Owner, Holt's Cigar Store, Inc., and the Ashton Brand
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CA: So at that time, was it essentially a cigar shop?
Levin: Yes. Mainly cigars. But we had pipes, too. In the early '80s, we started to sell pens and that became a very profitable item for us. But, we were always mainly cigar merchants, or as we like to call it, cigar specialists.
CA: Did you have a significant catalog business at that point?
CA: Did that precede you or did you create that?
Levin: My father started the mail-order business. A lot of it was in the local Philadelphia market, in the suburbs, for instance. But he built it up over the years. He did everything himself. He sent out the mailing pieces and gathered the names. We never bought mailing lists. It was just friends telling friends and accumulating names over a long period of time. Now, we send out 70,000 catalogs.
CA: What percentage of your business does the store represent?
Levin: The store represents about one-third, the catalog accounts for one-third and the Ashton brand contributes about one-third.
CA: So, the store and the mail-order are about equal?
Levin: Yes, the mail-order revenues are a little higher than the store. Of course, we're talking about the new store, which opened in 1995. It's a totally different ballgame.
CA: Before the cigar boom began in 1992, what percentage of revenues did the store represent versus the catalog?
Levin: At the time, there were more revenues in the store. It was about 60 percent store, 40 percent in the catalog.
CA: In 1995, how did the business do?
Levin: Revenues went up about four times.
CA: And in 1996, what are you looking at with your new store having opened in 1995?
Levin: We'll be up about 60 percent over 1995. Since 1992, if you include the Ashton brand, it has increased eight times.
CA: What's been the most exciting thing?
Levin: First of all, the new store is beyond my wildest expectations and dreams.
CA: How much of your business there is new customers?
Levin: There's a constant flow of new and younger customers. I mean, a totally new market in the past two years.
CA: How do they find you?
Levin: We have been in Philadelphia for a long time, so we are a known quantity. We've always had a good location--even the former store was on a good street--and today's new store is in a great location. People just come in.
CA: Of the revenues in the new store, how much of that is cigars versus accessories? You have one of the best selections of cigar accessories in America. How significant is the accessory part of the business?
Levin: It's becoming more and more significant. In fact, anything to do with cigars is selling: humidors, cutters, anything. Our humidor sales have more than quadrupled. Elie Blue has been our top seller at the upper end.
CA: Excluding the Ashton brand, you must be experiencing the same problem as other retailers all over the world: getting enough of the brands and sizes you need for your customers. How are you dealing with this problem?
Levin: It's not getting any better. But every manufacturer is trying to increase production. Consumers for the past year or so have gotten used to the fact that they may not get their first or second choice. I always tell my people, we have to try to substitute whatever alternatives I have on the shelves. If someone comes in for something we don't have, you have to have the right product or substitute. It's a huge problem.
CA: Are the established brands that you've done business with for years, are they giving more product than last year?
Levin: Absolutely. Every manufacturer increased production. And because of our long relationship with a lot of the manufacturers, I think they are taking pretty good care of us. We're getting a lot of product in. It just goes out the door much quicker.
CA: If the demand for established brands is unsatisfied, are you buying a lot of new brands? What has been the consumer reaction to their willingness to experiment with new products?
Levin: I'm buying a lot of new brands. But I try to be selective in what I'm buying. I really don't feel good about selling brands that I don't feel have the right quality for the price. It's not even a question of price, it's a question of quality.
CA: What has been the reaction from your customers when they try these new brands?
Levin: I think you get a very mixed reaction. I think the major manufacturers for the most part make the best cigars. They've been at it the longest, they have tobacco, they have everything that's needed to make a quality product. A lot of the new players in the market, they don't have that. They don't have the tobacco reserves, they don't have the inventory and they don't have the experience. It shows in their product.
CA: One of the criticisms is that a lot of the tobacco in the new products is young tobacco. When the established manufacturers are able to increase shipments, which I understand should happen as early as 1997, do you think many of these new brands will stay on the market or will they not be able to survive?
Levin: I think the cream will rise to the top. If the producer is making a good quality product, it will last. The ones that are poor quality will go by the wayside.
CA: What are some of the main problems you see in the new brands?