August 4, 2015 Charlie Minato Editorial, IPCPR 2015

Livin’ a Treme Life: IPCPR 2015 Recap

It’s a Kermit Ruffins theme.

Our goal this year was not only to give you more coverage of the IPCPR Convention & Trade Show than ever before, but also to take you behind the scenes in the process through our What’s In My Bag posts, morning blogs and this post from Rosalie, who handled much of the editing roles during our live coverage of the show.

That will continue with this editor’s note regarding the future of our IPCPR coverage.

As we’ve done for the last few years, Patrick Lagreid and I bookend our IPCPR coverage with an article that highlights some of our impressions from the show after we’ve had a bit to digest what took place. As you will see, one major theme has to do with the size of the trade show floor. For those that weren’t there, or even quite frankly those that were, Brian Burt shot a quick walkthrough of the floor so that you can get idea of what we are talking about.

FDA AROUND THE CORNER, OR NOT?

The good news is, we didn’t and still haven’t heard from the U.S. Food & Drug Administration (FDA).

While I caution this with my obligatory most people who claimed to be “in the know” about FDA were proven drastically off-base last year, our best sources have repeatedly told us that an announcement over summer should be expected, although the Winston-Salem Journal recently cited unnamed sources who indicated it could be “several months.”

With very little exception, it seemed as if most cigar brands were acting almost ignorant of FDA. I mean this neither as an insult nor in the commonly used connotation of “ignorant,” rather FDA was largely just ignored. I’m not sure that’s the wrong approach, running a company in fear of potential regulations from an organization that has largely been slower to move than expected doesn’t sound great for business. I’m not sure what the middle ground is, at least from a public appearance perspective. There are plenty of manufacturers and retailers who are pouring in hours daily to garner support against the potential rules, but that seems to be the minority, albeit one that includes most larger and more established brands.

What is concerning is how little some brand owners, particularly newer ones, still appear to know about what the FDA could do. I’ll be the first one to admit that there’s a lot of nuance, but the number of times I’ve had to explain the difference between grandfathering and Option 2 to people whose businesses will be gravely affected by potential FDA action has gotten out of hand. — Charlie Minato.

THIS WAS NOT THE YEAR OF CONNECTICUT

We heard (and probably even said) that there were a fair number of Connecticut-wrapped cigars debuting at the trade show this year, something that is certainly true. But let’s step back for a moment and see where this declaration goes askew.

First and foremost, two major manufacturers—Padrón and Drew Estate—both added Connecticut-wrapped cigars, items that were noticeably absent from their portfolios. While the buzz about the Padrón Dámaso was reasonably high going into the show, it certainly cooled off quickly; in fact, both Charlie and I would argue there was more hype about the 50th Anniversary releases last year when there weren’t a lot of samples being handed out and the cigars were fairly expensive then there were this year about a much more accessible cigar both in terms of price and the ability to try before buying.

Drew Estate seems to have done the better job impressing retailers with its Connecticut offering, the Undercrown Shade. While the pre-show hype may not have been as strong, those who tried it had fairly good things to say about it. Though bear in mind this cigar uses an Ecuadorian Connecticut wrapper, not one from the U.S., where its famed Liga Privada wrappers come from.

For both of those companies, this wasn’t a matter of “let’s do a Connecticut because it makes sense this year” it was probably something like: what’s the biggest gap in our portfolio at the moment.

Then there’s My Father’s El Centurion Connecticut, a new version that uses a habano seed grown in Connecticut that was largely an experiment prior to the cigar’s release. Altadis U.S.A. released the Montecristo White Series Vintage Connecticut, PDR Cigars went high-end with the Connecticut Valley Reserve and Kuuts released the Kuuts Connecticut, though it too is an Ecuadorian version, and this list just scratches the surface.

While there were certainly a number of new cigars that used the word Connecticut in their name, the reality is that the split between US-grown and Ecuadorian-grown was noticeable, as was the difference between shade and sun grown. When you start getting down to the specifics of where these “Connecticut” wrappers actually come from, it begins to be a bit less of a movement and more of what we’ve seen for numerous years.

