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Q: New business/product: Tobacco related. Need help on DISTRIBUTION CHANNELS ( Answered,   0 Comments )
Subject: New business/product: Tobacco related. Need help on DISTRIBUTION CHANNELS
Category: Business and Money > Consulting
Asked by: aghcorp-ga
List Price: $60.00
Posted: 20 Feb 2004 13:09 PST
Expires: 21 Mar 2004 13:09 PST
Question ID: 308936
I have a new product/accessorie related to the tobacco industry (not
actual tobacco. Just for an example, imagine a custom cigarrete
lighter that sticks to the cigarette pack.)

I want to know:

1) Distribution: How do I approach distributors, get my product in
front of them? Is there an easy way? Simple way to get it in all
stores? Any other suggestions to get my product next to cigarette
packages on the shelf or next to register. What margins do
distributors typically expect. What kind of distributors are there?
National? Regional? Local? Would I approach only distributors or also
wholesalers and stores? Please provide names of dist, wholesalers,
stores, etc and a way to contact or reach these channels.

2) Legal issues: Are there certain restrictions against selling
tobacco related products.

3) Marketing ideas?

4) What major events are coming up within the next year that I could
introduce this product at? (tobacco related or not)
Subject: Re: New business/product: Tobacco related. Need help on DISTRIBUTION CHANNELS
Answered By: clouseau-ga on 20 Feb 2004 15:55 PST
Hello aghcorp,

Thank you for your question.

I think that you will find that a lot of the specific details to
answer your question will depend on exactly what type of product you
will offer. If it is a consumable and has health risks, then there
will be laws that regulate the advertising and use of the product. If
it is a lighter, then there may be regulations concerning the shipment
of the product as well as a warning label that may need to be affixed
to meet state or federal requirements. It may need to be child-proof
as defined by the governing body that stipulates those requirements.
Since I have no way of knowing the exact nature of your product, I
will have to make the assumption that it is not consumable tobacco
(including chewing tobacco and snuff products) and that it poses no
danger that might require restrictions such as lighters in the hands
of children. With that in mind, let's address your questions:

"1) Distribution: How do I approach distributors, get my product in
front of them? Is there an easy way? Simple way to get it in all
stores? Any other suggestions to get my product next to cigarette
packages on the shelf or next to register. What margins do
distributors typically expect. What kind of distributors are there?
National? Regional? Local? Would I approach only distributors or also
wholesalers and stores? Please provide names of dist, wholesalers,
stores, etc. and a way to contact or reach these channels."

This is the job of marketing and that varies a bit depending on who
your target customer is. By definition, marketing is designed to
create a demand for a product wheter directly to the end user or to a
middleman such as a distributor. That can be as simple as a well
designed point of purchase display that markets to customers that pass
by, to print advertising, bus benches and banner ads or a trade show
display targeted at reaching the retailers and distributors you wish
to court.

Since you mention distributors, I am envisioning this product as a
smoker's accessory that might be appropriate in a smoke shop,
convenience store, supermarket or the like. With broad distribution
like that, it is wise to consider regional or national distributors
that already have a relationship built with retailers and can offer a
new product in the context of their normal contact with their dealers
and handle all billings and collections as required. In essence, the
distributor is your customer and as long as they are successful
selling your products to their retail dealer base, they are doing the
job that you will have contracted them for. You ship to one (or
several) locations and bill one or several distributors for each
shipment, rather than billing and collecting from hundreds or
thousands of retail locations.

The three best ways to get the attention of a distributor is by direct
contact, trade show exhibits (or contact made at trade shows) and
advertising in trade journals that they customarily read. Let's look
at a few of those options:

Smokeshop Magazine notes that your timing may be very good as the
first annual National Association of Tobacco Outlets show is coming up
this March!!

"N.A.T.O. Conference & Exposition: 

The National Association of Tobacco Outlets will hold its first annual
trade show, on March 25-27, 2003, at the Rio Suite Hotel Convention
Center, Las Vegas. The event, which recently merged with the
seven-year-old International Tobacco Expo (ITE), is tailored for
retail tobacco outlets, smoke shops, and other tobacco merchants, with
exhibitors offering a large selection of cigarettes, cigars, related
accessories, and ancillary items. Seminars and roundtable

Their homepage can be found here with all the information and contact
data you might require. Although it is short timing, this will get
your product in front of your customers and allow you to meet with
distributors in person. It could be an invaluable experience for jump
starting this business for you, even if you only attend and view the
competition and talk to potential dealers and distributors.

