May 15, 2020 Charlie Minato Editorial,  PCA,  PCA 2020

12 Thoughts: PCA 2020 Is Canceled, Now Onto Bigger Problems

A few weeks ago, I raised a question to some people in the cigar industry: What would the conditions need to be for the Premium Cigar Association to say, “the trade show is happening” and you to believe it?

Would the Venetian need to be open? Would it need to be 30 days out? Would the vaccine need to exist? Would it need to be the week of the show? Would you need to already be in Las Vegas?

Because when the PCA told me on April 28 that the trade show was still happening, I didn’t believe that would be the case. Instead, I started working on this article.

Yesterday, the slow car crash that was the PCA having to cancel its trade show came to a formal end, or at least a point of impact. Much like many of the decisions by the PCA in the past year, picking up the pieces is going to take a lot longer.

For the third time in less than a year, I’m back to try to make sense of the mess that has been the 2020 PCA Convention & Trade Show. From the onset, I should be very clear: the decision to cancel was the right one, the path to cancellation was frustrating and the failure to identify the problems with both the PCA and its event are… whatever comes after frustrating. But most importantly, the consequences of not addressing the latter will end up costing this industry, sooner rather than later.

1. 2020 WAS ALREADY A DISASTER

Please don’t let anyone tell you otherwise.

The 2020 PCA Trade Show was going to be a problem for the organization regardless of coronavirus. While I don’t agree with it—see heading #5—I definitely see a scenario where “coronavirus forcing the PCA to cancel the 2020 trade show was a good thing” ends up being true.

As a refresher:

Canceling CigarCon was the obvious conclusion to what had been a mess of an idea. Amidst a generally negative reaction by both retailers and manufacturers, the PCA never created (or at least provided) firm enough financial data to where the organization could explain things like: how much tickets would cost, how much money the event would cost to put on, or how much money the event would make. Even if the response to CigarCon was positive—and it wasn’t—trying to tell your members CigarCon was happening without asking for member input and providing basic financial data was irresponsible.

In June, when we reported the news of CigarCon, we also mentioned that five of the largest exhibitors—the aforementioned four plus Perdomo—had indicated they were unwilling to commit to the 2020 trade show due to a myriad of issues. Those issues centered around the profitability of exhibiting at the trade show, the leadership of both the trade show and the PCA, as well as concerns over whether the trade show would have a role in the future and other concerns.

After some fruitless meetings and months of speculation, the four companies pulled the trigger. In one day, the PCA lost over 18 percent of the trade show floor space it sold, and after a few more weeks of other companies making their 2020 plans, the number was easily over 20 percent.

2. AND THERE WERE MORE PROBLEMS UNDER THE SURFACE

The PCA pays to rent the trade show floor at the Sands Expo Center but it’s actually not that much of the roughly $1.5 million the organization spent at the 2018 trade show. Sources have told halfwheel the organization is also required to generate over 5,000 hotel room nights amongst the attendees of its trade show. If it doesn’t generate the minimum number then it must pay for any of the nights that aren’t sold.

When the bigger companies began pulling out, it not only meant 18 percent of the trade show floor wasn’t being sold—and realistically, there weren’t companies that were going to take that space—but also the PCA was in danger of not selling its room block and therefore having to pay for unsold rooms. It began trying to recruit some other cigar companies to buy rooms at The Venetian/Palazzo instead of rooms at other hotels like Treasure Island. I’m not entirely sure how that was going, but given that the hotel rooms were $200 per night, even failing to generate 10 percent of the room allotment would be a six-figure hit.

Furthermore—and rather curiously—the PCA never publicly opened registration for this year’s trade show. For comparison, registration for the 2019 trade show began in late March, which would suggest that by early April, the PCA was either considering a cancellation or was falling behind on what it traditionally has done.

By late January it was apparent that things weren’t going normally for the PCA. The trade show floorplan was still in a massive flux, there was a dearth of unsold floor space, and for the first time that I can remember, not selling the hotel room block was a serious concern. That was all apparent during a competing event, the smaller Tobacco Plus Expo in late January, where—for the first time—I heard people wondering if coronavirus would cancel the already doomed 2020 trade show.

