The Cuban Conundrums

As consumers and Tobacconists we are all familiar with the history of cigars as they relate to Cuba. In fact, Tobacconist University started as Cuban Cigar University after many fact-finding and educational trips to Cuba in the 1990s. The history and traditions of cigar making are undeniably rooted in Cuba. Yet, the most exciting developments and products in the cigar industry today are occurring in Central America, Africa, and the Dominican Republic. Our current and unprecedented Cigar Renaissance is occurring outside of Cuba yet it stands on the shoulders of hundreds of years of Cuban traditions and innovations.

With that said, learned aficionados understand the differences between quality and mythology. And with regard to Cuban cigars, there is a world of difference between perception and reality. Some say they can be the best and worst cigars in the world... But we can definitely state that the qualities of the soil and climate can produce extraordinary and distinctive flavors.

As retail Tobacconists we see first-hand the amazing level of Romanticism in our consumers hearts and minds. People ask us every day, "Do you have Cubans?", "Do you have Cohiba?" and when you ask them what their favorite cigar is, they often tell you it is a Cuban. Often, mentioning a Cuban as your favorite cigar can be a psychological/egotistical badge of honor. Yet retail Tobacconists know that the quality and diversity of product from outside of Cuba is outstanding and today's connoisseur does not need to smoke anything Cuban to be satisfied.

So what should retail Tobacconists do when customers bring in Cuban cigars to smoke in their shops? After all, you wouldn't drive through Wendy's and take it into a McDonald's to eat. In my opinion, all cigar lovers are part of a brotherhood of sorts, so in my retail shops we allow you to bring in whatever you want and smoke it. There are so few places left to smoke that it would seem heartless to kick a cigar smoker to the curb. And we must hope that these customers will value our service and give back in some other way.... in theory at least. But I fully understand why many retailers will not allow you to bring in outside product to smoke. That is their decision and as long as they pay the rent, it is their prerogative to make it.

Another unique feature of the Cuban Conundrum is that many American consumer and trade magazines allow Cuban cigar internet and mail-order companies to advertise on their pages and websites. I suppose a consumer magazine can justify that by saying they are catering to their readers' interests, but I can't imagine any justification for our trade magazines to allow this kind of advertising when it takes business away from American Tobacconists: this undermines the very clientele which they claim to serve.

These issues are convoluted by the U.S. trade embargo on Cuba and the unparallelled brand equity of "Cuban" cigars: there is no other luxury product in the world whose terroir is so revered, not even Bordeaux wines. But that is no excuse for companies who claim to serve Tobacconists to then undermine our businesses (i.e. see Keystone is Keystone). Sadly, retail Tobacconists sometimes seem like the under valued, under appreciated 'red-headed step children' of the luxury tobacco industry. And this is done by our vendors.... not to mention how society views us.

Keystone Is Keystone

Keystone, as defined by Merriam-Webster dictionary, is "something on which associated things depend for support" and "the wedge-shaped piece at the crown of an arch that locks the other pieces in place". Without the "keystone" in the latter definition, the structure will collapse. This is also the case with our industry's Keystone Margin: without retailers having the ability to make a reasonable markup, we will collapse. Retail Tobacconists cannot make enough money to sustain themselves without a reasonable markup on single cigars. Anything less than Keystone results in the commoditization of our products, declining margins, and ultimately 'going out of business' sales.

As a retailer, I do not sell any products that are not Keystone, nor am I interested in supporting any company that does not support my ability to make enough money to survive. Obviously, mail order and internet operations thrive on non-keystone products and deals: they exist to thrive on and undermine the brick and mortar (B&M) keystone marketplace. And our economy proves this is a viable strategy for growth - just look at the big box retailers and discounters in every community. But this market thrives on reducing quality and diversity in exchange for cheap homogenized products. One of the worst and most damaging examples I can think of is the Shop-Rite supermarkets here in NJ, where they have a large selection of premium cigars at retail prices that are unbelievably cheap. I, of course, refuse to shop there. But I am not single-handedly able to make any kind of impact on their bottom line. Obviously manufacturers should refuse to have their premium handmade products sold next to shaving razors and tampons. So what are they doing about it???

Ultimately, the Keystone Margin is that which B&M Tobacconists 'depend on for support'. And if we want to see our industry get new customers, introduce new and innovative products, and survive, we must protect B&M Tobacconists, which means protecting our margins.

This year the Supreme Court ruled that manufacturers do in fact have the right to establish a minimum retail price for their products. Lets hope our vendors have the chutzpah to protect their retailers, sacrifice a little in the short-term, and preserve our industry for generations to come.