General Cigar and the Consumer Divide
by David "Doc" Diaz
Sunday, October 23, 2011
The sky was a purple haze as we touched down in Santiago de los Caballeros, Dominican Republic. This being my 6th trip to the island, I knew the weather would be hot and humid, so I was fully prepared to face the sultry conditions in my quest for fine cigars and libations. This trip was billed as the Dominicana Blogger Tour 2011 and was sponsored by General Cigar Company, one of the largest producers of premium cigars in the world.
Michael Giannini: Team La Gloria Cubana
The genesis of the blogger tour was based on conversations between Victoria McKee, head of Public Relations for the company and company president, Dan Carr. Other companies had already sponsored similar trips for new media providers and General Cigar decided to weigh in with its own brand of hospitality and did so, with characteristic aplomb. There were 15 of us new media providers. Some are bloggers, others podcasters or videocasters. All are connected to the world via Facebook and/or Twitter. In short, we represent a new breed of journalist that brings cigar information to the world through the use of various types of information technologies.
My purpose in accepting this generous invitation was to assess General Cigar in terms of its current state of operations as well as to discern its plan for growing its brands. Of course, I would be remiss if I didn’t say that I also hoped to improve my own personal knowledge of cigars and the processes for making them, as well as to smoke a fine stogie or three along the way.
This is the first installment of my recollections and pontifications. In this article I will try to unveil one of the more important topics that I had the opportunity to talk about while over in the Dominican Republic. It has to do with how General Cigar and other big companies are adapting to changes within the industry. I’m talking about the changing characteristics of current cigar consumers and how General Cigar is adapting to meet their needs. What I have seen is the emergence of at least two kinds of cigar consumers and this division entails important considerations for all cigar makers.
From Strength to Strength
Making great cigars starts, and ends, with tobacco. To build premium cigars, you need the very best leaves and you need lots of them. With sufficient tobacco, demand rarely exceeds supply and cigar consumers are satisfied because they can easily find their favorite cigar brands on the retailer's shelf. Ideally, you would also like to have control over the tobacco throughout each stage of development: planting, picking, curing, fermentation, aging, rolling, packaging and more. This vertical integration from seed to smoke, allows a cigar company to carefully guide cigar production in every phase.
Members of the Operations Management Team
What was confirmed for me on this recent trip is that, General Cigar has it all. Because of its partnerships with tobacco growers like the Oliva family, Nestor Placensia and others, General Cigar has access to many tons of the highest quality tobacco. They have more than enough tobacco to adequately meet the prolific requirements of their current brands (i.e., Macanudo, Punch, Partagás, La Gloria Cubana, etc.) and to keep these cigar brands consistent over the years. It is this kind of consistency that leads to brand recognition, brand satisfaction and, ultimately, to brand loyalty.
Many of us who have smoked cigars for a long while will tell you that it is great to have dependable cigars in our smoking lineup. In other words, the quest for a cigar smoker is not only to find cigars that we personally enjoy, but also to find cigar lines that are consistent from year-to-year and from decade-to-decade. Many boutique companies cannot achieve this kind of consistency because they don't grow or control their tobacco and the total amount of tobacco they do have access to won't sustain a brand indefinitely. That is the primary reason you will see so many changes and new lines within the boutique market. If you pay careful attention, you will also see wide variations in the flavor and body profile over time in many boutique brands. With respect to brand consistency, General Cigar Company has been the veritable picture of perfection since the early 1960's.
Below: General Cigar has huge stores of tobacco
Of course, where boutique brands have excelled over the last 10-15 years, is to create a new breed of consumer that has not only gotten used to variety within and among cigar blends, but also has come to appreciate and even expect such variety. This new type of consumer has been bitten by the "boutique bug" and is looking for continual change within cigar lines and their corresponding blends. This trend has led to the development of many new cigar lines and has driven an environment that supports and encourages more limited edition and small batch cigars.
A New Breed of Cigar Consumer
What we have seen, and will continue to see in the marketplace, is the growth of at least two very distinct types of cigar consumer. One type has represented the norm for over 100 years or longer. These consumers seek out cigars that have a solid pedigree and are positioned for the long haul. They like cigars that will be around to satisfy their cigar smoking needs for well into the future. This type of consumer is conservative in their approach to the cigars they buy. They are more inclined to smoke fewer brands or lines of cigars, but are fiercely loyal to those few brands/lines that match their personal cigar needs. They aren't so interested in fancy packaging, sizzle, bling, or hype. They don't need to share a conspiracy, recite a common mantra, or bask in the light the latest cigar guru. They don't require overpriced, but fabulous packaging, but instead, their needs are few and simple; they value reasonable prices, consistent performance (i.e., flavor, burn, construction), and a rewarding experience.