3. THE TRADE SHOW WAS STILL QUITE PROFITABLE FOR PCA

Here’s a breakdown of the PCA’s revenue in 2018:

  • Trade Show — $3,007,781 (66.1 percent)
  • Membership Dues — $748,240 (16.4 percent)
  • Acknowledgments — $275,188 (6 percent)
  • Annual Almanac — $118,961 (2.6 percent)
  • Newsletter — $78,691 (1.7 percent)
  • Investment Income — $195,647 (4.3 percent)
  • Net Gain from “Sale of Assets Other Than Inventory” — $139,300 (3.1 percent)

I feel pretty confident that very few people would remain a member if membership wasn’t needed to access the trade show and that the annual almanac wouldn’t be published if there wasn’t a trade show. Realistically, I think at least 80 percent of the PCA’s 2018 revenue goes away in a world where it isn’t hosting a trade show.

The PCA’s total line item for conferences, conventions and meetings—which likely includes some non-trade show expenses—is $1,497,286. That doesn’t include the cost of salaries or some other expenses related to the trade show, but it’s clear that the trade show almost certainly provided the organization with well over $1 million in profits in 2018.

There are obviously some questions about how much losing just Altadis U.S.A./Davidoff/Drew Estate/General would cost, but it’s a decent chunk, certainly more than just the money those companies spend on the trade show floor. At least some of those companies have agreed to pay their membership dues for now, but that won’t last. Then there are the aforementioned hotel rooms that might have gone unsold, headlining sponsorships that those companies typically bought, and the big question that we won’t get an answer to this year: How many retailers wouldn’t show up because four of the biggest cigar companies aren’t exhibiting?

Even if those four companies were going to show up, retailers already seemed pretty upset about the CigarCon rollout in 2019. I’m not sure of the warped logic needed to say “I’m going to the trade show because these four companies aren’t showing up,” though at least one retailer got there, albeit, basically as charity.

I don’t think the loss of those companies wipes out $1 million in revenue, let alone $1 million in profit, but 2020 was going to be noticeably less profitable than 2019. Barring some unforeseen positive developments for the 2020 trade show, 2021 also seemed like it was going to be even worse. It was bad enough that I wrote in January that I thought the 2021 trade show would be in jeopardy without an unforeseen uptick in attendance.

It wasn’t hyperbole then and if I had to guess right now, I don’t think there’s a 2021 PCA Convention & Trade Show for a number of reasons, only some of them are related to coronavirus.

4. THE TRADE SHOW IS NOT A GOOD PRODUCT

I’ve written over 8,000 words about what led to those companies deciding to not go to the trade show and there’s no point rehashing that decision. But it needs to be pointed out, the trade show as a product is not in a good place.

Whether or not the trade show is still profitable for an exhibitor depends on a number of factors, including how the company calculates profitability. What is clear is that the retailers attending the show, and more importantly the number of retailers buying at the show has been in decline. Though, because the PCA has never taken attendance statistics seriously, who knows. That fact combined with rising trade show costs, travel expenses, a saturated market for large discounts, overstocked retailers, further shifts to catalog retailers and the trade show’s inability to attract new retail customers for these companies all lead to a simple reality: the show is at the very least declining in profitability for manufacturers.

The industry either needs to address the retail attendance problem—which seems unlikely given the retailers have their own set of issues that have been exacerbated by coronavirus—or the laundry list of other variables.

Or it needs a new trade show model.

As the event has become less and less profitable for the manufacturers, there’s been a massive uptick in scrutiny about the management of the trade show. The PCA tried to add CigarCon to the event to help deal with both issues at the trade show as well as its own revenue generation, but the botched process of creating CigarCon just furthered a growing animosity between many of the exhibitors and a small group of people who control the PCA.

5. THE BIGGEST RISK FOR THE PCA

For the PCA, the most dangerous part of the coronavirus situation is neither the financial penalties it might incur for canceling the trade show nor the health risks associated with having a trade show.

It’s that cigar companies and retailers get to live in a world without a PCA Convention & Trade Show. And that means they get to not just think about whether or not it is needed, but they get to see it.

Other industries have already seen 2021 events canceled after exhibitors have decided that the downsides to not doing a large trade show far outweighed the costs of doing these larger events.

