Do you want to get into the cigar industry but you don’t know how? If YES, here are 7 profitable niche business ideas in the cigar industry you can try today.
The cigar industry is a large industry that is all-encompassing; there are different business opportunities in the value chain of the cigar industry and any entrepreneur that is looking towards getting into the industry has different niche ideas to leverage on to become a player in the industry.
A cigar is a rolled bundle of dried and fermented tobacco leaves made to be smoked. They are produced in a variety of sizes and shapes.
Almost all cigars are made of three distinct components: the filler, the binder leaf which holds the filler together, and a wrapper leaf, which is often the best leaf used. Although there are stiff regulations when it comes to the cigar industry, players in the industry are still making returns from their investments all across the globe.
It is important to point out that the prevalence of cigar smoking varies depending on location, historical period, and population surveyed.
The U.S. is the top consuming country by sales by a considerable margin, followed by Germany and the United Kingdom. The U.S. and western Europe account for about 75 percent of cigar sales worldwide. For example, the consumption of cigars in the US rose from 6.2 billion in 2000 to 13.8 billion in 2012.
The cigar industry has a significant economic impact on the world’s economy. The global tobacco market in 2010 was estimated at US$760 billion, excluding China. A report released by Statistica estimates that in the U.S. alone, the tobacco industry has a market of US$121 billion, despite the fact the CDC reports that US smoking rates are declining steadily.
In the US, the decline in the number of smokers, the end of the Tobacco Transition Payment Program in 2014, and competition from growers in other countries made tobacco farming economics more challenging. If you are interested in getting into the cigar industry, here are few steps you should follow.
7 Tips to Get into the Cigar Industry
Table of Content
- Do Your Research
- Choose a Franchise or Start from the Scratch
- Obtain Your License and Register Your Business
- Choose a Good Location
- Decide on How to Run Your Cigar business
- Establish Business Relationship with Suppliers
- Tobacco (Leaves) Cultivation
- Cigar and Tobacco Leaves Exporting and Importing
- Open a Cigar Manufacturing Plant
- Production of Cigar Accessories
- Marketing and Distribution of Cigar and Cigar Accessories
- Open a Cigar Lounge
Do Your Research
In order to invest wisely, you need to carry out a research on the industry or line of business you intend to invest in. If you are opening a cigar related business for the first time, it is important you conduct thorough research so that you can be well informed and guided when making the choices of what you want from the array of options that are available to you.
Researching will open you up to the various opportunities you can leverage on and how you can access them. It is not compulsory that you must be the one to carry out the research; you can pay professionals to help you garner the needed information.
Choose a Franchise or Start from the Scratch
After you must have conducted your research, you will definitely be exposed to information that will help you get started in the cigar industry.
You will find that you can either start from the scratch, or buy the franchise of an existing cigar company that is into franchising. Making a choice will be dependent on loads of factors amongst which are your financial status, the availability of cigar franchise, and your overall vision or goal of wanting to get into the industry, but the choice is entirely yours to make.
If you are interested in buying a cigar franchise, you can choose from the following cigar companies that are into franchising; Bobalu Cigar Co, Casa de Montecristo, and Cheap Smokes & Cigars Franchise et al.
Obtain Your License and Register Your Business
Since there are laws that stop people from smoking in public places, then it is only logical to know that you would require a license to operate a cigar related business. You will be required to approach the Drugs and Foods Regulation Body or a Licensing Office close to you.
Your proposed facility will be inspected and they will ensure that you meet certain standards before you can be issued a license.
Choose a Good Location
Your choice of location has either a positive or negative impact on your business. In opening a cigar business, you should look for available facilities that are within the zones approved for such business.
For example, if you are looking towards opening a cigar lounge, you can choose to rent a facility close to a business district that can easily be accessible by workers who will want to take short breaks to come smoke without traveling a distance.
Decide on How to Run Your Cigar business
From the outset, you should decide how you want to run your cigar business so as to help you design it to suit your choice of business. There are various ways people run the cigar business, if you’ve taken time to visit some (which you must), you would realize that most of them aren’t run in the same way.
For example, if you run a cigar lounge, you could choose to allow coffee or drinks both alcoholic and non – alcoholic to be sold in your lounge, or you can decide to use part of your facility as a cigar lounge and another part as a restaurant.
Whichever choice you make, ensure it is such that has the potential to thrive in the environment you choose to open it. You can only know this if you have done your survey before starting. You can also allow certain music to be played in your bar or a Karaoke.
Establish Business Relationship with Suppliers
You can enter the cigar industry by opening a cigar lounge or shop, and in order to make sure that your cigar lounge or shop is always loaded with varieties, you must establish a business relationship with cigar distributors/suppliers.
Make sure you always negotiate for a better deal when dealing with suppliers. If you grow the business to a certain level, you can even bypass the middlemen and deal directly with the manufacturers – You can import directly from the factory to get a really fair price.
So also, if you choose to run a cigar manufacturing factory and you don’t have your own tobacco farm, you would need supplies of tobacco leaves from tobacco farmers.
7 Profitable Niche Business ideas Within the Cigar Industry
If you are looking towards choosing a niche in the cigar industry that best suits the kind of cigar business you want to run, then here are some neat ideas you should consider;
Tobacco (Leaves) Cultivation
There will be no cigar without tobacco leaves because tobacco leaves are the major ingredient used in the production of cigar. Tobacco is cultivated annually and can be harvested in several ways. So, if you are looking towards entering the cigar industry, then one of your best options is to become a tobacco leaf farmer.
