For the most part, this was not a year of bold risks, massive capital expenditures or complete reboots. Instead, thanks to reasons FDA-related and not, it was pretty conservative. As such, there weren’t many standouts for company of the year.
Problematically, the one that did stand out for the right reasons—General Cigar Co.—saw its sister company—Cigars International—stand out for all the wrong reasons. Despite a very public poor year for Cigars International, we still felt like the accomplishments of General Cigar Co. in 2017 were largely unparalleled.
As such, Scandinavian Tobacco Group (STG), the parent of both General and CI, is the winner for company of the year.
First, the bad.
In April, Cigars International publicly acknowledged that an upgrade to its IT infrastructure had caused major issues, namely, the world’s largest retailer was no longer able to fulfill orders. That led to STG, which is a publicly-traded company, to downgrade its financial guidance for the year from 1-3 percent growth to 4-8 in negative growth. STG never changed its guidance and acknowledged that it was having to spend money aggressively to retain customers.
On the positive side, Cigars International is coming to Texas. The company said it would spend $1 million in 2017 as part of a planned expansion to the Dallas-Fort Worth area in 2018.
General’s year was much different. The company, which sells brands like Cohiba, Macanudo and Partagas in the U.S., replaced much of its executive team between late 2015-2016. There’s new life in General and it’s showing.
Much to the behest of its competitors, General made a concerted effort in 2017 to acquire shelf space in retail humidors, something that will likely pay dividends for year’s to company. It continued its extremely aggressive pricing strategy, for example only 1 of 29 new cigars at the trade show from General retails for over $9. It continues to try to introduce popular CI brands like Diesel and Humi-care into shelves, the latter of which could become a large player in that small space.
And General has been unafraid to trim its portfolio and get rid of brands, even new brands, that don’t sell. And after years of trying, including that bizarre idea where General hired brokers, it appears the company has finally all but given up on Foundry.
But most importantly, the cigars have gotten a lot better. The CAO Amazon Trilogy is a bonafide hit, the company has cigars being made by Ernesto Perez-Carrillo Jr. again—and they are good—and even General’s affordable offerings are oftentimes good cigars.
Just two years ago, it seemed little General could do would work. Now, it has competitors legitimately concerned. There’s still a pretty common belief amongst those competitors that the financial side of the turnaround isn’t yet done, but from the outside looking in, the progress elsewhere has been remarkable.
Honorable mentions include A.J. Fernández, Caldwell Cigar Co., Foundation Cigar Co. and Fratello.