If the PCA doesn’t blow this thing up—more on that below—or blow itself up—yeah, that commentary is coming too—it’s not going to go well. I can’t imagine the PCA is going to start trying to sell its 2021 trade show space like it normally would, i.e. in July. So if it waits until say, October, that gives cigar companies—most of whom are probably going to continue to miss their 2019 sales benchmarks—five months to ponder and analyze whether it’s all worth it.

If I was running the PCA, that would scare the fuck out of me.

At last year’s trade show, the PCA was having a hard time selling booths for the 2020 trade show. Those problems didn’t get any better in January and it didn’t seem like things were on track in early March. No matter your feelings about what took place in January, there’s no way to argue that Altadis, Davidoff, Drew Estate and General all pulling out is a sign that the trade show is working or on the right path.

I do think that there will be some people—a distinct minority—that say, “after coronavirus, and if we can do it safely, what the industry needs is to #bandtogether and see each other in one place.” But many of the core customers of the trade show—the brick-and-mortar retailers—are probably still going to be reeling at that point, or worse.

As the days go by the reasons for attending the trade show increasingly boil down to FOMO and inefficiently funding a very necessary fight against FDA, but more and more people are frustrated that the financial risks aren’t worth the reward.

Some have asked why the PCA doesn’t host a virtual trade show. From what I understand, that idea wasn’t really seriously considered. That sounds like an absolute technological mess, but I think there are better questions: what’s the point of a virtual trade show and why would the PCA need to be involved?

The PCA isn’t what the RTDA—the predecessor to the IPCPR name—was. It is no longer the facilitator that provides exhibitors with the retailers they otherwise wouldn’t know about. And so, one must ask the question: what value is the PCA bringing to the actual trade show in 2020?

At this point, it’s not a net positive.

6. IF THE CRA WERE TO DROP ITS SUPPORT, THE TRADE SHOW DIES

For years the IPCPR and Cigar Rights of America (CRA) did not see eye-to-eye. At times, the relationship was reduced to finger-pointing and childish name-calling. They could co-exist. There were even times in which it was quite synergetic and cordial, but those aren’t the two words I would use to describe how the two groups acted towards one another for most of my decade in the cigar industry. At least until recently.

Last year, the organizations were once again in talks to merge. While those talks failed, the groups are still quite a bit more synergetic than they’ve been for much of the last decade because they need each other.

While the CRA promotes itself as a consumer organization, for the purpose of this and many other discussions, it’s more or less a cigar manufacturers’ organization. It’s largely funded by the following companies:

  • Alec Bradley
  • Arturo Fuente
  • Ashton
  • J.C. Newman
  • La Flor Dominicana
  • My Father
  • Oliva
  • Padrón
  • Rocky Patel
  • Tatuaje

If say three of those 10 companies also pulled out of the trade show in January, I suspect that would be enough to put an end to the trade show for good. Quite honestly, depending on which two it is, I think a pair of them could more or less sink the trade show for good.

But none pulled out because the CRA members know the profits from the trade show are vital to the industry, even if the trade show isn’t.

7. THE CRA’S SUPPORT ISN’T REALLY ABOUT A TRADE SHOW

The reason why the CRA and PCA are increasingly aligned is likely because of the lawsuit against the U.S. Food & Drug Administration (FDA). Those two groups, along with the Cigar Association of America (CAA), a group made up of both machine-made and premium cigar companies, filed that lawsuit and continue to fund it.

Not surprisingly given that the CRA was more or less formed after a group of premium cigar manufacturers left the CAA upset, there are disagreements about both legal strategy and funding obligations between the CAA and the CRA/PCA sides. So, over time, the CRA and PCA sides have become more aligned.

The very basic agreement to fund the lawsuit was that each group would fund a third of it. While the PCA uses its profits, largely from the trade show, the CRA relies largely on the names above.

If you are a company that isn’t part of the CAA or CRA, your contribution to the lawsuit is likely only the money that PCA profits from your trip to the trade show. If you aren’t exhibiting at the show, you probably aren’t directly contributing to the lawsuit at all.

But if you are one of the 10 CRA companies, your contributions to the lawsuit are coming from both your PCA exhibitor costs as well as your contributions to fund the CRA. The same could be said about the CAA members. And it’s not just a matter of getting double charged, those companies are likely paying a much disproportionate amount of the legal bill than their direct contemporaries.