Jhonys Diaz, Vice President of Operations (photo by Skip Martin)
The other type of cigar consumer has been brought up in a technologically modern and material world. They are fast-paced, super-sized, and stylized. They are totally plugged in to social media: blogs, vlogs, Twitter, Facebook, email, and texting, to name a few. They embrace change and chaos and they value "cool," "hip," and "tech." They are collectors, of sorts, and are happily engaged in "accessorizing." They collect cool cutters, lighters, humidors, and any other cigar accessory with a high "pod-factor."
More importantly, they have created and sustained the "rock star mentality" in the cigar industry by placing people on a par with product. They, in large part, identify with boutique brand owners, not so much because they are cool, but because they are fighting the good fight against tough odds. They applaud the American success story, the Godfather, David and Goliath, et al. Boutique brand owners have faced an uphill battle since day one. They most often do not have an unlimited supply of tobacco to work with, they do not own their own tobacco farms and factories, they are not blessed with vertically integrated businesses and therefore are not able to easily assure consistency of flavor profiles and quality in their cigars. As a result, these brands are differentiated mainly by being small batch, limited production cigars and have successfully used bling and hype to promote their products. Ultra cool banding and boxing, car and motorcycle giveaways, promotional tours, fan clubs, promotional marketing materials, and more are used to connect with potential new customers.
Below: In the fields with Don Quico
Challenging the Future
General Cigar Company has made its name by fostering relationships with the first type of cigar consumer and by meeting their needs with products that focus on tradition, quality, integrity, and value. In my opinion, there is no way to successfully challenge General's ability to best serve these consumers. For reasons stated above, General Cigar has the wherewithal and talent to compete at the highest level in quality and consistency. And, I don't mean to imply that General Cigar doesn't have its own version of the American success story... One need only review the history of General Cigar and the efforts of Edgar Cullman Sr. to see classic examples of how intense passion, work ethic, integrity and pursuit of quality can seed a gigantic international corporation. I also don't mean to imply that General can't meet the needs of the second type of cigar consumer. On the contrary, I believe (and this is either great news or scary news, depending on your perspective) that General Cigar can kick some serious ass in the boutique market too. After all, they have all the raw materials (both in great people and great tobacco) to make hugely successful cigars that would appeal to a boutique-driven market. They have people with great passion, who love to blend and smoke cigars, who have great ideas and great motivation to bring awesome cigars to the market. And, General possesses perhaps the largest and most diverse range of premium tobaccos in the world as their pallet for making cigars. So, they can bring small batch and limited cigars to the market as easily as small production sticks.
General Cigar has already begun to make their move. They have implemented management changes in the past couple of years that have led to new and radical operational changes. For a company that has been largely conservative throughout its history, this is indeed good news for the company and dire for the competition.
Below: President, Dan Carr (photo by Skip Martin)
One of those changes was the hiring of Dan Carr to head the company as its president. I think the most visible illustration of Dan's management style is the implementation of individual brand identities. Each of the General brands have had brand managers for quite some time, however, Dan has given current managers, for both major and minor brands, a lot of flexibility to express their vision through experimentation and implementation of new cigar blends and in other ways to innovate and excel in their jobs. The result has been a flattening of the corporate hierarchy and a more free-flowing communication within the organization. Basically, Dan empowers the brand management teams to excel at their jobs.
The fact that Dan invited over a dozen cigar bloggers to the Dominican Republic for a few days of immersion is a testament to General's awareness of how social media and the web is figuring in to the cigar industry. Or perhaps it was a “hedge your bets” philosophy at work. Regardless, the interaction between new media folks and members of General Cigar's corporate culture this past week was just the first salvo of the future relationship between General Cigar and new media providers. Without a doubt, General Cigar is poised to make rapid changes within a rapidly changing economic and consumer climate and new media will undoubtedly serve as an important catalyst in reaching all segments of today’s cigar consumer.
About the Author
David "Doc" Diaz is the publisher and the editor of the Stogie Fresh Cigar Publications. He has served as an educator, researcher and writer and has taught in the Health Education and Health Science field for over 30 years. He possesses an earned doctorate from Nova Southeastern University. Doc is a Certified Master Tobacconist (CMT), having received this certification from the Tobacconist University and is a member and Ambassador of Cigar Rights of America (CRA)blog comments powered by Disqus