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IPCPR 2014: Three Things

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Sunday morning, the premium cigar world’s largest gathering will open its floor to manufacturers, retailers, distributors, suppliers and media. In many ways, the four days serve as a good spot check of the mood of the U.S. premium cigar business. Each year, there’s always a few questions we have going into the show, and dozens leaving the show. 

1. WILL IT BURST?

Whether or not the FDA decides to wreck havoc on the cigar business, there’s a growing problem. In places like Estelí, Nicaragua factories are shedding orders as purchasing seems to have been reduced in the first six months of the year, particularly from some of the cigar industry’s largest buyers. There’s no tangible data, at least until the import numbers come out, but there is evidence of a bubble bursting.

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At nearly every factory, production seems to be up, rolling salons (or galleries) are expanding and workers are being added. That’s been the case year in, year out for the last few years and this growth has gone almost completely unchecked, until 2014. There’s a very easy question to ask, with a challenging answer—where are all these cigars going?
This year’s trade show will be a good indication of whether the first few months of the year were just a bump in the road, or a real indication of things getting worse. — Charlie Minato.

2. NOTHING NEW.

A few companies are heading into the show with very little planned as far as new releases. Curivari simply has nothing. Companies like AKA and Quesada are focused on new packaging options, but very little as far as new product. It’s one of the most interesting experiments taking place at the trade show—will retailers actually back up their words.

Everyone is a bit fed up with the amount of new products, but most in the industry believe it’s absolutely necessary in today’s ecosystem. Updating packaging and focusing on core lines is a great thing, in principle. It’s one less new cigar to take a risk on, one less thing to try to explain and potentially—one less cigar that may have not been ready.

If the aforementioned companies have great shows, perhaps it will be a sign that manufacturers will not be punished by retailers for not putting out new cigars, but I don’t think many in Sin City are betting that to be the case. Simply put, people want new cigars and if there’s any time you are going to hear “what’s new” in the cigar business—it’s the next week. — CM.

3. HOW DOES THE DEEMING DOCUMENT AFFECT THINGS ON THE SHOW FLOOR?

There shouldn’t be a single person who walks onto the trade show floor for whom FDA’s pending regulation of the cigar industry shouldn’t be a first and foremost thought. Yes, they may have a lot of meetings to be at; yes, they may have payroll to do when they get back home; yes, there may be some new cigars they are really excited to see. But all three of those could very possibly not be realities this time next year depending on what FDA decides to do about premium cigars.

The real question is how will it affect the buying and selling of cigars on the floor, which is what the trade show is all about? Is regulation still far enough away that it’s not a real concern? Or are the possibilities that come with regulation so big and uncertain that it keeps people from buying deep or encourages manufacturers to sell harder to get their products into the market? — Patrick Lagreid.

Rather than just looking at the three most important tobaccos, we’ve decided to also look into some trends that are hardly trending as the trade show nears.

1. THERE ARE NOT 75 ‘NEW’ CIGAR EXHIBITORS.

— We ran through the list of exhibitors and by our calculations when you remove media and non-cigar related booths, you are left with 184 booths, out of those booths, we found that 33 of them were actually new exhibitors.

But that number is misleading. La Sirena and Robert Caldwell count towards the 33, despite the fact that they have both been exhibiting in other people’s booths in previous years. Also included are the new brands from industry icons like José Blanco and José Seijas, both of whom are hardly “new.”

We ran through the list of 33 and found that there were roughly 13 exhibitors that we were unaware of this time last year and as such truly “new.” — CM.

2. THE C-STORE BUSINESS IS NOT GOING TO SAVE THE CIGAR BUSINESS.

In the last two years or so, there has been a trend of cigar manufacturers packaging products for convenience stores–basically single serve, humidified packs containing well-known cigars to try and reach a market that wasn’t going into premium cigar stores. There were a lot of best-case scenarios happening in people’s heads: the cigars would turn like crazy, it would get occasional cigar smokers to start shopping at premium cigar stores, the sheer number of outlets would be a boon to both business and legislative efforts; the list goes on.

What appears to be the reality is that those dreams are simply not becoming reality, and with FDA stating in the deeming document that premium cigars are generally sold in specialty stores—and not c-stores—the argument weakens even further.

While the packaging should stay around for golf courses, hotels, grocery stores, smaller speciality liquor stores, casinos and resorts to name a few, the likely reality is that there’s a conversation just waiting to happen amongst some of the bigger manufacturers who thought that convenience stores would provide a swoon of business is simply not going to become reality. — PL.

3. LANCEROS ARE NOT BACK.

The definition of insanity is doing the same thing over and over again and expecting different results. Every few years, the 7 1/2(ish) by 38(ish) vitola seems to come back on to the radar of cigar manufacturers and then people try to christen a lancero comeback.

Lanceros do not sell. Period. Selling 1,000 boxes of 10 is one thing, but lancero sales are a rounding error, if that.

We’ve seen this “trend” happen in 2008, 2010/2011 and yes, a bit again this year. The fact remains that the vitola does not sell very well and while there might be an influx of new lanceros, that does not mean they are actually going to be purchased by consumers or retailers.

They didn’t really sell before 2008, they didn’t really sell after 2008 or 2010, 2011, 2012, 2013 and there’s zero indication they are going to start selling again now. — CM.

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Charlie Minato
About the author

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I handle the editing of our written content, the majority of the technical aspects of the site and work with the rest of our staff on content management, business development and more. I’ve lived in most corners of the country and now entering my second stint in Dallas, Texas. I enjoy boxing, headphones, the Le Mans 24-hour, wearing sweatshirts year-round and gyros. echte liebe.

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