Let us also not forget that Connecticut wrappers have been a huge part of the cigar industry for decades, and if you need a reminder we have two words for you: Macanudo and Montecristo. Both huge brands that use Connecticut wrappers and outsell some very prominent companies’ entire portfolio.

So yes, there were a fair number—maybe even a lot—of cigars prominently featuring Connecticut-seed tobacco, be it from the U.S. or Ecuador, but this is not something new, and as such this is not the year of the Connecticut cigar. — Patrick Lagreid.

350 (+ ABOUT 400) RETAILERS WERE THERE

Before the end of day one, I first heard the rumor: there were less than 350 scanned retail badges on the floor.

That didn’t seem true at all, particularly given the hustle and bustle I witnessed hungover in the morning of day one, and secondly, there was no one scanning badges. That rumor was played like a game of telephone through an elementary school and I heard all sorts of variations by the end of the day four. It spread enough that the IPCPR decided to announce preliminary figures over a loudspeaker on day four.

I asked the IPCPR to provide us with a few figures—mainly how attendance and space compared to both last year’s show and also the 2010 show, which was the last time we were in New Orleans. The data is below and I have a few takes on it below that.

	New Orleans 2010	Las Vegas 2014	New Orleans 2015
Retail Badges	1,786	1,914	1,896
Stores	755	827	745
Exhibitors	251	351	340
Net Square Feet	123,900	160,000	160,000

Giving retailers a third badge free clearly made a difference as the ratio of retail badges to stores in attendance increased dramatically from 2.32 badges per store to 2.55.
I thought the floor was a lot busier than the numbers show compared to the 2010 show. I know of a few retailers who flew in for Monday and Tuesday, deciding that skipping out on a whole weekend with the family wasn’t doable. Still, most people didn’t scoff at the idea that it was much busier than 2010, even if the numbers don’t show that entirely.
You can trust these numbers or you can deny them, but then you have to bring your own numbers. As I’ve mentioned for the last few years, bitching about attendance—along with retailers stealing things—is one of the (unfortunate) traditions of the trade show.

Here’s what I said in 2013:

For the past three years, the “I could roll a bowling ball down the aisle and I wouldn’t hit anyone” joke has been applied to the attendance of the IPCPR trade show. So, are we just using the wrong metrics?… People seem to be living in the days of RTDA or when Lynyrd Skynrd was performing at CAO parties, that’s not happening again for the foreseeable future and it’s probably not the best standard to judge the success of the trade show against.

The IPCPR has finally put out these numbers in a timely manner—vendors were emailed last week with the same data provided above—and the initial response has been largely to dispute the data with claims about accuracy.

I wasn’t there handing out badges so I have no clue if there were in fact 1,896 badges given out, but I’m inclined to believe it’s yes more than no. Here’s what I do know though: there’s no way anyone can count the people in the convention center at one time, it’s too big, there’s too many ways in and out of the floor and people are too busy. — CM.

IPCPR 3.0

In last year’s 10 Questions for 2015, question number two was will this be the year the IPCPR trade show gets dramatic changes. The answer is yes and no. Were there many big changes during this year’s show? For the most part, no. Are the big changes already set in motion? Absolutely.

Likely, the biggest change to the trade show next year will be a reduction in available booth space for next year. The change is happening and the reality is booths, particularly from companies outside of the five largest in sales volume, are getting excessively large. This means there’s more and more space that needs people to fill it, otherwise the aforementioned complaints of emptiness only accelerate.

That’s being addressed by Mark Pursell, ceo of the IPCPR, and his team and it’s just one of a number of changes.

The cost of booth space is going up to compensate for the lost revenue from the reduced floor space. There’s also a large effort from the IPCPR to figure out how to incentivize more retailers to come. From what I understand, the IPCPR’s Cigar Bash, a third night party featuring the band, America, was a success. In addition, seminars were apparently better attended than in year’s past, something that gave the IPCPR hope.