This has been a sticking point for the CRA member companies for quite some time. Many—if not all—of them feel like lots of others aren’t contributing their fair share. And while their participation in CRA is voluntary, it’s hard to argue that the lawsuit isn’t a necessity for most cigar manufacturers to survive in the future.

But increasingly—particularly once the discussion of whether Altadis U.S.A./Davidoff/Drew Estate/General might be pulling out of the trade show emerged—there’s been an even larger concern.

What happens if there is no trade show?

Sure, the PCA has millions in the bank—it said its net assets were $5.57 million at the end of 2018. That will help it make it through 2020, but if the trade show is dramatically reduced or goes away permanently, funding for the lawsuit will be entirely voluntary for most cigar companies and trying to collect donations from most smaller cigar companies and retail stores hasn’t been effective.

That is why many of those CRA companies have been so vocal in their support for the trade show. Not just that they were attending, but some announced they were planning trade show exclusive releases in hopes of attracting more attendees. I suspect that if coronavirus didn’t exist, a large storyline heading into this year’s show would be lobbying by those 10 companies to get similar support of the trade show from other manufacturers.

But if the trade show profits weren’t tied to funding the FDA lawsuit and instead was a for-profit business like its competitors, InterTabac and Tobacco Plus Expo, I would venture to guess almost all of them would scale back their presence and some would probably not attend at all.

The staunch support for the trade show isn’t about the trade show, it’s about the lawsuit, and to a lesser degree about trying to help the independent brick-and-mortar retailers thrive against the catalog retailers, though the declining attendance of brick-and-mortar retailers would suggest that the trade show is increasingly not helping those retailers.

8. WHY IT TOOK SO LONG TO CANCEL

Back to coronavirus.

It’s still not clear what happened, but it’s safe to say that reason it took this long to cancel the trade show is because of money. Specifically, questions remain about whether the PCA will have to forfeit its deposit and/or be subject to other costs by the venue, the Sands Expo Center.

Yesterday, I asked Scott Pearce, the executive director of PCA, questions regarding this. He has yet to respond.

There have been murmurs that the PCA could trigger a clause in the contract, some have referred to it as an impossibility clause, which could be used because it’s not possible for the venue to hold the event. For instance, if the trade show had to happen tomorrow, it would not be possible.

As of now, The Venetian/Sands is still closed by an order from Nevada’s governor. There is no timeline to reopen. When The Venetian does reopen, the state’s gaming commission has banned gatherings of 250 or more people. There’s also no timeline as to when that restriction might be lifted. Furthermore, The Venetian stopped selling hotel rooms once it closed.

None of this is new, The Venetian closed on March 17.

The frustration with the PCA isn’t about canceling the event; but rather the process of doing it. Specifically, the PCA kept saying the event was going to happen when it seemed unlikely. There was never any roadmap for how it was going about deciding the viability of its trade show.

In regards to its negotiations with The Venetian, it was in the PCA’s interest to keep saying the event was happening, at least until it figured out what the financial ramifications were going to be. This was likely a complex game of chicken involving The Venetian/Sands Expo Center and the PCA trying to avoid having to eat the financial cost of canceling the event. And so, that’s what the PCA said.

Last week, a number of people told me that the PCA had told them that the event was being canceled this week because this marked 60 days out from the event. Presumably, this was because of either language in the contract or an interpretation of said language.

Whenever the organization had come to this determination, it should have said something to its members. And if it hadn’t figured this out before last week, well, skip to heading #12.

If the PCA knew that it could (or would) cancel the trade show without a financial penalty 60 days out, why didn’t it say that publicly? Something like, “We are planning on having a trade show, but, if The Venetian is still closed by May 12 then we will exercise our rights to cancel the trade show.”

It would almost certainly have meant that I never would have published this article. It would have saved countless hours in preparation and frustration that many—including me—have experienced in trying to prepare for a trade show that increasingly seemed like it wasn’t happening. The PCA’s decision to not provide any sort of roadmap, while perhaps the safest thing to do in relation to its negotiations with the Sands, was a giant pain in the ass to anyone that was planning on being an exhibitor at the trade show. I know this because I was one of those people.

