October 1998
Volume 25
Number 5

1998 RTDA Trade Show & Convention
by Bob Ashley

With a dizzying array of merchandise to select from, retailers had the upper hand at the industry's traditional merchandise order-writing show. This year, the major manufacturers came on strong, with numerous deals and strong support.

VegaFina, an old Havana brand name reintroduced as a value-priced line, from Tabacalera.
Established cigar companies were attempting to reassert their market dominance while industry newcomers were trying to hang on through a weeding out period at the 66th Annual Retail Tobacco Dealers of America (RTDA) Trade Show and Convention in Nashville, Tennessee.

"There is a tremendous unsettled market," said Edgar Cullman Jr., president and c.e.o. of General Cigar Holdings, Inc., the publicly-owned parent of General Cigar Co. "There is still an enormous number of new brands that are trying to find a home. Many of them will survive, but there are a lot of them that won't."

Retailers attending the trade show found most major manufacturers offering rejuvenated established brands, extensions of existing brands, and - in rarer cases - whole new lines. Several, like General Cigar and Consolidated Cigar Co., were taking on new general accounts for the first time in several years and assuring that orders made at the show would be fulfilled forthwith. Meanwhile, new companies that entered the market with medium- to high-priced cigars that found favor on retailer's shelves during the boom and resulting shortage of popular brands found their fortunes fading.

The full-flavored Macanudo Robust is the newest extension to General Cigar's popular Macanudo line.
"Anyone who started up within the last year has got to be facing death, unless they've got something really unique," said Steven Barad, c.e.o. of The Original Cigar Clothing Co. of Sunrise, Fla., manufacturer of the whimsical Fat Cat brand, a medium-priced Dominican cigar that has been on the market since 1996. "The weeding out will be helpful to the industry. We are going to be one of the ones who survives. I don't think this industry works with only five suppliers. There needs to be room for 20 or 30 companies that put out a good product at a fair price."

"The industry certainly isn't like it was a year or two ago," said Leonard Brick, president of Brick Hanauer Co., a Waltham, Mass., manufacturer and distributor of the Honduran Santa Rosa and Mexican Madrigal brands. "The show next year will be a lot smaller - maybe half the size it was this year. But that's good.

"A lot of stores are backlogged, so they aren't ordering. We did better than I expected, though," admitted Brick. "We've had some good-sized orders."

Victor Migenes, president of La Plata Cigar Co., which manufactured cigars in downtown Los Angeles for almost 50 years before recently sending most of its production to the Dominican Republic and Honduras, said the new market dynamics mean that smaller companies will have to employ smarter strategies. "We are obviously going to survive, but there will be companies that will be washed under for whatever reason," Migenes said. "It's almost a clich answer, but the companies that survive will be the ones that have cigars that speak for themselves - a cigar that when a customer lights it up he says, 'That's damn good. Who's making it?'"

Continued on next page...