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Point-Of-Purchase Changes Tobacco Industry

Point-Of-Purchase Changes Tobacco Industry

for Retail Tobacconist

by Larry Ciptak

 

The 30-year-old Punch and Bances posters loom over Bloom Cigar's retail showroom like monuments to an era past.  "Famous the world over for over a century" claims the Punch, while the Bances is "for the man who misses his Havana."

Amidst these antiquated merchandising tools are 1990's-mode promotional items: humidors with built-in lighters and fancy cutters, full-color catalogs, booklets on how to choose a cigar, pipe or pipe tobacco and a variety of specials including "buy one get one free" bundle cigars.

Though the venerable posters will probably remain at Blooms another 30 years, the economy and current market conditions are dictating that retailers take a more proactive role in promoting their product lines.  And manufacturers and distributors are responding by offering retailers' a variety of programs and products geared to help them do just that.

Point-Of-Purchase

Point-Of-Purchase (POP) advertising–table top displays, kiosks, in-house coupons and circulars, videos, etc.–works.  According to the Point-Of-Purchase Advertising Institute, POP advertising of tobacco products and accessories increases sales by 28-percent.

"We believe [POP] is important to do from time to time, though we don't call advertising, we call it promotion," said John Rano of General Cigar.  General offers retailers POP displays for both their Macanudo and Partagas lines of cigars.  "We just did a Partagas one at the end of last year, where we offer to the consumer a "buy four cigars and get one free," and with that we provided big easel counter top signs to the retailer at no cost, to put up and build a display around this beautiful counter sign," said Rano.  General has also offered special box promotions with the same deal–buy four get one free–in it's own box, rather than loose cigars, Rano noted.

 

Arturo Fuente offers on a monthly basis a special promotion on their cigars for tobacconists, said Stanley Kolker of Fuente.  "In addition, we have offered to the tobacconists a contest where if they send in a picture of a window display or a counter display that features our cigars only, and they keep it up for one month, they will eligible to win a trip to the Dominican Republic," Kolker said.

Fuente also puts out four times a year a newsletter called "Fuente Forum", telling what's going on within the company.  "We give [tobacconists] suggestions on how they can improve their sales, and we make them more knowledgeable about how cigars are made.  We also provide several booklets on how cigars are made, including the difference between our handmaking procedures so they get a deeper knowledge of how a well-made, handmade, cigar is produced," according to Kolker.

"We will soon be making available a book that Carlito [Fuente] has just finished writing on the procedure we use for making handmade cigars, a 12-page book, made available to the retailer either the end of this month or early March," said Kolker.

U.S Cigar provides retailers with a cigar humidor, glass with bricks and framed in wood, a permanent display, said Don Ward, VP of Sales for Sparta Industries.  "We also provide trays to display our WD bundles and a mahogany display for our Don Rex cigars, said Ward.

"Retailers like [POP] advertising, especially when a customer is browsing.  Every company calls their cigar shapes by a different name, and with [POP], they can view whatever particular line you have and see what size that cigar is.  It's very important," Ward said.

Santa Fe Natural Tobacco Company–who manufactures a line of additive-free cigarettes and tobacco products–does not use "specialty" or promotional items as an incentive to retailers or consumer-direct customers to purchase it's "American Spirit" products, according to company representative Robin Summers.  "Instead we rely on the high quality of our products and consumer word-of-mouth to create demand-pull for the selected types of retail outlets which we target," said Summers.

POP is an "important factor" in the marketing of American Spirit products due to the limited number of outlets where American Spirit products are sold, Summers said.  "To help a store identify itself as carrying American Spirit we simply took the strong graphic image, that of the "Tobacco Chief" on each pack of cigarettes, and blew it up to a poster-size representation which retailers can put on their front window or door," said Summers.

Hollco ROHR "offers a certain amount of display material for our products," said Larry Weinfeld, President of Hollco.  "For example, we offer pipe trays, and for some of our cigar products we have display material for counters and things like that.  They come as a prepackaged deal.  No glass humidors, but we do have a display unit for imported cigars.  We don't go into [POP] for our humidified cigars but we do offer racks or display units for our dry cigars," said Weinfeld.

But Weinfeld questions POP Advertising:  "It's not too effective.  Half the time it's not used properly," he said.

Most important for POP is to "put it up where it can be seen," said Weinfeld.  "I think that doesn't always work.  To get the ultimate effect out of it, you should have another promotion or sale on the item.  I think that would help tremendously as well," he said.

But others see POP as critical, especially when introducing a new product to market.  "From our standpoint, [POP is] extremely important, especially if the manufacturer wants to break with a new item.  If you don't have POP, the retailer will tend to take that item and stick it on the back shelf.  But if you supply him with that POP material, he's going to put it on the front counter where it can be seen," said Allen Roth, Sales Director for H.J. Bailey Co.

"As a matter of fact, last week, we had a manufacturer come to us with a new product, and he laid out the whole program and he said that within a month they would have the POP material ready.  I said let's not even promote that product for a month until you have the materials available.  That's how important I feel it is," said Roth.

Tried-And-True

POP notwithstanding, special deals offered from manufacturers and distributors to the retailers remain the main avenue of promoting products.