This week, InterTabac—the international tobacco trade show scheduled for September in Dortmund, Germany—gave a roadmap for its decision-making. It’s not perfect and the specifics of that event are a bit different. The roadmap wasn’t particularly specific, using “before summer” instead of an actual date, and InterTabac is operated by the same company that owns the trade show venue, meaning it doesn’t have to worry about the contractual dispute like PCA and The Sands.

But I’d argue the bigger difference as to why InterTabac tried to provide a roadmap and why the PCA didn’t is because it’s a for-profit company that is run like a business.

9. SO LET’S BLOW THE TRADE SHOW UP

The last time halfwheel published one of these editorials, I wrote this as part of my conclusion:

It would be so problematic if, after all of this, nothing changes. I don’t think that option is still on the table. The “transformational change” those four companies talked about is already underway, at least in a negative sense. It’s just a question of if the outcome is a better trade show than the one those four walked away from.

Almost exactly four months later, I’m here to tell you the same thing.

The model of the PCA Convention & Trade Show is broken. It’s been broken for a long time and it’s not going to suddenly get better without surveying its attendees and exhibitors and then a complete rethinking of what the trade show should look like in the next decade. The issues with increased costs aren’t going away. The internet isn’t going away. And the basic inefficiencies caused by those two realities and others aren’t going away.

Like I did at that point, I’d remind everyone that many trade shows in other industries are struggling for the exact same reasons. The internet made people reconsider the need for face-to-face meetings, a shift recently accelerated by coronavirus. Trade shows are in the same boat.

As I’ve suggested for a while, the trade show needs to be smaller and focused on things that are dramatically better, or simply necessary, to do in person. I’m of the belief that education and training are the centerpiece of that. I would think that working groups assisted by experts and specialists aimed at solving specific issues the industry is facing, on macro and micro levels, would be another area where doing it virtually wouldn’t produce optimal outcomes.

It simply cannot be “well, it’s a bit better to do it in person, but we could do it over the phone or online.”

That starts with asking your members for input and then understanding that “show deals” cannot be the driving force of an event that will be around in a decade.

10. THE PROBLEMS WITH CIGARCON WEREN’T THE EVENT

I wrote 5,000 words about canceling CigarCon and I failed to drive home one very important point: the issue with CigarCon wasn’t the idea of having an event like that. Rather, it was that CigarCon didn’t address the problems with the trade show, and the PCA—and to a small extent the CRA—botched the process about how to create an event like that.

If I was running the PCA in January and dealing with the fallout from the Altadis U.S.A./Davidoff/Drew Estate/General announcement, and the option was to try CigarCon 2020 or not, I probably would have tried it.

While I think that CigarCon, as constructed, was at best a naïve planning of an expensive event few people wanted, the trade show as currently constructed is so broken that even a poorly planned and unprofitable Hail Mary seems better than changing nothing, which seemed like the path the PCA was headed on for this year’s event. Oh, there was going to be a panel with (former) professional athletes. One change.

Sure, it would have probably lost money. Who knows if any customers would have shown up? I’m also sure some people would be pissed about the flip-flopping, but it’s better than changing nothing at all and pretending it will fix itself.

11. THE PCA WILL HAVE TO ANSWER FOR ALL OF THIS, JUST NOT TO ME

Unlike some other people in cigar media, I don’t really care that the PCA made the decision to break yesterday’s news via Cigar Aficionado. It’s the PCA’s news to make and I can certainly understand trying to control at least some of the narrative given how things have been going lately.

What I find unacceptable is the PCA’s increased silence when things go wrong.

Scott Pearce never publicly gave me any statement following the Altadis U.S.A./Davidoff/Drew Estate/General announcement. That’s not good on a basic you lost 15-20 percent of your revenue in one day and you aren’t going to comment level. It’s probably worse when you are a non-profit whose proceeds fund valuable legislative and legal work.

In fairness to Pearce, I suspect that his decision to not comment isn’t entirely his. I’ve found him to be rather open in terms of answering questions, sometimes too open. Just last January he seemed eager to respond and then, after talking with some board members, he suddenly wasn’t.

