The tobacco category has been difficult for the Center Store, as retailers contend with stringent state regulations and the seemingly infinite escalation in price. Some grocery merchandisers have chosen to wash their hands of the troublesome segment altogether, while others claim that people are still smoking and there's no reason to give up. And many purveyors of fine wines and specialty foods have found cigars to be a successful alternative to a pack of Marlboros.
The tobacco category has definitely been hurt by litigation and legislation in recent years. In addition to pricing pressures, some retailers voiced concern about depending upon cashiers, who may be under 18 themselves, to proof customers responsibly. Yet there are those who have faith in the category, such as a Piggly Wiggly in Hendersonville, Tenn., and report no significant drop in tobacco sales.
Dave Ramsey, manager of the Hendersonville Piggly Wiggly, said that tobacco sales in Tennessee are particularly strong. This can be attributed in part to the state's location in the heart of the tobacco belt, and to the consequent consumer loyalty.
Ramsey expressed his surprise upon seeing parents in some of the more rural areas of the state actually condoning the use of tobacco by young children. He also noted that in these out-of-the-way places, there aren't many regulators to check on these kinds of things. He stresses the fact that his store does not serve that segment of the population and that his employees check identification with a vengeance. However, the casual attitude toward tobacco in the rural parts of Tennessee is indicative of a statewide trend. State laws in Tennessee allow self-serve tobacco in supermarkets and the cigarettes in Ramsey's store are currently found on the floor next to the registers. Shortly, the store will be moving cigarettes to the customer service office, making it easier to monitor the category, but Ramsey does not foresee a dent in sales due to the inconvenience factor.
"People will still buy them. There will always be that segment of the population that buys them," he said.
Highland Park Market, an upscale supermarket in Glastonbury, Conn., caters to a demographic very different from a suburban Piggly Wiggly in Tennessee, but the store manager there, Skip Moreau, has similar things to say about the tobacco category.
"Even though prices have just about doubled over the last several years, we sell just as many cigarettes," Moreau said.
In the Glastonbury store, the packs are self-serve while the cartons are locked up and the customer has to ask for service. Evidently, shrinkage in the category is not a big problem at the Glastonbury store, although Moreau said employees do have to keep a close eye on young kids. Indeed, he said cigarettes are almost more of a hassle than they are worth, but not quite. And the reason is simple, according to Moreau: People still smoke. But despite the success stories, there are those that have almost given up on the category. For instance, Dan's Supreme Supermarkets, Hempstead, N.Y., carries cigarettes in only three of 14 stores. A company representative said it is just not worth the aggravation.
According to Steve Kottak, manager of public affairs for Brown and Williamson Tobacco, Louisville, Ky., retailers must strive to make smokers feel welcome when they walk in the store. Tobacco shops run their business on this type of familiar camaraderie. The smoker is their customer, and they like to see them walk through the door, he explains.
This type of smoker-friendly atmosphere is hard to achieve when customers are forced to make an extra trip to the customer service counter to purchase a pack of cigarettes. However, cigars are a sumptuous invitation for the connoisseur, particularly when paired with a fine single malt and a knowledgeable staff. Retailers SN spoke with take advantage of the inherent decadence of cigars and sell them alongside the fine wine and spirits.
Zagara's, a specialty food chain based in Marlton, N.J., will be installing a 3-by-7-foot humidor next to the fine wines at the Mt. Laurel store within the next several months. The store will be focusing on premium brands, and perhaps some private labels. The designated spot for the humidor is adjacent to the high-end, reserve spirits that are kept under lock and key, according to John Zagara, president of Zagara's.
Although plans have yet been solidified, Zagara intends to work with suppliers on a strategy marketing the cigars and wines together. In addition, the retailer will probably incorporate cigars into the wine tastings and dinners held at the store's cooking school.
The chain has no plans to sell cigarettes at this point.
"Cigarettes are not on our agenda. It doesn't fit our profile," Zagara said.
However, he feels that cigars will be a welcome addition for Zagara's customers -- people who enjoy a complete culinary experience with class and style. Furthermore, Zagara feels that the residuals from the waning cigar craze are still impressive and provide the category additional vigor.
Scott Silverman, vice president of specialty food and wine for Rice Epicurean Markets, Houston, said that his stores have carried cigars for several years, but have recently trimmed back the category to select top names such as Macanudo and H. Upmann.
"Demand has slowed dramatically," he said. "People realized why they quit smoking them in the first place. They stink up your car, home and office. They are not going away, but they have seen their best days."
High prices and bad cigars have also hurt the business, he added.
Nevertheless, all of the chain's stores continue to maintain a small humidor, an average of 4-by-5 feet in Silverman's estimation, in front of the manager's station. The humidor is generally situated in proximity to some allocated cabernets and ports. They may also be marketed along with gourmet food items such as foie gras or aged balsamic vinegar, all of which are kept in a lock box.
Higher-end cigarettes can be also be a lucrative complement when catering to the customer looking for an extravagant smoke. Silverman noted that Rice Epicurean does some business with higher-end cigarettes such as Rothmans and Dunhill.
Rob Giusti, wine and specialty food buyer for Andronico's Markets, Albany, Calif., attributes his stores' continued success in the cigar category to a number of factors, and believes that excluding local smoke shops, Andronico's offers the cigar smokers the best selection in quality and price.
"We have established regular customers and they rely on our selection. They have confidence in our cigars," he stated.
To keep these customers happy, the retailer is willing to fill special orders, usually available within one or two days, and gives a discount to those who buy an entire box.
Most of the chain's stores have custom-made humidors from 4 to 6 feet located in the fine wine section. According to Giusti, Andronico's focuses on the quality of brands as opposed to the quantity.
"We look for a variety within the best brands," he said. "At the present time, we carry at least 17 varieties of Macanudo."
The brand selection is still fairly extensive, with top-of-the-line names such as Arturo Funete, H. Upmann, Partagas and Davidoff, to name a few. Vintage cigars are also available on occasion, according to Giusti.
One advantage Giusti sees for food retailers in the cigar arena is that supermarkets are open late.
"I have noticed that people usually buy cigars during the evening or on weekends. We're open until 10 p.m., when most smaller smoke shops are closed," he said.
Maintaining a humidor can be tricky, because scrupulous attention must be paid to the humidity level of the cases. Andronico's employs Tiburon Trading Co., a cigar distributor and manufacturer, in the service of the entire case. The stores receive weekly status reports on the condition of the cases to keep the humidors functioning at the optimal level.
In addition to monitoring the humidors, a Tiburon representative conducts a Cigar 101 class, giving the wine stewards an educational edge when making recommendations on the floor. The class is open to all Andronico's employees, although it is not required.