The biggest issue that plagues the show is the fact that the increased discounts that were traditionally only offered to retailers that attended the show are now being extended to retailers who do not attend both before and after the event. The problem is not new and it’s probably never going away. The reason for this is sales representatives. If one rep gets 75 percent of his/her stores to attend the show—he or she will have a great show. If another rep only gets 10 percent of their stores to attend, numbers are going to be down. Offering the deals to retailers who do not attend helps to level the playing field—and adds to the bottom line—and the support for eradicating the practice is pretty much non-existent on the manufacturer level.

One solution, which we’ve mentioned before, that is gaining traction—including from the IPCPR itself—is the concept of exclusive cigars that are only available to those who attend the show. Expect the IPCPR to heavily push the concept, and with good reason.

What’s very clear is the IPCPR Convention & Trade Show is going to change. The organization seems open to just about any idea and seems poised to be aggressive in its recruitment of retailers to attend the show next year. — CM.

THE HOOKAH/VAPE PAVILLION WAS A BAD IDEA

After lobbying from members of the premium cigar industry, the IPCPR relented and moved the vapor and hookah vendors into their own spot of the show. I’ve been around plenty of retailers, who have argued in favor of this and this year they finally got their wish.

That being said, I never heard a single positive thing about the decision during the show. Not one, “it was so much easier to navigate without the vapor guys in between the booths.” No one mentioned how they were so glad they didn’t have to see the booth models of the hookah companies.

When the decision was announced, many vapor and e-cigarette vendors pulled out of the IPCPR show, which cost the organization revenue—and I’m not sure for what.

If the hookah and vapor guys have to go in their own spot, why shouldn’t the pipe vendors, or the accessory companies, or the people selling canes, or back massage chairs—or really anything else. I’m all for making the show smaller and a bit pricier for vendors as mentioned above, and that becomes easier with the decision to place the hookah and vapor people in one area, but I’m not sure this achieved any of its intended consequence, other than politely telling some vendors that certain retailers didn’t really want them at the show.

General Cigar Macanudo bands side-by-side

WHY WAS THE GENERAL CIGAR BOOTH SO QUIET?

While General Cigar Co. isn’t known for rolling out the loudest or most festive booths in recent trade shows, there’s always been something eye-catching and attention-grabbing happening inside. Whether it was Foundry Cigars with a steampunk setup, a Lamborghini as part of the Cohiba section or CAO rocking out with Concert, General Cigar has always had something — just take a look at this piece that the company that designs General’s booth has on its website, with a reminder that General won the Best in Show award at the 2013 trade show.

Yet this year, it was eerily quiet—almost disconnected from the rest of the show. Not only was there no energy inside, it found a way to block out noise from the surrounding booths. I even jotted a reminder down in my notebook about the feeling I had while in the booth.

Other than Sam Leccia finding himself on the business end of some wrestling moves, it was a pretty stoic environment. That’s despite CAO unveiling a line of cigars that are the result of a partnership with Jimmy Buffett, a new look for General’s biggest line, Macanudo, the relaunch of Bolivar and Ramon Allones, and the “celebration” of the 170th anniversary of Partagas. It also had the recently acquired Toraño line to show off, yet that was relegated to a plexiglass case.

There’s been chatter for a while both on and off the floor that some of the biggest companies don’t see the value of the trade show as much as they have in years past, with some individuals going so far as to say it would be better to direct the money spent on the show towards events at stores or other brand-building events that take place in the field and in front of customers. One person on the sales side went so far as to say there are a few companies just waiting for someone to make the first move and either scale down drastically, or not be part of the show at all.

Whether or not General is starting to take a critical look at the value it gets from being at the trade show remains unknown to those outside the Virginia offices, but one thing that can’t be ignored as a likely factor is the looming IPO of Scandinavian Tobacco Group (STG), the parent company of General Cigar Co. and Cigars International. We’ve been told that when the IPO goes through, it will give STG and General greater spending ability, but could the company be a bit hamstrung as far as keeping expenses down until that point?