This wasn’t just an issue with halfwheel. In January—to my knowledge—the PCA didn’t give any statements to media and then chose to send out its announcement to retailers but specifically not media. That’s problematic as any media that attends the trade show has to be a member of the organization, but that’s probably the 197th most pressing issue in this post. In fairness, more than a week after the news broke, Pearce did make an appearance on Cigar Coop’s podcast where he addressed some of these topics.

Yesterday morning, a few hours before the announcement was made public, I sent Pearce an email about speculation that the decision to cancel the trade show was forthcoming. He replied after the news broke and said that he was busy and there was a press release coming, which was sent.

However, that press release didn’t address some very obvious and important questions. Yesterday afternoon—over 24 hours ago—I sent Pearce the following questions:

  • Was the vote to cancel unanimous by the executive committee?
  • Is the organization using an impossibility clause or something similar to relieve the financial commitments?
  • I think this is relevant regardless of the answer above, has the organization done estimates to determine the costs that it will still owe for the 2020 event? If so, does it have a ballpark number?
  • Has the organization estimated what the loss in profits from the show will be?
  • Will exhibitors be refunded deposits by PCA?
  • If PCA members have made hotel reservations through the PCA’s link, will they be refunded?

He has not replied to that email. He had previously been very quick to confirm that the trade show was still happening whenever I asked him over the last couple of months, however.

Much like in January, the PCA isn’t doing itself any favors by not responding to at least some of these questions. If it’s giving refunds—which it sounds like it is—then why not make that clear? That should have been in the press release. If it did a financial analysis, which I hope it did, why not share it?

Since it’s a non-profit, almost all of this will get out one way or another, as the PCA has to disclose these types of things, though we might not be able to see the numbers for 18 or so months.

I’d also think that most organizations who just lost the majority of their revenue for the year would probably tell their members what the broad financial impacts might be, but the PCA hasn’t been that organization in my experience.

If you’re a PCA member, I’m guessing you too want to know the answer to most of those questions. Ask them. Perhaps your luck will be better than member #19458.

12. THE FIRE NEXT TIME

It’s time for the leadership of the PCA to change.

Well, it’s been that time for quite some time, but it’s five months into the year, two catastrophic trade show announcements have been made and there’s further evidence that its current leadership doesn’t know how to properly run an organization that meets the needs of the cigar industry in 2020.

If you look at what the PCA does, it basically boils down to:

  • Operating the trade show
  • Lobbying efforts
  • Funding lawsuits for cigar interests
  • Operating media publications that you probably haven’t read lately
  • Membership outreaching/training

Only one of those pillars—the last one—is really focused on retailers. And the PCA itself, as its name change and the explanation of its rebrand makes clear, is increasingly trying to be more than just an organization for retailers.

As has been mentioned many times before, it has not been just a retailers’ organization for quite some time.

Because of the trade show, both individually and in totality, the PCA’s largest contributions come from cigar manufacturers. Perhaps more importantly, the cigar manufacturers are the ones who take nearly all of the personal financial risks and bear the financial fallout when the trade show is run poorly. And yet, the manufacturers have no power. Actually, no manufacturer has any real power at the PCA.

The PCA’s executive committee is comprised of five brick-and-mortar cigar retailers and Pearce. And the executive committee is all-powerful.

It’s the one that decided to cancel the trade show. It’s the one that decided to promote and then cancel CigarCon. It’s the one that decided to go through with the rebrand without a formal vote from its members. It’s the group tasked with the meetings with the aforementioned four manufacturers which resulted in the trade show losing at least 20 percent of its show floor commitments. And it’s the group that should be held responsible for all of the botched moments that went along with all of those things.

I understand that the PCA’s press release says that it consulted about canceling the trade show with the manufacturers on the Associate Members Advisory Board, but if for some reason the manufacturers on the AMAB voted to do the trade show, would the executive committee have gone along with it? If the answer is no, then the AMAB—once again—doesn’t really have much power.

Not only are the five executive committee retailers afforded an extreme amount of power, but they also increasingly blindside their members with bad news while not getting feedback about major decisions. I’m not sure what the argument is for not surveying your members about any of the major decisions of the last year before they were made, and that includes the situation regarding Altadis U.S.A./Davidoff/Drew Estate/General. And the secrecy regarding these plans—even if tidbits of it eventually gets leaked onto this website—only adds to the animosity between the leadership and its members, both retailers and manufacturers.

