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Is Black & Mild Cigars Charging Hood Tax?
By: Emory Brown
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I’ve been smoking Black & Mild cigars for years for a moderate price. However, recently I’ve noticed a strange trend happening in retail. False advertising! You go to one store and the price on the cigar says 79 cents, but they want to charge you a dollar. So basically that means the consumer is paying 20 cents in tax. Go to another store and their cigars are labeled 99 cents and they want to charge you a $1.25 or $1.37. Then you stop by another store and they will charge you $1.00. Something is wrong with this picture—or should I say, someone is ignoring the price on the packaging to boost yearly sales by 21 to 40 cents per cigar. Sounds like a serious case of “Hood Tax.”

First, let’s define Hood Tax. Hood Tax is an undocumented tax created by street salesmen or merchants in the hood that supersedes actual law. Think about it. McDonald’s sells a $1.00 burger for $1.00 with tax, which comes out to about $1.08. So what’s up with the B&M tax? So I had to take a moment to conduct a short investigation over a course of a few days to see why is the price on the sticker isn’t the price people pay at the counter.

Day 1:
I went into my favorite spot and grabbed a Black & Mild. The guy behind the counter says, “$1.00.” Paid the guy and enjoyed the mild.

Day 2: 
Went back to my favorite spot to purchase a Black & Mild and the same guy who sold me a cigar the day before says it’s $1.25. I asked him, “Why is it $1.25? The pricing on the tag says 99 cents. What happened?” He says, “No, they sent us the wrong boxes…$1.25 is what they cost.” I said OK, because I’ve been shopping with these guys for years and they’ve been cool. But my Spidey sense started tingling intensely. So I figured I’d do a walkabout to see what’s good in the hood.

Day 3:
On day three I decided to visit three stores and asked each retail cashier what they charged for a B&M.

At “Store 1,” I chose the “Casino Black & Mild” which is advertised for 79 cents. Went to pay and the guy said 1 buck. So I asked him why and he couldn’t give me a real explanation. I said to him “Why do I have to pay 20 cents in tax? The package says 79 cents. What’s the tax rate on it?” He couldn’t answer. All could say is what it costs. Hood Tax!

Went to “Store 2” and chose the same “Casino Black & Mild,” which is advertised for 79 cents. I asked him how much and he said $1.00. I asked him why and even pointed out that 10% on 79 cents is about 7.9 cents, which estimated to roughly 8 cents tax. That’s like 87 cents. All he could say was the same thing, that “There’s something wrong with the packages.” I left the store thinking to myself, “Hood Tax!”

On to Store 3 and the “Black & Mild” brand is looking really shaky. Walked in and asked the guy what he charged for a Black & Mild and he says “a dollar” and this one didn’t have promotional packaging at all. Hmmm…is someone pimping the “Black & Mild” brand and its customers? I think some retailers are charging “Hood Tax!”

Think about it for a minute. Four stores with four different prices on products that clearly state the price is 99 or 79 cents. Who’s scamming who? Is Black & Mild sticking it to their retailers? Are Black & Mild’s retailers sticking it the customers? Promo packaging says one price and Black & Mild distributors are telling their retailers another. Who’s doing the false advertising? Is the retailers’ “Word of Mouth” dominating and undermining B&M’s promotional efforts via packaging? The Black & Mild brand isn’t delivering on their brand’s promises. Customers are being exploited. Is Black & Mild exploiting its retailers?
Let’s pose a new question. How much can a retailer earn from Black & Mild sales quarter by quarter?  

We’ll use one store and one Black & Mild cigar to illustrate the brand’s ability to be a profitable product within the market place for single sales. We’ll use the "Casino Black & Mild" sold at 79 cents. 25 come in a box at what they are calling the “Pre-Promotion Price” which is a sales strategy to get customers to try the new flavored cigars. If sold at the pre-promotion price, the cigars will earn a retailer $19.75 per box of 25 sold. The boxes are sold wholesale for about $11.99. Now, if the retailer imposes “Hood Tax” and charges $1.00 for each B&M sold, the new value of the box is $25.00 a box

So, let’s dig deeper. The average gas station has at least 100 customers that visit per day. Let’s say that the average customer who smokes Black & Milds is about 25% of those 100 customers. So basically 25 cigars can be sold in one day at a gross profit of $25.00. If this was a consistent average, that means a retailer can earn $750.00 per box in a 30-day period. Which translates into $9,000 per year gross profit per box.

Now let’s look at this illustration from B&M smokers’ realities. If a retailer sells one flavor of Black & Mild cigars at an average of 75 cigars per day the per month, that’s $2,250.00 in cigars sales per month. If a retailer sells seven flavor-brands of Black & Mild at 75 a day per flavor, that translates into $15,750.00 per month in sales. Annual sales will translate into about $189,000 per year. The 21 cents that retailers’ taxes per cigar creates some serious extra moola. Now mind you, these transactions are not formally taxed nor do you receive a receipt for the transaction. In many cases it’s a straight cash exchange. We haven’t formulated the 25, 37, and 41-cent taxes imposed upon Black & Mild cigars at any given time by no prescribed law.

So my question to the branding world is, who’s giving the Hood Tax? Is Black & Mild ignoring the fact their ultimate customers, the smokers, are being unfairly overcharged to enjoy the smooth, mild flavor? Or are retailers ignoring the law and falsely stating that Black & Mild is screwing them out of profit by creating promotional pricing to get customers to try new flavors? Maybe Black & Mild is sticking it to the retailers. I think this may be one to sit back and contemplate with some smooth cigar smoke. 


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About the Author
Emory Brown is an award-winning creative director/writer whose mission is to spread the gospel of what great marketers can do when they put their heads together and work together for the greater good and not the bottom line. Working with many esteemed clients, his portfolio of work ranges in genre from conservative to ultra-modern including American Family Insurance, United Airlines, Mazda 6 and RX-8, Illinois Lottery, Tyson, Miller Genuine Draft, Nike Air Force 1, and Mercedes Benz, to name a few.  
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