Today, let's explore the world of cigar distribution in the United States, where cigar manufacturers employ various strategies determined by factors such as size, and risk tolerance.
Distributors are like the middlemen between manufacturers and shops. This can be an exclusive agreement or in conjunction with other avenues as well. They handle inventory, shipping and sales, making life easier for smaller brands that can then focus on making great cigars. Also, they hold the licenses that allow them let them import cigars (both into the country and individual states), which helps smaller shops such as gas stations, smoke shops etc. have access to this inventory. In other cases, if an account isn’t large enough to justify purchasing directly from a a manufacturer, they can access certain brands by going through a distributor. When this is not an exclusive relationship, these distributors typically buy in bulk from manufacturers, paying a much lower cost than individual shops will pay.
Brokers act as liaisons for manufacturers to cigar shops. They typically don’t handle importing or storing large amounts of cigars, but they're responsible for opening up new accounts and taking care of existing ones. Brokers work with multiple cigar brands and earn a percentage of their sales, though they cover their own expenses like travel and hotels. This is most common on medium size brands, but even some larger brands choose not to hire an internal staff and rely on brokers to sell their cigars for them. Brokers are typically small companies made up of individuals that have experience both on the retail and manufacturer sales side. Because they are paid on a percentage basis this limits manufacturers risk and expense on slow months.
The most direct route involves hitting internal reps. As brands grow, they hire a national sales manager who manages relationships with brokers and hires reps in territories that can support them. Brands usually look for areas with around a million dollars in cigar sales in order to place a rep in a territory. Once brands are hiring their own internal reps they typically also are importing their own inventory and have a warehouse stateside. During growth, brands often have a mix of their reps and brokers in order to cover the entire country.
Growing a cigar brand is a balancing act, both in marketing and logistics. Managing overhead cost wisely is key for long-term success. While it may seem that only small brands work with distributors or brokers, some larger brands still choose to work with theses organizations and focus - making great cigars. Thanks to these different ways of getting cigars to you, you can enjoy your favorites, no matter the size of the company!