The IPCPR Cigar Convention Recap and a Look Forward
Editorial by David Garofalo
The memories are still sharp and my legs and feet are still sore from the 84th Annual Cigar Convention known as the IPCPR. The International Premium Cigar and Pipe Retailers convention ended Thursday and after the breaking down, cleaning up, packing up and traveling back I reflect.
Exactly 1092 Cigar Retailers, the majority in America, but some from across the Globe gathered this year in Las Vegas, Nevada to attend a 5 day Convention of Education, Camaraderie and Business including sampling and smoking of the new releases of cigars.
This was a very special convention, possibly the last as we know it today. In the future, it is very possible the sampling of new brands and the introduction of new brands will be all but gone. Due to FDA regulations that take place in just hours from now (August 8, 2016) no new brands or sizes can come into the marketplace without FDA approval, which is expected to be both time-consuming and very expensive, especially to the small boutique manufacturer. I mention this because you couldn’t walk 10 feet without overhearing discussion of the dooming, deeming regulations which were not only on the tips of everyone’s tongues, but also a key part to the educational seminars conducted before, during and after the convention.
Although the worry of the future was apparent and acknowledged, it was surprising to me the overall positive feeling of the retailers throughout the convention. This feeling was not however passed on to most of the smaller and newer manufacturers and brand owners. As I see it, the retailer, as unhappy as retailers are that we may never see new and exciting cigar brands ever again, for the most part they can see a path to continuing their business. They see that they will continue to sell cigars and have a future. The retailer envisions that the consumer will, when all is said and done, continue to buy cigars… and I believe they are correct, they will. The small boutique brand owner or manufacturer who might not have a brand that falls into the grandfathered predicate date of February 15, 2007 do not all feel the same way. Some have hopes and dreams that things will change, lawsuits will prevail and the FDA or government officials will all of a sudden come to their senses. Some of the realists see it differently, as for how the regulations are written and see little chance for a future. We will soon see what happens, but I might have already seen how it will play out.
Observing and listening throughout the show I heard lots of opinions, be it from attorneys, industry leaders, manufacturers, brand owners and retailers. I heard their thoughts but I also witnessed the actions of the retailers. For the most part, and of course there are some exceptions, I saw the big manufacturers with grandfathered brands had packed booths and record-breaking sales, some reaching 1 day sales beating last year’s 4 day convention while some boutique brands, without the predicate dates, slow and some reporting less than half the sales of past shows. I observed overflow crowds in the big name booths from start to finish. I also detected some not so happy expressions on the faces of some popular boutique brand owners faces at the conclusion of the show, moments after the ballots (sales orders) were tallied.
Were the retailers playing it safe? I believe so. Retailers can buy the brands and sizes that are not grandfathered and they can sell them for at least 2 years without worry but more than one retailer asked me, “Why?” Why build a brand that will have to go? Why take in a new brand that we know must be off our shelves or be seized as contraband in the future? Again, this was not everyone, but it was very apparent and I will go on record to say it was the majority. The overall feeling to me was that the day of the boutique brands of cigars being the talk of the show was over. A sad statement and a very sad thought.
I witnessed a lot of things on the show floor at IPCPR, some I could unquestionably see and it was oh so apparent and some I could just feel and smell, it was blood in the water. I could feel the big getting bigger and the little guy getting eaten alive. I felt some of the big sharks circling the bloodied water and the small fish. I could smell some of the big fish offering to buy the small ones out of this, offering jobs, offering opportunities. Rumors were flying and meetings were taking place, which I could see. It was apparent, things were changing in front of my eyes, no matter what eventually happens in the future.
So what does this mean for you, the cigar smoker? Actually not a whole lot for right now. Sure, you will see some price increases right off the bat. FDA “user fees” will be calculated and remember you are the “user.” Soon, consolidation will continue and selection may be cut down to best sellers. Years from now we may see just a handful of major players who will control what was this mom and pop industry… but there is some hope.
The IPCPR along with the CRA (Cigar Rights of America) and CAA (Cigar Association of America) have jointly filed a lawsuit to stop some of this madness. This is historic in this industry that all 3 major industry associations worked together and filed together, in unity, with one strong message. Another hope is that the first hole in the FDA ruling already happened. Altria, the parent company of Philip Morris, owners of Marlboro cigarettes, who owns Middleton Black and Mild filed a 3 Billion Dollar lawsuit to stop the FDA ruling of not allowing a brand to use the term “mild.” Altria bought Middleton Black and Mild just 4 years ago for 3 Billion dollars. The FDA has already conceded and this has put the first hole in the FDA regulations. Will the FDA settle with the IPCPR is 30 days, before small manufacturers and brand owners close up shop or sell out? It’s possible, but I have left Las Vegas and this type of bet would be a longshot in my opinion.
So what do I think? Tune in to The Cigar Authority for a special show on August 20th and I will give you my hypothetical look at our industry three years from today. This will give me a little time to take in all I observed at the trade show and get some more intel into our future. We’ll take out the crystal ball once again and glance into what’s yet to come.
In closing, this was my last IPCPR as a member of the Board of Directors, I served two, three-year terms. Six hard-fought years alongside some great retailers and manufacturers alike. We all worked very hard to produce a great trade show filled with education, including many seminars and learning sessions. We all worked extremely hard on all the regulatory issues both through all 50 states and federally including the FDA regulations. To all those who served with me, a heartfelt “THANK YOU” for all the work you do. To those on the Executive Board, who serve 12 years… you are all better men and women than me… Thank you. To all those who play on the sideline and criticize them, think before you speak, without them we would be lost, I know this from experience. You have no idea the hours they put in, all for zero compensation and all for the good of our industry. To those small manufacturers who wonder what will happen, know that there are people who continue to fight for you, and although I am off the Board, I will always fight for you. I hope and pray our industry stays intact, but we need to do more than that, we need fighters. The fight continues.
The 2017 IPCPR Trade show is again in Las Vegas on July 16th just 355 days away. Lots of work before then.