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Custom Cigars Score a Victory

By E. Edward Hoyt III
Smokeshop Online
February 2005 Edition


One of the fastest growing brands in the cigar business isn't a brand at all, but rather Victory Cigar's custom banding business which has racked up thousands of highly satisfied customers. For cigar shops, there are significant opportunities to put custom label cigars to work for them.

When Harold Nathan, an avid cigar smoker and collector, tried to buy some cigars with his company's logo on the band to use as gifts back in 1997, the exercise left him thoroughly underwhelmed.

Having tried several different sources that supplied cigars with personalized bands, Nathan found the results to be dismal. The quality of the bands was "terrible at best," usually just a single color, and no one could reproduce his company's logo on the band - or any other artwork for that matter. Even worse, most of the cigars were seconds, over runs, or short filler. Some were simply unsmokable.

The market for personalized cigars was little more than a novelty with no follow through, it seemed. And no premium cigar smoker - much less connoisseur - would ever hand these smokes out to a fellow cigar enthusiast, Nathan concluded. Unable to find a quality cigar with a quality, custom-made label, he began to speculate that there were probably others out also searching for the same thing. His initial hunch, he would come to learn in time, was an understatement.

An entrepreneurial businessman by nature, Nathan began putting his own professionally-designed, custom-made labels onto cigars at his kitchen table, literally cutting out the bands by hand with scissors. At one or two boxes a day, it was largely just for fun. "I was thinking of it on a local level," says Nathan. "I never had any idea that I would be the size that I am now. It never really occurred to me."

But when he sold 100 boxes to the Seattle Mariners following their 1997 American League West championship (the first 10 boxes went to the former Seattle slugger Ken Griffey, Jr.) and then signed up, El Goucho, the Pacific northwest's premier cigar bar, supplying their own house brand, things began to heat up.

To help draw customers to the fledgling business, Nathan pieced together a promotional budget and tried placing his first ad in a small commuter airline magazine, because "that's all I could afford," he recalls. The response was positive.

By 2000, Nathan decided to take a big leap into national advertising, a considerable expense and a much bigger gamble. Expecting a deluge of calls, he quickly became nervous when absolutely nothing materialized in the weeks that followed. "I thought, 'Oh, at least I know I was wrong,' and I could go start another business doing something else, because that's my nature." Ready to plan a hasty retreat from the project entirely, the letdown proved to be short-lived.

"All of a sudden the phones started ringing and ringing, and they haven't stopped since," says Nathan, who quit everything else he was doing to dedicate his efforts entirely to the burgeoning new business. Victory Cigars was up and running.

A WELL-OILED MACHINE
Today, Victory Cigar's web site gets over 100,000 hits per week, about double the traffic it saw only a year ago. Print ads for the company's custom label services are seen in 650,000 hotel rooms nationwide and by as many as 50 million travelers on airlines through in-flight magazines, which has been a cornerstone of the company's advertising efforts since the beginning.

"We do a lot of advertising," explains Nathan, who early on discovered that there's a direct correlation with advertising and cigar orders. "We're not your regular cigar company. The correlation is there because it's a novelty, it's not just cigars."

Last year, Victory's sales were up 50 percent over the previous year, and were up 486 percent since 2001. This past holiday season, the company was adding over 50 to 100 new accounts per day. Already, through February of this year, sales are up another 53.7% over 2004.

Having consistently increased his advertising to include more and more magazines, Nathan has successfully built a base of over 7,000 customers, from private individuals to corporations, organizations, and - increasingly - even smoke shops, although retail stores hadn't traditionally been a part of his business.

"We are starting to get a lot of calls from smoke shops, which we didn't get about two years ago or even a year ago," notes Nathan. "Now, they're actually calling and ordering, which surprises me." Orders have come from both mom and pop shops and Tinder Boxes alike, primarily for weddings and births. While unexpected, the new-found interest from retail shops actually makes perfect sense to Nathan. "People just don't want 'It's a boy' or 'It's a girl.' They want the child's name and date," he says, "and we're the source for that."

In fact, Nathan sees bigger, untapped opportunities that exist for stores to build sales right in their local area by providing custom cigars to nearby businesses such as golf courses, country clubs, restaurants, hotels, and resorts. "It could give them a foot in the door," Nathan says. "Why let someone else do your local golf course? Walk in and say, 'Hey, we can offer you a service that you don't have. We can give you custom cigars with your logo on them, and sell you all your cigars.' We do so many resorts, golf courses, hotels - and they're all in the vicinity of a cigar store."

