On Cigar Startups and Interactive Marketing with Peter Modeste
September 5th, 2009 by Andy Didyk
Cigar maven Peter Modeste and his wife Pamela..
Hello again faithful readers. I’ve been a bit sparse in posting lately, as I’ve been traveling quite a bit for my day job. The upshot is that I’ve been been on numerous flights where I’ve actually gotten to meet some interesting people. It seems like most of the time that I fly that most people just want to keep to themselves and not be bothered to have a conversation (if there are any of you in my readership, could you please explain this to me in the comments?).
On one of my recent flights, I had the privilege of being entertained by the wit and wisdom of Peter Modeste, founder and cigar-smoker in chief for the recent startup Don Pedro Cigars. In addition to our plane conversation, the Don was willing to answer some questions for the blog.
A former innovator and business success in the bio-tech industry, Don Pedro is one smart and savvy guy. As you might gather from his responses, he’s incredibly passionate about what he does, which is the hallmark of any successful entrepreneur. Like my earlier interview with Patrick Smith, I’ve asked Peter about the role of interactive and social technologies in his new business, and I think you’ll find his responses both insightful and entertaining. And if you’re anything like me, there’s something fascinating about the “finer” things in life, and the connoisseurs of said things, as it seems that the more your know about what you’re experiencing, the better the experience. So enjoy.
[Full disclosure: I do smoke the occasional cigar, but know little about how to truly enjoy it. This page on Don Pedro's website really helped me out, and I look forward to feeling a little more like James Bond at the next Bachelor party I attend. Also, I don't receive any kickbacks from these small businesses - I do this because I'm interested in what makes them tick and I love to provide some exposure to other industries that the readers may know little about.]
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Tell the readers a bit about your business. What do you sell? How are you selling it? (please insert shameless plug here.)
We started Don Pedro Cigars as a way to perpetuate the lifestyle and heritage of fine cigar enjoyment. Our brand, a selection of hand-rolled cigars from Puerto Rico, is quite simply, among the best premium cigars available in the market today. The mixture of the famed filler tobaccos from Puerto Rico, which is grown at higher altitudes in rich soil that is devoid of chlorine (giving the tobacco an aromatic and free-burning quality), are custom blended with selected Cuban-seed tobaccos grown in other countries to produce a unique and exotic cigar with a perfect balance of flavor, subtle complexities, and richness.
Since we launched website in June of 2008, we have penetrated the market and establish our cigars as an exotic alternative to mainstream brands, and have grown to be the Internet’s #1 source for hand-made cigars from Puerto Rico. The geographic range of our customer base now spans from coast to coast in the United States, Iraq, Afghanistan, Japan, and the US Virgin Islands.
Currently our cigars are sold exclusively through our e-commerce website at www.donpedrocigars.com, and plans are underway to launch a very upscale “Brick and Mortar” social lounge facility in 2010.
What impact has the recent Big Tobacco legislation, lawsuits, etc., had on the cigar business? What makes cigars different?
That’s a great question and a comprehensive answer might be a bit lengthy, but if you indulge me I’ll do my best to be brief. We recently discussed this topic in the last issue of our quarterly newsletter called “The Cigar Buzz”. Basically the new [from Andy:this link is to a PDF] Family Smoking Prevention and Tobacco Control Act, signed into law on Monday June 22, 2009 by President Barack Obama, gives the Food and Drug Administration oversight over tobacco products. So for enthusiasts and business owners alike, the potential impact is of great concern throughout the country.
Well, there appears to be some relief in the law for cigar smokers, since cigars appear not to have been included under the legislation’s umbrella. As such, preliminary indications from industry experts suggest they do not expect the law to have a direct impact on the cigar industry; at least not in the near-term.
Many people incorrectly try to group all tobacco products in the same category, which on its face is clearly absurd. The differences between cigars and cigarettes are as plain as night and day. They are manufactured, processed, and consumed differently. One is an addiction, the other is a hobby. Have you ever know anyone that needed to use a patch to quit smoking cigars? Treating cigars the same as other tobacco products simply because they are both made of tobacco makes about as much sense as treating a car and an airplane the same because they both have wheels and carry passengers. Fortunately, our lawmakers had the intelligence and presence of mind to understand the distinctions, and as a result cigarettes are the focal point of the new legislation.
However, even though the focus is not cigars, the language and regulatory authority that it grants the FDA is somewhat ambiguous in places, which to me is a bit disconcerting. For example, SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS, states that it applies to “all cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco and to any other tobacco products…” It is the use of the phrases like “any other tobacco product” that I find most troublesome. Understand however, I’m not suggesting the legislation is disingenuous or unscrupulous with regard to its true intent, only that the vague terminology leaves room for the FDA to broaden its scope in the future, which could eventually impact cigars.
Forgive me for this, but when I think of cigars, I typically think of two things: old men playing cards and young men at bachelor parties. And yet I hear that the number of women cigar smokers and up-and-coming socialites is on the rise. Have you seen this trend? Why?
Actually yes, I have seen this trend. You know what; there was a time when the old conservative gentleman was indeed the perception of cigars smokers, but really all that has changed now. When the “Cigar Boom” (the period from late 1992 to 1998, when cigar demand was much, much greater than cigar supply) swept the nation, it ushered in new generation of smokers. Today, the general feeling is that cigars have recaptured its traditional symbol of success, celebration, achievement and good fortune, they are appealing to a much more diverse and group – among this group are young professional adults and women.
