A Post-Tax Guide for Tobacconist and Cigar Manufacturer Survival

While we will undoubtedly continue to fight the high rate of taxation for “Other Tobacco Products” in New York, the cigar industry also needs to prepare for what could be a new reality. Betting everything on a tax reduction makes about as much sense as making any unhedged business play. There’s a risk that we’ll be taxed at the 75 percent rate for a while, so tobacconists and manufacturers need to adjust their operations and marketing strategies.

So, what can you do? Believe it or not, you aren’t out of options. Of course, tobacconists and cigar manufacturers are now fighting more of an uphill battle than ever before, and the returns will be harder to realize. Yet, if the first goal is to stay in business and the second is to eke out as much profit as possible, there are a few things you can do to manage (and grow) your business in New York despite the 75 percent cigar tax.

So, tobacconists and cigar manufacturers, here’s my advice to you … free of charge. Hey, you already have to pay the higher taxes; I’m not going to hit you up for a cut.

Tobacconists:
1. Mind the shopping and smoking experience: you need to do everything you can to put asses in seats and keep them there. Coach your cigar shop staffs to become more accommodating (even if they’re great already) on issues that don’t have a revenue impact. Make sure your guests are comfortable … treat them like guests. Make it easy for a customer to buy that second stick when he’s on the fence about whether to stick around for a while.

2. Get a partner: specifically, get a manufacturing partner. If you don’t have a sponsored lounge yet, now is the time to do it. Manufacturers will be looking for any edge they can get in an already crowded marketplace, and they recognize how powerful the sponsored lounge tactic is. Take this approach, and you can improve your space and bolster sales using other people’s money.

3. Maximize event sales: there’s no shortage of sales among cigar retailers right now, so adding events may not be the answer. Instead, figure out how to do them better. Work with the manufacturers to get more perks and deals for your customers, and make it a priority to drive box sales. But, be careful not to get too generous: you want to make sure these deals don’t cut too heavily into future sales.

4. Become more social: some retailers are doing a great job on the web – W. Curtis Draper, Uptown Cigar, De La Concha and others have grown their social media presences substantially, and those are just the first to come to mind. If you’re already on Facebook and Twitter, figure out how to improve your presence to drive sales.

Manufacturers:
1. Slim down your supply chains: if there is any waste left in the process by which cigars go from seed to shelf, you need to get rid of it immediately. In some cases, this may mean modernizing infrastructures and logistics. Do it. Being more efficient doesn’t have to come at the expense of tradition, and making your cigars an attainable luxury will prevent the traditions our industry holds dear from dying completely.

2. Spend less time at home: you need to be on the road as much as possible. If people know you, they’re more likely to buy your cigars. Get out to as many shops as possible, press the flesh and push your product face-to-face. Cigar smokers really want to know the brands they’re smoking – and that means they really want to know you.

3. You need to be social, too: invest in your websites … and bring them into the modern age. While you’re at it, there’s no excuse for not having at least a basic Facebook presence. Hire a pro if you want to drive a real return on your social media investment. It makes a difference.

4. A quality cigar is not enough: remember the days when saying “we make quality cigars” was enough to resonate with consumers? Those days are over. You still have to do a great job, but being great doesn’t speak for itself. You need to turn your company into a marketing engine. When the consumer steps up to the point of sale, he needs to be thinking about your brand.

Related posts:

1. Post Office Won’t Let You Send Cigarettes
2. Does the Proposed NY Cigar Tax Come with Systemic Risk?
3. The Future of Cigar Companies, Big and Small
4. New York Tobacconists: “Taxes cost jobs”
5. Tobacconists Take a Stand in New York

Tags: cigar business, cigar lounge, cigar manufacturing, cigar shop, cigar taxes, De La Concha, marketing, New York, OTP, social media, tobacco taxes, tobacconists, Uptown Cigar, W Curtis Draper