Whatever factors went into the design and operation of General’s booth this year, the result was a bit disappointing: a tepid, scaled-back showing from one of the biggest companies in the cigar industry. — PL.

FAMILIAR NAMES IN A DIFFERENT SPACE

No. I’m not talking about booths.

Instead, it’s the accessory category and what appears to be a newer trend of cigar companies entering the accessory space with more than just branded goods. At this year’s show, Camacho, Nat Sherman and Oliva all made new accessories a significant part of their new product offerings for the show.

None of these companies are new to the accessory game, but previously it’s been almost exclusively promotional items of late from each, with maybe the exception of Nat Sherman, who appears to be making the biggest commitment of the three.

They aren’t the only ones, Rocky Patel Premium Cigars has a fair bit of unique accessories which they sell and Camacho’s sister brand Davidoff has a lengthy catalog, one that could be receiving a makeover. But even Davidoff is making a new push with its lower-cost Escurio line of accessories. All of these companies seems to be in the mid- to upper-mid range; not full on S.T. Dupont, but also not really XIKAR’s segment either. — CM.

DO YOU HAVE THIS IN ANYTHING OTHER THAN A TORO?

Ask most cigar manufacturers and they will tell you that their blends smoke best in a certain vitola. Sometimes it may be a corona, other times a robusto, but regardless of what it is, there’s almost always a preferred size.

Yet this year it seemed like the toro, particularly in 6 x 52 format, became the preferred size for a lot more cigars than we would have expected.

It’s a trend that’s been building for the past five years or so; My Father Cigars has released its limited editions in a 6 1/2 x 52 vitola and this year was no exception. Altadis and Pete Johnson teamed up for the 6 x 52 Henry Clay Tattoo while the Montecristo 80th Anniversary in a slightly bigger 6 x 54 vitola. Ernesto Perez-Carrillo’s humidor selections are all 6 x 54, as is this year’s Edición Limitada. Brian Chinnock’s new XOXO is a 6 x 52, and I’m sure there are several more I’m leaving off this list.

While there’s nothing inherently bad about the toro vitola, the repetitive use of this shape does get to be a bit tiring, and I’m inclined to believe it gets picked not because it’s the size that the blend shines the best in, but rather it’s the vitola that the most people will buy. And yes, I get that this is a business of selling cigars, but I’d really like more manufacturers to deliver the best size for the blend, not the best selling size—and I’d like to believe that consumers will support great blends in whatever size they come in.

The idea of a single vitola release is usually one that at least gets the ears perked up, though with the trend towards picking a safety vitola like the 6 x 52 (or thereabouts) toro, these cigars are becoming less and less compelling. — PL.

Drew Estate Booth IPCPR 2015

DREW ESTATE 2.?

Jonathan (Drew) was there, Marvin (Samel) was there; Drew Estate was there.

When the announcement was made late last year that Swisher International would be acquiring Drew Estate many consumers and retailers feared this would lead to a dramatic shift in how the company, particularly its creativity, operated. It hasn’t been a year, but this was the first trade show and new product launch since the acquisition and for better worse, you’d be hard pressed to tell the differences, at least at the trade show.

Agio, Joya de Nicaragua and Tsgue are still being distributed by Drew Estate in the U.S. The Drew Estate sales force is still being led by the same people, Subculture Studios continues to put out innovative and creative gifts for retailers at the trade show, the booth is still buzzing and busy and there’s still a diverse playlist of music blasting from under Drew Estate’s bridge.

Drew Estate is still being Drew Estate. — CM.

TRADEMARK ISSUES GALORE

There were a lot of potential trademark issues that came up due to new cigars before the show. Some of them got resolved: Kings Cigars dropped the Nubb name prior to the show; but for the most part, potential trademark concerns were on full display.

General’s new Leccia is Luchador El Gringo, Thompson has the trademark on El Gringo; Acme Cigar Co.’s Route 66 might interfere with Van Nelle Tabak Nederland BV’s trademark, an Imperial Tobacco subsidiary; and Viaje released another Collaboration, despite Alec Bradley owning the trademark on that name.