Please note that cultivating tobacco leaf is location based; you just have to choose the right location that can support the growth of the crop.
Studies show that the cultivation of tobacco leaf increased by 40 percent between 1971, when 4.2 million tons of leaf were produced, and 1997, when 5.9 million tons of leaf were produced. According to the Food and Agriculture organization of the UN, tobacco leaf production was expected to hit 7.1 million tons by 2010.
Interestingly, there are more than 70 species of tobacco plant you can choose to cultivate, but the chief commercial crop is N. tabacum. The more potent variant N. rustica is also used around the world. Today, tobacco seeds are sown in cold frames or hotbeds, as their germination is activated by light.
In the United States, tobacco is often fertilized with the mineral apatite, which partially starves the plant of nitrogen, to produce a more desired flavor.
If you intend going into tobacco cultivation in the United States, then you must make sure you choose the right location. In the U.S., North Carolina and Kentucky are the leaders in tobacco production, followed by Tennessee, Virginia, Georgia, South Carolina and Pennsylvania.
Cigar and Tobacco Leaves Exporting and Importing
Another niche idea in the cigar industry is to become a tobacco leaf and cigar exporter and importer. If you have the capital, you can engage in importing high end cigars from countries like:
Cuba (Cuban cigars are world-famous), the Dominican Republic, Haiti, Honduras, Mexico, Ecuador, Nicaragua, Guatemala, Costa Rica, Panama, and Puerto Rico; it is also produced in the Eastern United States, Brazil and in the Mediterranean countries of Italy and Spain (in the Canary Islands), and in Indonesia and the Philippines of Southeast Asia.
Please note that it is important to check the regulations in your country before choosing a country to import or export cigars or tobacco plant from or to.
Open a Cigar Manufacturing Plant
Opening a cigar production plant is yet another highly thriving cigar related business for an investor who is interested in getting into the industry. This is indeed a very thriving business howbeit it is relatively capital intensive. You can go into the production of both handmade and machine-made cigars.
Statistics show that every year, about 6.7 million tons of tobacco are produced throughout the world. The top producers of tobacco are China (39.6 percent), India (8.3 percent), Brazil (7.0 percent) and the United States (4.6 percent).
Interestingly, this industry is open to new investors and the competition is not as stiff as expected. You can actually start on a small scale since quality cigars are still handmade and an experienced cigar-roller can produce hundreds of good, nearly identical cigars per day. As a matter of fact, major tobacco companies have encouraged global tobacco production.
Philip Morris, British American Tobacco, and Japan Tobacco each own or lease tobacco-manufacturing facilities in at least 50 countries and buy crude tobacco leaf from at least 12 more countries. This encouragement, along with government subsidies, has led to a glut in the tobacco market.
Production of Cigar Accessories
Another niche idea in the cigar industry that an investor should consider if they are interested in entering the cigar industry is the production of cigar accessories.
You can go into the production of cigar accessories such as Humidors (it is essential to keep your cigars at an optimum temperature of 21°C with near 70 percent humidity and a humidor will do exactly that), cigar cutters (A cigar cutter is mechanical, ensuring the end of the cigar is cut precisely and evenly.
Cigar cases (single cigar cases – also known as cigar tubes – are ideal for keeping one cigar safe in your pocket, bag or suitcase. Reinforced ends ensure your cigar is safe from being crushed or damaged on the move), Holders (A cigar holder, also known as a cigar stand, is used to keep a cigar out of an ashtray), Lighters, cigar ashtray, and Air purifiers et al.
Marketing and Distribution of Cigar and Cigar Accessories
Marketing and distribution of cigar and cigar accessories is yet another niche idea that is available in the cigar industry. For example, pure tobacco, hand rolled cigars are marketed via advertisements, product placement in movies and other media, sporting events, cigar-friendly magazines such as Cigar Aficionado, and cigar dinners.
Since handmade cigars are a premium product with a hefty price, advertisements often include depictions of affluence, sensual imagery, and explicit or implied celebrity endorsement. Please you must know what obtains in the country you intend marketing and distribution of cigar before venturing into this business.
For example, in the US, cigars have historically been exempted from many of the marketing regulations that govern cigarettes. For example, the Public Health Cigarette Smoking Act of 1970 exempted cigars from its advertising ban, and cigar ads, unlike cigarette ads, need not mention health risks.
In the US, inexpensive cigars are sold in convenience stores, gas stations, grocery stores, and pharmacies. Premium cigars are sold in tobacconists, cigar bars, and other specialized establishments. Non-traditional outlets for cigars include hotel shops, restaurants, vending machines and the Internet.
Open a Cigar Lounge
Opening a cigar lounge is no doubt one of the easiest means and perhaps cheaper option available if you want to get into the cigar industry. A cigar lounge or cigar bar is a place where smokers go to buy their preferred cigar brand and smoke freely without the fear of being embarrassed, arrested or fined.
The World Health Organization (WHO), in conjunction with Governments of various Countries are clamping down on smoking in public places in a bid to protect non- smokers from the harmful effect of smoking. Right in the Airports, Cinemas, Shopping Malls and Public places in general, you might have noticed the “Smoking Not Allowed” signs hung at various spots informing the general public that the area is a no smoking zone.
However, if you take your time to make inquiries, you will find out that there might be a cigar lounge just around the corner. This goes to show that it is thriving business that is open to interested entrepreneurs.
In conclusion, there are other unique niche ideas that are not listed here that you can explore in the cigar industry. Some of these niche ideas might be unique to the location you intend starting your cigar related business.