The Taste of Success
Could a product ban sour flavored cigars?
If you walk into a convenience store now, how many different flavors of cigars are you going to find? A decade ago, the answer could be in the twenties or more and include extreme tastes such as bourbon, coffee and even mojito-flavored cigar products. While variety may have settled into simpler flavors such as grape, strawberry and sweet, sales of flavored cigars have soared. “As of 2011, 70% of cigars are flavored cigars,” states Joe Teller, senior category manager for cigar manufacturer Swedish Match, Richmond, Va. “That’s how big it is.”
However, some within the industry fear this core cigar segment could go the way of the flavored cigarette, falling victim to a federal ban.
While the FDA has yet to regulate cigars or indicate plans to expand the ban of flavored cigarettes to include cigars as well, anti-tobacco groups are pushing for just that: a move that would weigh heavily on those in the cigar business.
While one cannot predict what the future may hold for these popular products, we can educate ourselves on the evolution of flavored cigars and their appeal, current trends in the category and the implications a flavor ban would have on both cigar manufacturers and the retailers who sell them.
A Flavored History
While they’ve seen incredible growth in recent years, flavored cigars are nothing new, as those in the know are quick to point out. “The reality is that flavored tobacco products have been around for over 100 years,” says Paul Marquardt, president of marketing for Phoenix-based Prime Time International, which has been in the flavored-cigar business for years. “It’s really been a part of the smoking experience for a long time.”
In fact, flavored tobacco dates back to the early origins of the United States, when Spanish explorers stole the Indian practice of storing tobacco next to kegs of rum, causing an unintentional flavoring and a desirable smoking experience.
The U.S. Patent and Trademark Office has records of trademarked flavoredtobacco products dating back to the 1800s, although primarily in sweet and pipe-flavored blends. Swisher’s stillpopular Swisher Sweets line debuted in 1958, and Middleton premiered its pipeflavored blend in 1968.
These sweet and pipe-flavored tobacco products are slightly different from the “fruity” tastes most modern consumers associate with flavored cigars. Middleton’s popular Black and Mild line takes pride in this more complex blend, according to Greg Mathe, a spokesperson for Middleton’s parent company, the Altria Group, based in Richmond, Va.
“Black and Mild is primarily a pipe blended cigar,” says Mathe. “It’s made up of complex blends, as we call them.”
So when did the category transition from these few simple flavors to include the fruit, alcohol and dessert flavors it now features?
“Probably something like 10 years ago, there weren’t a lot of flavored cigars out there,” Teller explains. “Then, all of a sudden, the flavor trend kicked in and really took off. You went from a situation where there weren’t a lot of flavors to where literally every flavor you could ever think of has been tried by somebody, which was driving category growth.”
Marquardt credits the flavor boom to the modern consumer’s demand for more variety across the board, pointing out that we’ve also seen an expansive boom in the amount of flavored chip, beer, and liquor offerings in the past 10 years. Tobacco is no different.
“Consumers are demanding more now,” he says. “They’re not content with a small variety of options.”
While the demand for variety is still out there, four flavors stand as the core performers in the fruity-flavored category: grape, wine, strawberry and peach. According to Nielsen c-store data, this core four drives 84% of flavored cigar sales.
Trends, Grape and Small
Although Teller endorses the core four, he says one flavor stands above the rest: grape. “Of the four core flavors, only grape is growing,” Teller says. “But what is happening in grape is that all of its growth is coming from white grape. White-grape sales have more than doubled since last year, while regular grape declined 20%, according to Nielsen.” Nielsen numbers clearly identify grape variations as the leading trend, with grape- and wine-flavored cigars enjoying close to 17% growth in the past year. For perspective, all other flavors were down 9% over the same time period.
But grape isn’t the only trend sweeping the market. Industry insiders are also noticing a higher demand for smallersized flavored cigars. John Mayer, product director of tobacco products for Temple, Texas-based McLane Co., has noticed this from the retailers who buy from his company.
“The demand for flavored cigars has migrated from the larger cigar to the cigarillo-sized, smaller cigar,” says Mayer. “That’s where the business is settling in and that’s where the most growth is in the category.”