There were other matters that appear to be potentially ongoing issues, notably Sosa going after Crowned Heads (La Imperiosa) and MLB Cigar Ventures (Imperia) for their uses and potential infringement on Sosa’s Imperio Cubano trademark. (Both Crowned Heads and MLB Cigar Ventures declined to comment on the matter.)

And then of course there’s the ongoing debacle regarding Cubanacan/Robaina/González, which definitely didn’t get any cleaner given the former was still selling products claimed to be owned by the latter.

Whatever the case, there were more issues this year than ever before. As the amount of new cigars continues at its rapid pace, the amount of available names is going to dwindle. Perhaps this is the norm, but hopefully not. — CM.

HITS

Altadis U.S.A. — Judging by the “SOLD OUT” signs, both the Henry Clay Tattoo and Montecristo 80th Anniversary seemed to be very well received, but that alone wasn’t why it was a successful trade show for Altadis U.S.A. They enhanced the look of one of their biggest sellers—Casa de García—while also pushing the Montecristo brand forward with the Vintage Connecticut and Estoque. They brought retailers back to the booth with afternoon cocktails and educational seminars, and had people on hand to talk about what’s happening in the factory and on the farms. They didn’t release a flood of new products, seemingly going for releases that would make a big splash instead, and in a year when there wasn’t a clear standout release, managed to be mentioned by numerous people for what they were doing. — PL.
Davidoff of Geneva USA — It’s hard to do a hits and misses section at this point in time without mentioning Davidoff of Geneva USA. There’s no company more aggressive at the moment, and it seems to be working. Camacho American Barrel-Aged, which launched right before the show, and Davidoff Escurio were consistently topics of conversation with retailers, including those who aren’t even able to carry the latter. The conversation regarding Davidoff of Geneva USA has turned to a new place, with many perplexed at just how to derail the Swiss giant’s momentum. — CM.
Dunbarton Tobacco & Trust — The new company from Steve Saka was one of the most talked about and more importantly, most visited booths at the show. But that’s not why it is on the list. Dunbarton Tobacco & Trust received months full of orders from retailers—all of them placed without actually smoking the cigar. — CM.
Miami Cigar & Co. — This is the second year that they’ve made this list and while I’m not sure the last 12 months have been a blazing success story, the trade show in at least one very specific way was. For the first time since I’ve been covering the trade show, Miami Cigar & Co. did not look like a company you would first describe as La Aurora’s distributor. For years, the oldest Dominican brand has been the dominant force in the company’s trade show presence, this year it was Miami Cigar & Co., with its own brands and the three companies it distributes, and the direction of the portfolio is becoming more and more diverse, something that a potential deal with Toscano would only further. — CM.

MISSES

Cubanacan — It could have gone a lot worse, but the company definitely seemed a bit rattled by the aforementioned issues with the González family and Hirochi Robaina. The question is simple—can Cubanacan survive without the glamor and buzz brought to them by Hirochi Robaina and the HR line. The answer, at least according to a half dozen key retailers I spoke to, is no. Cubanacan as a brand could survive this, but it’s going to need more in its portfolio than what’s currently there. — CM.
General Cigar Co. — See above. — CM.
Graycliff — While I think Graycliff is going in the right direction. That being said I had to correct at least a half dozen people—including a member of our staff—who swore Graycliff wasn’t at the show. They were. — CM.
J. Fuego — There were a lot of companies with booths that were probably too big, but J. Fuego’s was beyond that, it was just awkward. I’m not sure 100 people could have made the space look packed. It was a massive, spread out tiki-themed booth that was too big for its own good. If you need an example of oversized booths, here’s exhibit A. — CM.

We covered 103 booths at this year’s trade show:

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For those wondering, we did get to see Kermit play. For those who need more Kermit in their life.

It was fun New Orleans, see you in a bit Vegas.

Davidoff is the official sponsor of halfwheel's coverage of the 2015 IPCPR Convention & Trade Show.

IPCPR 2015

Charlie Minato

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 have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.