 THOSE CUBAN CIGARS ARE GETTING EXPENSIVE
Plus: growing a retail cigar business . . . while having fun doing it!
Los Angeles, June 13 – The government office responsible for monitoring violations of the U.S. trade embargo against Cuba has U.S. cigar smokers in its sights.
The Office of Foreign Assets Control (OFAC), a department of the U.S. Treasury, has handed out seven penalties so far this year with fines totaling $13,712.75 to Americans who “purchased Cuban-origin cigars offered for sale on the Internet.”
That’s a high level of enforcement compared to past years. For example, in all of 2006, OFAC handed out only two such penalties, and late in the year, with fines totaling $2,189. Most of the penalties issued by OFAC to individuals prior to the fourth quarter of last year were for unauthorized travel to Cuba or the sale of goods or services by companies without an OFAC license to do so.
In the cigar cases handed down so far this year, penalties ranged from a low of $820 to a high of $6,088.85 for violations ranging from a single case to multiple instances:
• April: a fine of $820.00 for an individual who bought Cuban cigars on the Internet in 2005.
• April: a fine of $1,071.90 for an individual who bought cigars in 2004 and 2005.
• May: a fine of $6,088.85 for an individual who bought cigars from 2003-06.
• May: a fine of $1,261.00 for an individual who bought cigars in 2006.
• June: a fine of $856.00 for an individual who bought cigars in 2002-03.
• June: a fine of $1,311.00 for an individual who bought cigars in 2004.
• June: a fine of $2,304.00 for an individual who bought cigars in 2005-06.
It’s worth noticing that as OFAC acquires records of transactions going back as far as five years, it is imposing fines, no doubt based on the number and size of the violations. In addition, OFAC has sent letters to smokers with U.S. addresses who are suspected of being customers of Internet sites which ship Havana cigars into the United States. So while the practice continues, the U.S. Government has increased its vigilance of the Cuban cigar trade into the U.S.
In case you had any doubts, the language of the current Cuban cigar regulations, issued in September 2004, read:
“There is now an across the board ban on the importation into the United States of Cuban-origin cigars and other Cuban-origin tobacco products, as well as most other products of Cuban origin. This prohibition extends to such products acquired in Cuba, irrespective of whether a traveler is licensed by OFAC to engage in Cuba travel-related transactions, and to such products acquired in third countries by any U.S. traveler, including purchases at duty free shops. Importation of these Cuban goods is prohibited whether the goods are purchased directly by the importer or given to the importer as a gift. Similarly, the import ban extends to Cuban-origin tobacco products offered for sale over the Internet or through the catalog mail purchases.”
Is OFAC seriously impeding the flow of Cuban cigars into the U.S. with these penalties? Probably not. But forewarned is forearmed: OFAC is watching you.
Continuing the tradition:
From Monday’s Detroit News’ coverage of the Detroit Tigers:
“So why was Gene Lamont lighting up a cigar before the game? Because Marcus Thames was passing them out in honor of his newborn daughter, Jade.
“‘Don’t like cigars,’ said Lamont, the third-base coach coughing after the first puff. ‘But a guy has a baby, you gotta have his cigar.’”
That’s tradition. But if the cigar was a powerful Camacho – a sponsor of the team and the title sponsor of the Camacho Cigar Bar in The Tiger Club – it’s no wonder that Lamont has some trouble with it. For Thames, a first baseman for the Tigers, it’s his second child, both girls.
Attention retailers:
The Kansas City Star carried a great story on Tuesday on Kendall Culbertson of the Outlaw Cigar Company and how he’s increased his business:
“Three years ago, cigar shop owner Kendall Culbertson decided that to grow his business he would need to convert non-cigar smokers to smokers.
“He says the strategy is working. Sales at his Kansas City, North store, the Outlaw Cigar Co., have grown 42 percent in the last two years, reaching more than $1 million annually.
“Culbertson has brought what he calls sizzle to the business by hosting monthly events that draw a demographic that crosses into the one he hopes to attract. To attract those people, mostly men, Culbertson has partnered with dozens of businesses and organizations.
“For instance, at one of his recent events, Culbertson hooked up with a local Porsche car club. He said the event drew more than 1,000 people.”
And that’s not all. Other events have included programs with a golf-swing coach, a knife company, Hooters waitresses, free food (and beer), and the military. At one event, a howitzer was displayed. At an upcoming event, according to the story, an Apache helicopter will land near the store.
“The whole idea wasn’t a big brainstorm,” he told reporter Jennifer Mann. “It was more ‘I need customers – who has those customers? It seemed pretty obvious to me.
“‘A mistake the [cigar] industry seems to make is that this is for the rich and famous, but it’s not’ it’s all kind of guys,’ Culbertson said. ‘Although most of our customers are between 25 and 50, we don’t target any specific income or age group – we just target guys, all guys.’”
That’s a worthwhile lesson for every retailer to note when thinking about growing business in today’s anti-smoking environment . . . even if you’re not an “outlaw”!
~ Rich Perelman
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