Also noted on Smokeshop is the largest tobacco trade show link, The
Retail Tobacco Dealers of America:

"Founded in 1933, The Retail Tobacco Dealers of America, Inc. is the
country's largest trade association, dedicated to the sale and
promotion of tobacco products and related items. Every summer, it
hold's the tobacco industry's largest trade show: the RTDA Annual
Convention & International Trade Show."

Their pages are available here:

They note:

"The Retail Tobacco Dealers of America is the oldest, largest and most
active trade association representing and assisting retail

Our members include:

over 2,000 retail stores throughout the world selling tobacco products
and accessories - premium cigars, tobacco pipes, loose tobacco, cigar
and pipe accessories and gift items.

more than 350 manufacturers, distributors and service providers of
high quality merchandise

... and all fully committed to preserving the rights of adults to
enjoy legal tobacco products. "

Retail Tobacco Dealers of America
12 Galloway Avenue
Suite 1B
Cockeysville, MD 21030
Phone: 410-628-1674
Fax: 410-628-1679

You can become a member of this organization and have access to
contact information for their member base of retailers and
distributors. Or attend their show this summer.

The single page at Smokeshop mentioned above is actually a phenomenal
resource for you as it lists all trade associations and many other
useful resources for the tobacco industry with links and contact
information. For example:

American Wholesale Marketing Association, Inc.(AWMA) 
1128 16th Street NW 
Washington, DC 20036 
Tel: (202) 463-2124 
Fax: (202) 467-0559 

National Association of Tobacco & Confectionary Distributors 
3090 Boulevard le Carrefour 
Suite 504 
Laval, Quebec H7T 2J7 
Tel: (514) 682-6556 
Fax: (514) 682-6732 

And Tobacco Merchants Association (TMA)  
P.O. Box 8019 
Princeton, NJ 08543 
Tel: (609) 275-4900 
Fax: (609) 275-8379 

You should be able to pinpoint excellent contacts and potential
business associates through these links.

Searching a bit further for tobacco accessory distributors, I located
these resources for you, and once again at Smokeshop. Their site is
extremely thorough as you will see as you browse their pages. This one
shows Accessory Distributors and links - for example:

Altadis U.S.A. Inc. (Fort Lauderdale, FL) 
Arango Cigar Co. (Northbrook, IL) 
Ashton Distributors, Inc. (Philadelphia, PA) 
Bahia Cigars, Inc. (Miami, FL) 
Birchfield Collection (Glendale, AZ) 
Don Salvatore by Buddy Products (Chicago, IL) 
CAO International, Inc. (Nashville, TN) 
Clinton Tube (USA) (Plattsburgh, NY) 
Coppo Enterprises (New Port Richey, FL) 
Cristom Imports & Exports, Inc. (Tampa, FL) ...

And many, many more.

Their buying guide includes the following categories:
Supplies & Services 
And, you can advertise both your product and your desire to find
distributors both in their magazine and on their website:

You might also wish to read through the list of tobacco distributors
and wholesalers at

Now, once again, I am not privy to the exact nature and description of
your product, but from what I can assume, it may well be that not only
tobacco distributors, but gift distributors may be equally appropriate
to fill or augment you distribution needs.

AD/AMG lists a number of trade shows that might be appropriate for you:

And offers this list:

Again, you know better than I if this is appropriate for your particular product.

I would suggest having working prototypes or finished products, at
least a one page tear sheet on the features, benefits and pricing
structure and perhaps a sample of packaging readied when you discuss
this with distributors. And have your product protected if you can. Is
it patentable? Do you have a clever name you wish to copyright?

Now, you asked about pricing and margins and that is another area
where "it depends". It depends on the selling price of your product
and whether it is a $1 product or a $100 product. It depends on the
potential sales volume of the product. And, as anything else in life,
it is negotiable. If you have the next Pet Rock in your grasp, you can
negotiate giving away a smaller piece of the profits to a distributor.

But let's take a hypothetical:

Assume your product sells for $3 retail. The retail price should be
determined by what the end user will pay for your product and the
value it offers. A retailer is going to expect a markup of 40-50% on
inexpensive point of sale products, and so the wholesale price will be
between $1.50 and 1.80. Perhaps, they will be priced with additional
discounts for dozens, or gross quantities, or master cartons. There
are many formulas for this and they depend on the product and how
quickly they sell through the dealer.