"More than anything, our stock reduction program and price reduction help retailers move our products.  With the stock reduction, if [a Mastercraft] product doesn't sell, we'll swap it for something else.  We'll never let a retailer get stuck with our goods," said Judy Weinberger of Mastercraft Pipes Inc.

In addition to offering samples to retailers, General Cigar replace cigars that don't sell.  "In other words, the retailer doesn't get stuck with that cigar," said Rano.  "We replace it at no charge to the retailer."

U.S. Cigar also offers a buy-three-get-one-free, "which is pretty standard," said Ward.  "Most of our promotions are quarterly.  We'll run 10-percent free goods on selected Don Rex cigars or WD Bundles, so for about every ten boxes, [retailers] get a box free," Ward said.

Hollco runs "what we call 'deals' to our retailers on a quarterly basis, and put on specials on all sorts of our products, ranging from buying 12, getting 14, things of this nature, to just straight discounts on particular items," said Weinfeld.  "That is probably our most effective promotional program.  We find that stimulates interest in products.

"I think everybody is looking for a sale at this point, no matter whether it's the retailer or the consumer, and hopefully the retailer passes these savings onto the consumer.  But that we have no control over," Weinfeld said.

Retailer Response

"My favorite [POP program] is the one that makes me the most money, not the one that is the sexiest or the most interesting marketing-wise," said retailer Ben Henderson, of Lone Star Tobacco in Houston.  "Whenever the manufacturer has a POP program, I use it.  Frequently those programs are 'dollars-off' ones for the consumer."

POP programs increase sales some, but a lot of what POP does is to move people from brand to brand, said Henderson.  "It also gives the consumer a warm feeling about my store, which will tend to bring him back.  It builds loyalty," he said.

Henderson characterized Lane Limited's deep-discount program for their Dunhill brand of super-premium cigars a "real exciting program, and I sold a lot of them because [consumers] thought it was a good deal.”  He also does co-op advertising with Consolidated.  “[Consolidated] provides me with ad slicks that make the development of a professional-looking advertisement easy for me.  They co-op 50% of the costs of my ad.  If I spend $100, they give me $50.  If I spend $1,000 they give me $500," said Henderson.

"The best POP is where I can show my customer pictures of the manufacturing of the cigars that he is smoking," said Diana Gits, owner of the Up Down Tobacco Shop in Chicago.

To accomplish this, Gits goes "all over the world and take spectacular high-resolution videos of the cigar manufacturers.  I have all of the tobacco fields in the Dominican Republic, and of the Arturo Fuente cigar factory.

"These videos are the best [POP advertising] that could ever be," said Gits.  "The customer wants to entertained.  It's not a matter of just selling them something anymore.  They want to have fun."

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SIDEBAR:

 

In an era of non-smokers' rights a haven exists where cigar smoking is not only condoned, but required.

Every Saturday at Bloom Cigar Company in Pittsburgh, cigar aficionados gather to eat, drink, lie about their accomplishments, solve the world's problems–and to smoke cigars–lots of them.

Coined "Cigar Camp", the weekly gala is not only a great way to foster an sense of community amongst smokers, but also an effective way to sell cigars.  Marc Adams, owner of Blooms, said "[Cigar] Camp is not only a lot of fun, but business has been great on Saturdays since we started this tradition.

"These guys go out of their way to bring their friends down here to relax and enjoy a cigar in good company.  There are new faces here every week.  We even received a call from a gentleman in California who wanted to know how to join Cigar Camp so he could visit on his next trip," said Adams.  There is only one requirement–an appreciation of fine cigars, he said.

The local media picked up on the event, and the resultant coverage "was unbelievable for business," said Adams.

"Cigar Camp" has been such a hit that the "campers" have had their own golf shirts printed up, just held their second annual Super Bowl party, and are starting a monthly dinner event at local restaurants who allow cigar smoking.  Every so often conversation turns to a contemplated "field trip" to Florida to golf and to visit the Punch factory in Tampa.

Punch and Hoyo De Monterey, both produced by Villazon & Co., are by far the cigars of choice of the campers.  Villazon every so often sends special boxes of cigars for the campers to sample and enjoy, said Adams.

Cigar Camp was not developed with a specific marketing intent in mind.  The Blooms regulars–doctors, lawyers, students, laborers, businessmen, bikers, you name it, they show up–decided to make Saturday's "the boys' day out," said Adams.  They brought cold cuts and bagels, pastries, a little hooch, a lot of stories and jokes, and a tradition was soon born.

Between 50 and 100 show up on a typical Saturday, said Adams.  "Sometimes the smoke is so thick you can smell camp two blocks away," he said.  As Blooms is located on Pittsburgh's trendy South Side, walkers-by routinely provide looks of amazement as they gape in the window to the conflagration of campers.  Some of them poke their heads in the door and are never seen again, while others come in and return week after week.

Many of the regulars to Cigar Camp are between the ages of 20 and 35, said Adams.  "We find [Cigar Camp] an effective way to bring the younger crowd in here, and they typically buy super premium cigars," he said.  "These guys are the future lifeblood of our industry, and camp is a great way to get them here and keep them here."