For the ninth consecutive year, the Cigar Coop brand will be providing coverage of the International Premium Cigar and Pipe Retailers (IPCPR) Association Trade Show and Convention. We are proud to be a part of a very small group of media to say that. Our four-part series for the 2018 IPCPR Trade Show has you covered whether you are going to the show or following from home.
IPCPR 2018 Pre-Game – The Trends to Watch
Today, we look at some trends that we are seeing at the Trade Show. In some cases, these trends may not be large in volume, but they are being set by some of the more influential players in the industry. These trends are things we could see from others at the show who have not announced product. The trends could also set the stage for releases later in the year or into 2019.
The New Definition of New Product
The 2016 IPCPR Trade Show was one where there was a fear of the unknown. Less than two weeks after the 2016 Trade Show closed, many thought there would be a doomsday scenario for the cigar industry – and we would never see a new product on the shelf again. This was because U.S. Food and Drug Administration (FDA) regulations on premium cigars would go into effect on August 8, 2016. Essentially any new product developed would require the FDA’s pre-market approval – which is an expensive process. On top of that, non-grandfathered products introduced between February 15, 2007 and August 8, 2016 would have until August 2018 to demonstrate they were substantially equivalent to an existing product or request a costly pre-market approval – otherwise, the product would have to be removed from market.
Since then, the deadline for those products that were not grandfathered has been moved out to 2021, so there is a little breathing room. At the same time, I haven’t heard of any company requesting that process.
Yet you look at this year’s trade show and there are going to be plenty of new things. How is that possible?
What has happened is the cigar industry has adapted to working in a regulatory environment and the definition of “new” has changed. There are three factors that play have changed the definition:
- Stealth Products: Because of that August 8th, 2016 date, many companies put product into the marketplace without any marketing or fanfare. The idea was to introduce it before the deadline and then defer marketing and mainstream sales until a later date. I’ve referred to these “Stealth Products”. Some of these products have now begun to have their formal introduction into the market, even though they were originally sold and shipped two years ago.
- Reintroduction of Grandfathered Products: Several companies are reintroducing “grandfathered products” – i.e. those introduced before February 15, 2007, which were somehow discontinued since then. Some, like Illusione, have acquired dormant grandfathered blends.
- Rebranded Products: Many companies are taking advantage of the ability to rebrand products. This came about in 2016 as the result of a court decision that labeling changes do not constitute a packaging change. Many grandfathered products and even pre-August 8th products are now being rebranded, cleaned up, and released as something different.
Even in these cases, we’ve heard may factories say they have been “tweaking” the blends. This is because vintages of sources of tobaccos change over time. However much of the “blending” from scratch has been limited due to the regulations. In the end, what we are seeing is that while some of the blend innovation is sunsetting, there is still plenty of marketing innovation keeping “newer” offerings alive and well.
Value Priced Cigars
For whatever reason, this year many manufacturers are introducing value priced offerings. We are defining these as falling under the $6.00 price point and/or sold in bundles and/or 50 to 100-count boxes. They may or may not be long-filler.
- Drew Estate Factory Smokes
- Drew Estate Isla del Sol Maduro and Isla del Sol Sun Grown Gordito
- Global Premium Cigars Cachitos
- Island Lifestyle Importers Island Club Cigars
- JSK Toothpicks 2.0
- RoMa Craft Tobac Weaselitos
- Southern Draw 300 Hands
What is interesting about this list is the companies who are releasing the value-priced smokes in each of these cases are companies that have established a very strong connection with their consumer base in the premium space. It could also trigger more companies who fall into this category to push bundle offerings this year, or consider them for the future.
Mystery Blends
Slowly but surely, the days of learning about wrapper, binder, and filler are disappearing. This is not a new trend at the trade show, but it’s one that seems to be continuing to gain some steam. In some cases, companies are generalizing the leaves used in the tobacco and only specifying the region. In other cases, companies are simply not disclosing the blend components.
The trend of less specific or no blend information has definitely been evident in the press information that has been communicated by many companies and brands leading up to this year’s IPCPR Trade Show.
Companies like Caldwell Cigar Company and Dunbarton Tobacco & Trust were once quite open with the specifics of the tobacco. Both have cited the FDA regulations as reasons for not doing this at the same level any more.
My feeling here is this will continue and we will see more examples of this year and beyond.
The Packaging War
Toward the end of April, the Tobacconists Association of America (TAA) held its annual Convention at Casa de Campo in the Dominican Republic. At the time, General Cigar Company showed up with product (CAO Zócalo) that had FDA Warning Labels on it. It triggered massive pushback from both retailers and even some other manufacturers attending the TAA Convention. The problem was that many people feel like General Cigar jumped the gun – showing the warning labels on packaging before the August 10th, 2018 date when enforcement of warning labels would begin. At the time, the ruling from the District of Columbia Circuit Court was still pending in terms of the legality of the warning, so there was optimism – and this was much of the reason many thought the gun was jumped. While a recent injunction was granted by the D.C. Circuit Court delaying enforcement of warning labels until after an appeal is heard, my question was would we see a similar battle on the floor at the IPCPR?