Even if there were legal ramifications with the Sands by doing it, polling every exhibitor that had agreed to have a booth at the 2020 trade show and asking them for input, at once, is the right thing to do.

And given that the world is in the middle of a global health pandemic, it probably would have been smart to poll retailers about their general thoughts about attendance, including whether they’d be willing to attend under certain conditions: no smoking, masks required, social distancing, etc. It also probably would have been a good idea to figure out how many of its members were closed, as well as other non-trade show-related inquiries.

Part of the PCA’s problem, including why it’s increasingly frustrated with halfwheel, is that articles like this are being written now and that wasn’t happening previously.

These types of critiques weren’t what you would see in old copies of Tobacconist or SMOKE, and while some in the blogosphere would poke around, most of the problems focused on how media was being treated by the organization, not the organization’s decisions in a broad sense.

This is the third major problem for the trade show since the last one concluded. And this is the third editorial like this that ponders why the organization’s power structure hasn’t yet changed.

I personally don’t have any issues with the current executive committee as retailers. But as a collective board, like the ones that have come before it, they are frustrating. I’d like there to be a trade show not just in 2021, but in 2031 as well, and it seems quite clear that both more and different voices need to have legitimate seats at the table, not just with the trade show but the organization itself.

Until either dozens of manufacturers collectively threaten to not attend the trade show or the PCA itself agrees to surrender power, the costly missteps of the industry’s most important event and biggest trade group seem bound to continue because the same homogenous and insulated power structure will exist.

I get, for rather simplistic reasons, that these people don’t want to surrender power to cigar manufacturers. But I think it’s worth pointing out that the people who make up the board aren’t really the ones responsible for the fact that the organization has $5.5 million in assets. They aren’t the ones responsible for the thousand-plus members the PCA claims it has. And they aren’t the ones responsible for the power the organization has in this industry. They inherited it.

They might all be good retailers, but that doesn’t earn them the right to wield this much power with so little oversight.

There are a number of leadership structures that make more sense than the one that currently exists. One that represented the entire industry, like the PCA’s new name, would be an ideal solution. A mixture of cigar manufacturers, retailers, reps, suppliers, etc.—and in that order in terms of the percentage of seats at the table—seems tough to argue against.

A structure where manufacturers and retailers have equal say and equal seats would seem like the bare minimum, though I’m guessing that’s a far reach without some sort of threatened protest. The sticking point for years has been that the PCA has money and the CRA doesn’t. It might be true in terms of literal bank statements, but it’s not realistic with who is taking the risks at the trade show and who is responsible for shouldering the bulk of funding the lawsuit and lobbying efforts. More importantly, when all of this goes south, one side will be bailing out the other.

I don’t think that either of the hypothetical structures or any new structure will be perfect. It could very well be the case that if five manufacturers were in charge today that the trade show would already be run into the ground. But at least the people inflicting the damage would be the ones with the most to lose.

Since the coronavirus-related closures started and the trade show’s future became in jeopardy, I couldn’t help but think about how different things would be if the five people making the decisions were five people who had booths at the trade show. I also think that if the same five people who made the decision were five cigar manufacturers and not five retailers—five exhibitors instead of five attendees—I think these people would have done things differently.

If you took a blank sheet of paper and drew up plans for a new organization that is going to have a cigar trade show, do lobbying efforts for cigars, fund lawsuits and operate some outreach to cigar retailers, there are a lot of different ways that organization could be led.

But it wouldn’t be with five brick-and-mortar retailers more or less in complete control.

Then add more conditions and realities. Say that the trade show primarily funds the organization, and the manufacturers are the ones who spend the most money with the organization at the trade show, and the manufacturers are the only ones who personally shoulder financial risk at the trade show.

You wouldn’t end up with a group of five brick-and-mortar retailers.

And if this hypothetical organization, within the course of a year, managed to have its largest new initiative in years backfire, lose four of its five largest customers, and then had to cancel the one thing that basically funds the whole organization?

You would fire everyone in charge.

PCA 2020 Premium Cigar Association
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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.

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