Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.
Issue link: http://read.dmtmag.com/i/777147
www.beveragedynamics.com Digital Edition Exclusive 2017• Beverage Dynamics 2 wine buyer at The Fridge Liquor. "We speak with our custom- ers about pairings with cigars when they are interested, and also have hosted cigar pairing dinners at local restaurants, but, in-store, being sold together is not an option." At The Fridge Liquor, cigars are located in their "Party Shop," which is an area that has to be legally separated from where they sell alcohol. This area houses all of the store's non-alcoholic items, ranging from wine keys, vapor pens, mixers and cigars, which are in a large humidor at the end of the shop. LEGAL LIMITATIONS Of course, selling cigars often means dealing with thorny and often-frustrating state and federal laws. In Oregon, Guerra says people will look online and see the MSRP for cigars but don't take into account the additional state taxes on the items. That creates unrealistic expectations for prices in brick-and-mortar cigar retailers. "Filling out the quarterly state paperwork can be quite dif- fi cult and time-consuming for cigar retailers who elect to 'go direct' with the manufacturers like we do," Guerra explains. "We wholesale cigars to several other liquor stores in the state so they don't have to deal with all of the state tax reporting. We do all the paperwork and provide verifi cation that all state and federal taxes have been paid. Our wholesale accounts ap- preciate how we streamline the process for them." Johnson would like to see tax rates decrease. "As it stands right now, 35 percent of every dollar spent on inventory go towards taxes," Johnson says. Likewise, Jonas at Timer's Beverage Center hopes the FDA reverses the new regulations on premium cigar makers, specif- ically being able to donate free samples and forcing premium cigar makers to submit cigars samples for market analysis. In this global marketplace, every industry has to adapt, change and evolve to meet the frequently changing likes and dislikes of the consumer. And for many beverage retailers, the cigar market segment is making inroads into their retail sales and impacting their bottom line. The majority of the customers at Cedar Mill Liquor & Cigar in Portland, OR, purchase only liquor, beer and wine. Then there's another segment that buys those products as well as cigars, followed by an even smaller segment. "A small per- centage of our customers come in exclusively for cigars," says Randy Guerra at Cedar Mill. But it all adds up. "On average our cigar sales account for about three percent of our total sales annually," Guerra says. To help cross-merchandise cigars with other high-selling items, Cedar Mill displays items near their humidors that tra- ditionally pair well with premium cigars. "You will often fi nd displays of cognac, single malt scotch, or other whiskey that compliment a fi ne cigar," Guerra says. The humidors themselves are a refl ection of quality. "We are very proud of [them]. We had them designed and constructed by American Cigar Cabinets in Plymouth, Indi- ana," explains Guerra. "They use Amish craftsmen to create beautiful and functional humidors, and they get a lot of atten- tion just because of their quality and craftsmanship." "We placed them near the entrance of the storefront so people literally can't miss them," he adds. "That also puts them near the checkout area, which helps with loss prevention and last-minute impulse purchases." At Sherlock's in Atlanta, Georgia, about 85 percent of cus- tomers buy cigars as well as liquor or beer. "There is a very small amount of cigar purchases with wine buyers," says Evan Johnson, store manager at Sherlock's East Cobb. "We also do have customers that buy cigars only." Sherlock's sells cigars at four of their locations—two of which are wine only. Two of the stores have walk-in humidors and two have freestanding humidor units. With about 10 percent of their sales resulting from cigar purchases, Timer's Beverage Center in Racine, WI, keeps sam- ple packs of premium cigars near the register for impulse buys. They also have two large custom-made humidors behind reg- isters in the front of the store. "We offer a 10-percent discount on bundles and/or whole boxes of cigars to encourage our customers to buy by the box," says Jason Jonas at Timer's Beverage Center. The Fridge Liquor store in Manhattan, KS, has a lot of customers that come in only for cigars. Part of this owes to state law. "In Kansas we are not legally allowed to pair cigars with spirits or wine to increase basket size," says Keith Spreckels, DON'T OVERLOOK CIGAR SALES.