There are various explanations for the market expansion of premium cigars, which undoubtedly include among other things, product placement in movies, of highly visible women smoking cigars, that fact that more women feel empowered and view cigars as a very public statement that they want to freely enjoy one of life’s great pleasures.
How important are social media channels to your developing business vs. more traditional marketing? Why?
I think many businesses are beginning to understand that in today’s fast moving marketplace it is essential to integrate social media into their marketing plan and branding strategy. For Don Pedro Cigars, we plan to utilize technology better than any of our competitors, and social media is definitely vital component of our broader strategy. The thing that we are currently working on is figuring out the best way to leverage the reach and power of social media channels while achieving balance with our traditional efforts.
Social media marketing has a lot of very attractive feature for a business owner. For instance, its relatively lower costs, its interactivity, and the ability of a well-executed campaign to reach and influence a very targeted audience are just a few. But since we view almost every strategic decision as problem solving and risk mitigation opportunity, we have taken a cautious, systematic, and methodical approach in assessing how we incorporate this important tool. Information, whether true or false, accurate or misleading, positive or negative, can propagate throughout the social web like a runaway train, and if negative it can be very harmful to our brand and counterproductive to our goals.
So while we consider social media channels to be a necessity, we also believe in pursuing a prudent, well-balanced marketing approach.
I know your expertise is in business, and not necessarily social media trends, but how do you see the social media market developing over the next few years, and how do you plan to engage it?
First, let me thank you for acknowledging that I am no “Rocket Scientist“ when it comes to my level of competency in the social media arena. Having said that, I think that for anyone with a pulse, even a slight one, the rapid spread of the use of social media is no secret, and it is showing no signs of slowing down.
One key aspect of social media that I believe will be improving over the next few years is that we will see improvement toward more innovative measurement techniques. The old management adage that “You can’t manage what you don’t measure” is as relevant among social media channels as it has always been among traditional marketing. So I think that in the years to come we will see more accountability (i.e., calculating ROI) in marketing through social media.
If this develops as I expect, then it would allow us to make great strides in reducing the inherent risk in our overall marketing strategy. The improved measurements will guide our decisions by letting us know if a particular initiative is working or not, or if things are getting better or worse.
What are the things that social channels can’t help a small business with?
Really there is no substitute for quality products and outstanding service. And although a comprehensive marketing strategy is essential for a small business to survive, the core product/service offering, which is typically developed internally, is the foundation for building a successful organization.
Who should quit their day job and start their own business?
Ha ha! Let’s put it this way, running a business is not for the faint of heart. But seriously, not everyone is cut out to be a business owner. Notice that I said “business owner” and not “self employment”. There is a distinction between someone merely creating a job for themselves and someone building an organization that is organic and will grow with or without their daily presence.
With that said, I’ll leave out all of the obvious and perhaps generic stuff like finding something you enjoy, and having a plan, etc., and I’ll mention what I think are some of the more general things that is important for success. Anyone planning to enter into the world of entrepreneurship should do several things: 1) understand their personality and their appetite for risk, 2) be truthful with themselves about their level of business skill and acuity and know have a plan to fill any gaps, 3) evaluate their financial resources, 4) maintain a courageous problem-solving mind set, and 4) have patience.
Have you ever thought about lighting up a $50 bill instead of an expensive cigar? Just kidding (sort of). How do you see your business fairing in the Great Recession?
No I haven’t, but I doubt the experience of smoking cash would be as pleasurable as relaxing with one of our fine cigars your favorite beverage. As for the “Great Recession” the global economic downturn affected just about everyone. However in spite of the recession, Don Pedro Cigars has seen moderate growth. I guess in times like these, when people are measuring their success by who lost the least, any growth is a good thing. We are just grateful that our customers have responded so well to our exotic brand of cigars and are returning for more.
What is the best cigar smoking experience you’ve ever had?
I guess you saved the most difficult question for last, huh? Like most enthusiasts, I have many special cigar “moments”, and they are all special for a wide variety of reasons. At times it’s the camaraderie, at time it’s the quiet solitude or a host of other reasons. Anyway one special experience occurred about fifteen years ago. It was my first cigar smoking experience, but it left such an indelible impression in my mind, that I knew then and there I would never deprive myself the pleasure of partaking this affordable luxury.
I was going through the most difficult period in my life. I was distraught, overwhelmed, and my life was in shambles. That was when, as we walked through the streets of New York City, a lifelong friend and confidant suggested that we pick up some cigars at a local shop that hand-rolled their cigars right there on the spot. Going through the ritual of cutting and lighting the cigar seemed to take forever (there was no need to rush) and I instantly began to feel a soothing relaxation throughout my body and soul. Between the wonderfully fragrant aroma, the rich taste, and the utter euphoria, my mind became clear, more focused, and I was a peace. That single magical moment is special to me because it literally changed my life.
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I love the recurring theme of these interviews: there are no substitutes for product quality, passion, and excellent service. I think as long as those principles remain the heart and soul of a business, rather than a brand’s identity being eroded by the need to answer to Wall Street, a true brand will always survive.
Category: branding, business development, consumer products, marketing, social media | 3 Comments »
