Matawan, N.J.--When the end of February arrives, Andrew Kerstein will officially be all about tobacco. The NATO board president and owner of five Smoker's Haven stores in New Jersey is closing the sale of his last Andy K's grocery store to "concentrate completely on tobacco," he told Tobacco E-News.
Kerstein, an avid pipe and cigar smoker, discovered the intrigue of the category working with Phillip Morris back in the late '80s to launch a generic cigarette at the Krauszer's convenience stores he owned at the time. "That was my first passion for cigarettes and tobacco in the [image-nocss] business--where I was able to take something literally from scratch and build it and make it a market presence."
Since then, he has seen many changes to the category, which stoked that fascination. One such change was the creation of the State Children's Health Insurance Program (SCHIP), which led to double-digit growth in his sales of pipe tobacco, pipes and pipe accessories.
His store even does proprietary blends of pipe tobacco, which are named after the store employees who develop them. Mr. Paul's 1, 2 and 3 and Ave's Faves are among Kerstein's personal favorites. "I enjoy experimenting with different pipe tobacco blends as well, just to see how they come out," he said.
As for the challenges he faces as a retailer, one stems just from being in New Jersey. "It's a challenging state, because we have a 30 percent OTP tax, and we have one of the highest cigarette tax excise rates in the nation." That challenge is compounded by Pennsylvania being a neighboring state, according to Kerstein, with no OTP tax and a significantly lower cigarette tax.
Aside from taxation and regulation, he said, "I think the biggest challenge in today's market is picking which new products you're going to introduce in your stores. ...There's just all sorts of space pressure and inventory dollar pressure as to what you bring in and whether or not you're going to be able to move it."
He said with so many more products available today, he's learned that it's important to not take a cookie cutter approach to his stores. While shoppers in one location prefer large ring gauge cigars, another location does well with cigars that cater more to the cost conscious.
He added that having stores with different profiles has turned out to be beneficial. "One of the beauties of having different stores with different characteristics is if something doesn't sell in one store, I can simply pack it up and move it to another store--and have a good chance of selling it."
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