Introduction
Kiowa Smoke Shops LLC has been a family business since the early 1960s, offering a variety of named brand tobaccos, cigars, cigarettes, and roll-your-own accessories.
Over the past decade, the tobacco industry has faced challenges due to regulations, judicial decisions, and tobacco opposition groups. Kiowa has experienced declining clientele, increased costs, and distribution difficulties. As a result, the company is developing a revitalization plan that focuses on cost reduction, improved efficiencies, new distribution and marketing channels, and the addition of a combined cafe and tobacco store.
The Company
Kiowa Smoke Shops is a class C Limited Liability Company based in Kansas. It is owned exclusively by Mr. Fernando Renaldo and his wife, Elizabeth. No new owners are anticipated in the near future.
In the 1960s, Mr. Carlos Armando Renaldo and his family left Cuba for the U.S. Leveraging their family connections, they created Santiago Cigar Store in Orlando, catering to the growing Cuban population. In 1979, Fernando Renaldo purchased the business and relocated it to Kansas City, renaming it Kiowa Smoke Shop. The company has since flourished, acquiring two other tobacco shops.
Products
Kiowa Smoke Shops offers a wide variety of specialty and named brand tobacco products, including cigars from Mexico, Spain, India, the UK, and other tobacco-producing areas. They also provide cigarettes, roll-your-own products, pipe tobacco, and accessories.
The Market
The United States is a leading tobacco exporter and importer and the second largest tobacco producer. However, the industry has faced a 16 percent decline in cigarette consumption and exports since 1991, with other tobacco products experiencing a similar loss. Kiowa Smoke Shops faces an unfavorable market due to higher prices resulting from the Master Settlement Agreement and ongoing opposition to smoking. Despite these challenges, the company possesses competitive advantages such as established supply channels, cost advantages, multiple locations, and plans for a combined cafe and tobacco store.
Financial Considerations
Kiowa is a limited debt company and expects increased profits from its revitalization efforts by the end of Year 1. Over the next three years, profits will be invested in the new website and cafe ventures. Cash flow is not anticipated to be a serious issue.
Objectives
To remain viable, Kiowa Smoke Shops aims to reduce costs by 15% in the next three years, expand its customer base through a new website and online ordering, and differentiate its customers’ purchasing experience through a tobacco cafe.
Mission
Kiowa Smoke Shops strives to offer quality products, brands, and responsive service at a competitive price. The company aims to provide a unique experience and maintain the highest standards of service in the tobacco industry.
Keys to Success
To succeed in an industry facing declining customers and increasing regulations, Kiowa Smoke Shops must focus on expanding the customer base, increasing customer retention through excellent service, and reducing costs through improved accounting practices.
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