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Clandestine cigars?

havanaalhavanaal Posts: 155 ✭✭
How is it that some brands refuse to allow general advertising and catalogue sales? The brand that comes up the most here lately is San Lotano, but I know there are others. I don't understand why someone would produce a product and not hope to market it as widely as possible. So...the question is Why?

Comments

  • San Lotano was released a tobacconist-only line by A.J. Fernandez and his first solo nationally distributed cigar line. That's why you don't see it here on cigar.com and other, lesser internet tobacco sites ;)


    As to the question, part of making your brand a boutique brand with cachet is to avoid the idea it's a mass-market product and that it is rare and exclusive. Part of it is cost of advertising, not having a specific demographic (cigar smokers are all over, in all age ranges, with all tastes and different walks of life) to really market to, and a politically correct choice to not accept tobacco advertising because a small mob of people with pink hats or something would rage against your mag/website etc.


    I also imagine that here in the U.S. there's lot of legislation and rules that prevent any tobacco company from advertising in specific media or with a certain frequency as the war against freedom and choice rages on by those who convinced people, or have been convinced that one smoke can kill you...


  • kuzi16kuzi16 Posts: 14,634 ✭✭✭✭
    drpepperdude:
    San Lotano was released a tobacconist-only line by A.J. Fernandez and his first solo nationally distributed cigar line. That's why you don't see it here on cigar.com and other, lesser internet tobacco sites ;)


    As to the question, part of making your brand a boutique brand with cachet is to avoid the idea it's a mass-market product and that it is rare and exclusive. Part of it is cost of advertising, not having a specific demographic (cigar smokers are all over, in all age ranges, with all tastes and different walks of life) to really market to, and a politically correct choice to not accept tobacco advertising because a small mob of people with pink hats or something would rage against your mag/website etc.


    I also imagine that here in the U.S. there's lot of legislation and rules that prevent any tobacco company from advertising in specific media or with a certain frequency as the war against freedom and choice rages on by those who convinced people, or have been convinced that one smoke can kill you...


    that about sums it up.


    one more afterthought...
    the B&M is one of the last places you can go to smoke a cigar (besides my back yard but even that is under attack). giving a B&M exclusive cigar and not selling online or through catalogs will help push people to the shops that hold up the industry.

  • havanaalhavanaal Posts: 155 ✭✭
    I understand the boutique concept, but I would still think profit margins favor mass marketing. Interesting business, this cigar thing.
  • xmacroxmacro Posts: 3,402
    havanaal:
    I understand the boutique concept, but I would still think profit margins favor mass marketing. Interesting business, this cigar thing.
    It certainly is an interesting industry; not only the people, but the consumers ;) I think Alex once said that the entire industry is valued around $1 billion (so yeah, Bill Gates could buy the entire cigar industry if he wanted to)
  • docbp87docbp87 Posts: 3,521
    havanaal:
    I understand the boutique concept, but I would still think profit margins favor mass marketing. Interesting business, this cigar thing.
    There is currently a huge move to support B&M shops in the industry, since they are sort of the last refuge for the cigar smoker to partake of their hobby unfettered by growing legal BS. Online and mail order services are usually able to sell their product at significantly lower prices, because their volume is generally so great that it makes up for it. The B&Ms need help, and producing products that are only available at them forces interested smokers to support their locals. I love this idea, and am glad that people like AJ are doing this.
  • havanaalhavanaal Posts: 155 ✭✭
    Agree. Unfortunately, there are many of us that don't live near a decent B&M. I used to have a great one, but NY successfully taxed it out of existence.
  • firetruckguyfiretruckguy Greeley, ColoradoPosts: 2,529 ✭✭✭
    havanaal:
    Agree. Unfortunately, there are many of us that don't live near a decent B&M. I used to have a great one, but NY successfully taxed it out of existence.
    +1
  • dowjr1dowjr1 Posts: 600
    Yes I too love (as most of us do) finding a good deal on cigars online. That said, I make a concerted effort to stop in the local B&M occasionally and buy some sticks. Often they have something I couldn't easily find online or I can buy one or two of something I want to try and not have to buy a 5 or 10 pack.
  • havanaal:
    I understand the boutique concept, but I would still think profit margins favor mass marketing. Interesting business, this cigar thing.
    Not entirely true. It is about supply, demand and elasticity. Even then, if I can sell 1000 sticks at $3 or 500 sticks at $6, assuming an equivalent marginal percentage on both, the profit will be the same. I am of the opinion that sometimes folks in the industry don't properly price things based on supply and demand, but in theory this is how it works. Some things can't be produced in any more numbers and the demand is so inelastic that all mass marketing would do is make a product more well known.

    If there were no limits on production possibility, then I would say that mass marketing could provide greater margins, if the producer could acquire the supplies to make cigars at a lower per unit cost. However, there is always going to be some limiting factor. Some things people don't always think about are the cost of labor. To produce more of something you generally require either more laborers or more production out of existing laborers. If I make widgets and currently employ everyone nearby who will make them for me for $10/hour, how do I produce more? I could raise wages to $13/hour. That would likely get me more workers. Of course I just raised the average labor cost of every widget produced. I could work my laborers longer, but you run into a myriad of reasons why this is either not feasible or also adds marginal cost to each widget.

    At the end of the day some things can make more profit if mass marketed for myriad of reasons, while some things can't. Marketing a product to a wide market does not necessarily mean more profit than marketing to a small market, even if there is a market for the product.
  • havanaalhavanaal Posts: 155 ✭✭
    Very true in a limited production line. If you produced, say 10,000 high performance sports cars you may allocate a few each to the high end dealers, knowing you can sell them all. There would be no point in getting them out to the brokers, or even advertising them. Sold. But it's a lot easier to match a $6 cigar to a buyer. And even the top of the line products are offered all over the world through multiple outlets. My only point is that by granting preference to exclusive dealers, you are shutting out thousands of consumers who should also count as fans of the product.
  • There are other factors involved too. Take beer, for instance. There is a beer called Hopslam made by Bell's that comes out every year in January. It retails anywhere from $15-19 for a six pack. It is good. It is expensive. IMO, the expense is more than the beer justifies, even as good as it is. I then turn right around and buy one every year. While Bell's could produce this year round if they really wanted to, people would not rush to buy it the same way they do now, nor could they charge what they do for a sixer.

    At the end of the day there are so many variables to why or why not it makes sense to market something a certain way that, without having intimate knowledge of the company and its business model, trying to say definitively what is their most effective way to market themselves is really just conjecture.
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