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February,
2006

THE FUTURE OF TOBACCO RETAILING:
DO ALL ROADS LEAD TO ONE PLACE?

When the National Association of Tobacco Outlets (NATO) - the five-year-old trade association catering to the relatively new class of trade known as tobacco outlets - set out to conduct a cigar survey of its retail members recently, it was hoping to gain some insight on something it already new: a fair amount of outlets do a fair amount of business in the cigar category.

What it discovered when it compiled the results of the survey was even more surprising: a whole heck of a lot of outlets are doing business in the cigar category - especially premium cigars.

Mind you, details such as the percentage of total store sales attributed to cigars were not divulged, but the few highlights were quite insightful. Among the findings: 91% of surveyed stores sell premium cigars, and 98% sell domestic (mass market) cigars. (For additional details on the findings, see NATO News, page 80.)

According to NATO, one of the most important conclusions that can be made from the survey data is that the line between "tobacco outlets" and "tobacconists" is virtually non-existent. "NATOmembers are true tobacco retailers offering their customers a broad range of tobacco products, including many brands of premium and domestic cigars," wrote Thomas Briant, NATO's executive director in the association's most recent newsletter. "This is why an increasing number of cigar manufacturers have become members of NATO and support the association's industry-leading grassroots legislative programs."

Indeed, the laundry list of premium cigar brands that outlets said they sell reads much like the traditional tobacco shop, and includes: Altadis, Fuente, CAO, Camacho, Cusano, General,Graycliff, Rocky Patel, J.C. Newman, Padron, and Toraņo, among many others.

Velma Hartley, NATO's president, doesn't mince words on the matter. "The results from the survey should put to rest once and for all the notion that tobacco outlets sell primarily cigarettes," she said.

For outlets, the change has been a matter of diversification, as the emphasis was concentrated more heavily on cigarettes when they first burst onto the scene nearly a decade ago, even if cigars - domestic brands more often than not - were always part of the product mix.

"No one had to convince me that that our members had diversified their product selection to include a wide variety of domestic and premium cigars to complement the sale of cigarettes, smokeless tobacco, pipe tobacco, RYO, and tobacco accessories," Hartley adds.

To us at Smokeshop Magazine, it all makes perfect sense, since we've taken a "holistic approach" to reporting on industry issues for years. Smokeshop readers represent the single largest group of tobacco retailers in the industry, crossing the lines from cigar boutiques to traditional full line tobacco shops to tobacco outlets. The hotpoint issues affecting them are all the same.

Or, as NATO notes, we're all in this together.

"Tobacco retailers of every kind...face the same challenges of fighting unfair tobacco taxes and tobacco restrictions," concludes NATO's Hartley. "We are all more alike than we are different, and it is these similarities that should makes us realize how important it is to work together to protect the right to sell and use tobacco products."

E. Edward Hoyt III