In fairness, General was not the only company to do this. Other large companies were also showcasing packaging with warning labels. These tended to be from the bigger companies. While there were accusations from the smaller companies saying this was another tactic the bigger companies were using to wipe them out of business, the reality is a big company moves slower. In other words, they cannot quickly respond – there are processes that need to be followed, internal compliance issues to deal with, and supply chain challenges.
Many companies have invested a lot of money in making the packaging changes. With the Warning Label injunction coming a little more than a week away from the trade show; it’s probably too late for a company to keep on course. My gut tells me we will still see some packaging with warning labels affixed already.
The Decline of the Super Gordo Sizes
Every year, much is made about the lancero releases at IPCPR. Truth be told (and this year included), while lancero releases seem to always find their way to IPCPR, they are usually done in more limited quantities or released by companies focusing on small batch. On the other side of the spectrum, about four to five years ago saw the rise of the Super Gordos – those cigars with ring gauges above 60. It seemed by the 2015 IPCPR Trade Show, many companies were including a cigar in the 70 ring gauge when launching a line and these behemoth-sized cigars were here to stay.
Since then, there has been a steady decline. While certain brands like JFR Lunatic, E.P. Carrillo INCH and Asylum will always have a presence in the Super Gordo space, this year the amount of Super Gordos being released has been considerably down among brands not focusing in this space.
On the other hand, the 60 ring gauge cigars are definitely not going anywhere. These are as mainstay as Toro and Robusto in the U.S. market.
The Increase of Artesian Vitolas
One thing that has seen a slight surge has been an increase in artesian sizes. I categorize these sizes as figurados that go beyond a “standard bellicoso or torpedo”. Typically these sizes haven’t been the darlings of IPCPR, but this year there seems to be a surge of perfectos, diademas, salomons, and other cigars requiring more skill to roll.
- Casa Fernandez Aniversario Perfecto
- Davidoff Diademas Finas 50th Anniversary (although technically these sold before IPCPR)
- La Galera “The Cubes” (includes a Perfecto and a Hemingway)
- MQBA by Bombay Tobak (Diadema)
- Nestor Miranda Collection 75th Anniversary (Salomon)
It’s a trend we actually saw start to pop up a little earlier this year with the release of the EIROA First 20 Years Diadema and return of the Kristoff TAA Exclusive 49. Companies such as La Flor Dominicana and Black Label Trading Company have also been known to embrace these vitolas on a regular basis.
These cigars allow companies to offer small batch offerings and often can get higher margins. They are a great way for company to offer something to a retailer unique visiting its booth. This could be a trend that we see for several years.
Large Company Pre-Show Product Announcements
Three of the largest cigar companies: General Cigar, Altadis U.S.A., and Davidoff have all had changes in their marketing departments over the past year. We are already seeing some of the ripple effects of these changes this year.
General Cigar and Altadis have been much more known to hold back their releases until the day the Trade Show opens. This year (at press time) Altadis has announced the Montecristo Nicaragua, Romeo y Julieta 1875 Nicaragua, and the H. Upmann Connecticut Grupo de Maestros. General Cigar has already announced Punch Diablo and Hoyo La Amistad Black. They also did a limited release of Diesel Whiskey Row. Several retailers I talked to indicated the liked these changes because it helped them plan for the trade show.
On the other hand, Davidoff usually announces the bulk of its releases prior to IPCPR. This year has been much quieter as the company has only formally announced its Davidoff Diadema Finas 50th Anniversary. Whether the company will make more announcements and/or have “surprises” at the show is a bit of an unknown.
It’s quite possible between the time this article is written and the Trade Show, we see some late announcements, but regardless – Davidoff’s marketing direction has definitely changed since last year. This has included embracing other mediums than written press releases (i.e. podcasts, etc). The release of the Davidoff Vault Series has been done in a Viaje/Lost & Found-ish style. While this works for boutique companies, I think time will tell if the Appointed Merchants will embrace this. I’ve spoken to two Appointed Merchants on the changes. One seem somewhat perplexed by how the Diademas Fina release was done (he didn’t get it) and both were confused on the whole Vault series concept. Both indicated they missed the predictability of how things were in the past.
Finally, we shouldn’t leave out Drew Estate, who simply has done an amazing job at getting product information out to media and consumers. This is essentially the polar opposite from what we saw from Drew Estate five years ago. I point this out because sometimes a bigger company does need to make changes to its marketing strategy, and Drew Estate is a case study for how it works. It has helped Drew Estate succeed in the Swisher International era.
Other Installments of the IPCPR Pre-Game Series
Prime Time Episode 57: 2018 Prime Time IPCPR Pre-Game Show
Prime Time Episode 59: 2018 IPCPR Prime Time Pre-Game All Star Media Panel
7/1 Part 1: A Look at This Year’s Trade Show and Convention
7/8 Part 2: The Trends to Watch
7/13 Part 3: Predictions for the Five Hottest Cigars
7/14 Part 4: Around the Show Floor
Photo Credits: Cigar Coop, except where noted