The distributor will need to make a profit as well and this also will
depend on numerous variables. But in this case, we might assume a
margin between 25-50%. So they need to buy this product at a cost
between $ .75 and $1.35. And you also need to make a profit. So the
"general" pricing guidelines that show that your cost for a finished
product should be between 1/5th and 1/3rd of the retail cost seem to
hold true. This $3 retail product will need to cost you between .60
and 1.00 for it to be viable for all that handle it to make a profit.
Of course, this is just an example, but should serve to point out the
general parameters to be considered. Once again, ease of sale, cost of
freight, sales volumes, customer demand and many other factors will
influence the pricing of the product.

Following are a small list of links I discovered that address product
pricing and distributor margins that you might find informative:

American Wholesale Marketers Association

B2B International

"...The key to everything is stock turn and margins. A fast moving
consumable may have a 25 per cent margin (i.e. a 33 per cent mark up)
while a piece of kit which turns over at a slower rate may command a
40/50 per cent margin (i.e. a 66 per cent to 100 per cent mark up)..."
How to Find Distributors,4621,228918,00.html

VERY good information for you here.

Product Pricing Formulas


Understanding The Effects of Product Pricing

You can find hundreds more that address these concerns by searching
"product pricing" or "distributor margin" and similar searches.

"2) Legal issues: Are there certain restrictions against selling
tobacco related products."

Once again, not having the details of your particular product, this is
difficult to answer definitively. But we can uncover a few helpful

RJ Reynolds has an excellent page linking to state and federal laws as
relate to tobacco products:

For just one small example, California says the following regarding
smoking related products:

"...Any substance containing tobacco leaf, including, but not limited
to, cigarettes, cigars, pipe tobacco, snuff, chewing tobacco, or
dipping tobacco. Restricted products also include cigarette papers and
any other instrument or paraphernalia that is designed for the smoking
or ingestion of tobacco products or any controlled substance.

No person shall sell, offer for sale, distribute, or import any
tobacco product commonly referred to as "bidis" or "beedies," unless
that tobacco product is sold, offered for sale, or intended to be sold
in a business establishment that prohibits the presence of persons
under 18 years of age on its premises..."

Now, I am not a lawyer, nor does Google Answers provide legal advice
as you will note in the disclaimer below, but I would think that this
would NOT cover a multipurpose product such as a lighter which can be
used for other than tobacco related products, but MIGHT be included in
the above if it was designed specifically to attach to a cigarette
pack as you describe above. Only a lawyer will be able to properly
advise you.

You also might wish to search Thomas Legislative for laws and
requirements on tobacco accessories:

The organizations and distributors listed on Smokeshop should also
prove helpful to you in determining any legal requirements your
specific product may have to meet.

"3) Marketing ideas?"

Unfortunately, not knowing the details of your product, I can not
comment here. And in fact, this may be beyond the scope of this
question. If you choose to divulge the details of your product here at
Google Answers, you might post this as a separate question or series
of questions to get ideas from a number of our talented researchers.
Alternately, you can look into product development companies such as
those listed below. A caveat, however, as there is a breed of
"Invention Marketing Companies" that are less than totally above board
and you should choose a company here carefully and explore their
references. You might wish to read an answer I prepared for another
Google Answers question in a similar vein here:

selling an idea to a company

And do look at these lists:

Google Directory
Business > Marketing and Advertising > Consulting
Marketing Consultants

You can find many more repeating my search for product marketing consultant.

"4) What major events are coming up within the next year that I could
introduce this product at? (tobacco related or not)"

I think I have covered this with the links above on tobacco trade
shows and gift shows.

As you can see, this is a very broad subject with numerous variables.
If you think your product could be a winner, I strongly advise you to
protect your idea, explore possible competition, visit an appropriate
trade show and perhaps engage a marketing consultant to get you fully
informed and on your way. I wish you luck with your endeavor!

Search Strategy:

tobacco trade show
tobacco accessory OR accessories distributor
gift trade show
determine product pricing
tobacco related OR accessory +restrictions OR regulations
product marketing consultant

I trust my research has provided you with numerous links and valuable
insights to help answer you many questions on your new product idea.
If a link above should fail to work or anything require further
explanation or research, please do post a Request for Clarification
prior to rating the answer and closing the question and I will be
pleased to assist further.


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