Not every retailer finds the economics to their liking, Nathan acknowledges, but he's convinced there is sufficient room for stores to earn a profit servicing such establishments. "I have venues that will take a cigar that I sell to them and mark it up to three to four times," says Nathan. "You don't want it to get out of hand, but I think it should be an option," he adds. As he sees it, somebody's going to get the business, and it might as well be a local shop with a vested interest.

"There's a company that does probably half the golf courses in this country," Nathan offers as an example. "Why should you let someone else do your local golf course, when that's your territory?"

EMPHASIZING QUALITY, CUSTOMER SERVICE
In 2000, Nathan became a part owner in a cigar factory in Tamboril, Dominican Republic, to ensure he had a reliable and consistent source of quality cigars. In fact, the blend used in Victory's cigars has remained unchanged for the past eight years, although the number of sizes has increased. Today, there are 21 workers at the factory dedicated exclusively to Victory Cigar products.

To cater to customer's different needs, Victory offers either medium filler or long filler cigars in Corona, Corona Gorda, and Robusto sizes, as well as a long filler Churchill. In addition to a $65 setup fee, prices range from $60 - $75 per box for the medium filler cigars, and from $99.75 - $119.75 for the long filler sticks. All cigars are cello-wrapped, and packed in 25-count Spanish cedar boxes. These seven cigars are the core of Victory's custom label business.

The cigars themselves are medium bodied, a blend of Cubano Piloto and Olor Dominicano filler with a Dominican binder (Cuban Seed for the Churchill). The wrapper is an oily, top-grade Sumatra leaf that resembles Cameroon. Victory keeps about 125,000 sticks in inventory all the time.

"We have customers from all walks of life," notes Nathan. "It's amazing to me that some people think our products are expensive and others think they're a deal. You can't please all of the people." Still, Nathan would challenge anyone to find another custom label cigar of equal quality and presentation at any price.

Victory has recently expanded its cigar selection with new additions at either end of its price range. Its Corona and Corona Gorda medium filler cigars are also offered in 20-count bundles, rather than cedar boxes, at $41.50 and $46.50 respectively, while two flavored cigars have been added in corona sizes - rum and vanilla, at $80 per box of 25 cigars.

A new limited edition box-pressed maduro has also been added, taking its place as Victory's top-of-the-line offering. It's rolled from five-year-aged, Cuban-seed Dominican filler; Dominican binder; and an oily, Brazilian, sun-grown wrapper. The cigars have been aged a full three years, and the branded version received an "Excellent" rating last year in Smoke magazine . Prices range from $125 to $150 per box of 20.

Backing up his quest for a top-quality product, Nathan has made a point in investing in technology over the years, which today includes a nine-foot-long, $250,000 color laser printer that can print even the tiniest lettering legibly on cigar bands. A separate die-cutting machine cuts out the individual bands in a single step. The machines work in batches of 21 bands on a single, standard-sized sheet of paper. A full-time professional graphic artist works with customers to create an original design from scratch, or modify any one of numerous examples posted on the company's website. Victory can incorporate a customer's artwork - logos, photos, anything at all - and help create a band that's precisely what they want. "The customer is always right even if they're wrong," says Nathan. "Who are we to judge? If it looks great to the customer, it looks great to me. I'm going to advise them but I'm never going to correct them." Some clients also use their own designers and provide artwork that is fully completed.

While the average order is between two and three boxes, Victory offers discounts and other incentives for purchasing in larger quantities. On orders of 50 or more boxes of cigars, the company will die-stamp the customer's logo on the outside and inside lid of the box - the exact same process used by commercial brands. "We're one of the few factories, in the Dominican Republic, that has a box factory on premise," notes Nathan. "That's how we can print 50 boxes with somebody's logo on them." Victory also provides free, climate-controlled storage for the boxes, since many clients aren't able to take delivery of that many at once. Every order, regardless of size, comes with a free cigar cutter.

For Nathan, the business has been a labor of love. "I don't think there's anyone in the U.S. who wakes up more excited to do their job than I do. I love it," he admits. Whether it's sending cigars to a new dad, troops in Iraq (free rush delivery), movies stars, musicians, corporations, trade shows, restaurants, or even the launch of a famous designer brand, each job seems to bring a different twist. "Every week it's something new and exciting," adds Nathan. Nor does a week go by that someone doesn't say, "What a great idea. I didn't know anybody did it."

But perhaps the biggest reward is the non-stop flow of customer thank you's that are emailed, faxed, and phoned in, at least three to five times per week. Hearing glowing reports of how a customer's expectations were exceeded, truly makes the work fun.


[See Full Article at Smokeshop Online]


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