Mayer is quick to point out that this growth does not mean that larger flavored cigars are no longer relevant, but that this demand “means more emphasis should be placed on the cigarillo-sized cigars vs. some of the others.”
Smoother, Sweeter, Substantial
Regardless of the flavor of the day, it’s important for retailers to understand what attracts consumers to this product. After all, flavored cigars were popular long before the advent of the grape variety or the offering of cigarillo-sized products. Those in the Altria Group credit this product’s popularity to the desire for variety cigar smokers covet across the board.
“We know that adult cigar smokers like variety, whether that’s in blends or formats,” Mathe says. “The main reason for adult cigar smokers to make an alternate purchase is simply wanting a change or to try something new. By nature, flavored cigars offer a wide variety of flavors, blends and formats, thus making them a natural fit for consumers looking to try something new.”
Others, like Teller, credit the unique experience of smoking a flavored cigar product. Because of the flavoring blend, it’s a smoother smoking experience. Likewise, the flavoring sweetens the smell of the cigar, providing a more appealing environment for both smokers and nonsmokers sharing common air.
“Cigar smokers prefer flavored cigars,” says Teller. “It’s a better smoke than a cigar that doesn’t have any flavor to it because it’s smoother, it tastes better and it smells better. That’s what’s driving flavored cigars.”
Because of this favorable smoking experience, Teller believes flavored cigars serve as an entry point for many consumers first exploring the cigar market. “Many cigar smokers will try new flavors by buying one or two at time and then move to buying packs if they like the flavor,” he says.
Such appeal certainly explains the popularity of flavored cigars. However, could this appeal, which attracts new cigar smokers, also draw the unintended interest of underage smokers? It’s certainly a concern for those in the cigar industry, especially after the FDA banned flavored cigarettes in 2009 for this very reason.
Manufacturers of flavored cigars stringently disagree with such accusations, stating that cigars, flavored or not, are not appealing to underage or inexperienced smokers because they’re a much stronger smoke than cigarettes.
“They’re really for the more refined tobacco consumer,” Marquardt says. “I don’t care if you put flavoring in it or put a filter on it. … Cigar tobacco is a lot harsher, has far less sugar, and is a different kind of smoke and a different experience from a cigarette.”
With Prime Time cigars incredibly popular in Canada, Marquardt cites several Canadian studies to prove his point. The Canadian Tobacco Use Monitoring Study (CTUMS) reports minimal usage of flavored cigars by youth who prefer cigarette products when they smoke. Others, like Mathe, dispute whether or not a ban is the best way to prevent underage smoking.
“Certainly, there’s some in the public health community who have expressed concerns over tobacco products that have carried certain flavors other than tobacco,” he says. “But an outright ban of certain types of tobacco products is not necessarily the most effective way of addressing the issue of underage tobacco use.
“All products should be marketed in responsibly,” he continues. “Kids should not use tobacco products, and we have been working with retailers for a long time to promote underage-access prevention measures and responsible marketing measures.”
To help in this fight, Middleton works closely with the Coalition for Responsible Tobacco Retailing to support the We Card program to prevent underage access.
While cigar manufacturers can offer up science, statistics and other alternatives to banning flavored cigars, the decision is ultimately up to the FDA—which makes the future of flavored cigars nearly impossible to predict, because the FDA doesn’t actually regulate cigars … yet. The Family Smoking Prevention and Tobacco Control Act of 2009, the same act that banned flavored cigarettes, gave the FDA the authority to prohibit or regulate other flavored tobacco products, like cigars and smokeless tobacco, when they choose to.
Such uncertainty makes it very hard to prepare for a future without flavored cigars. Some companies hope that, should the FDA ban flavored cigars, traditional flavors such as sweet and pipe might be excluded, much the way menthol was excluded from the flavoredcigarette ban.
“Historically,” Mathe adds, “there’s always been a preference for a blended flavor of tobacco in the cigar category.” This preference has allowed flavored cigars to thrive throughout the years, even in the challenging world of modern tobacco sales, adapting to fit the unique needs and preferences of consumers. While the FDA has given no indication about when or if they might look into banning flavored cigars, one thing is certain: such a ban would be a blow to anyone who makes, distributes or sells cigars.