The tobacco industry has long been controlled by a small number of companies worth billions–– and they are eager to keep it that way with an industry structured to push out new competition. Antony Levinson, CEO of Pearls–– a small, emerging tobacco company and just the type big tobacco works to keep out–– describes the system as designed to fail for newcomers, who are forced to navigate a phalanx of regulations and pay import and export taxes up to 70%.
The oligopoly structure allows the current industry players to eschew innovation and focus almost entirely on lowering costs. Additionally the way to make money in tobacco is to sell large quantities and expensive taxes creates a barrier to entry as most small business owners cannot compete with industry giants. Take Backwoods, a big tobacco product and main competitor for Pearls. Upon its inception in 1973, Backwoods promised high-quality tobacco made from Madura leaves aged for three months. Since then, their production has exploded, and quality has declined. Backwoods turned to machine rolled wraps and stopped making Madura leaves in favor of the cheapest, fastest alternatives, while continuing to raise prices. Consumers noticed, but sales have remained high due to lack of competition. This well-oiled system has kept many from even trying to enter the tobacco industry.
Antony Levinson saw these obstacles not as a barrier, but as a challenge he could meet. And he sees Pearls’ success thus far as a testament to his company’s value. The way in which Pearls has taken on the seemingly insurmountable task of competing with big tobacco is admirable. The brand is young, gritty, and confident in the value of their brand. After their recent launch they’ve experienced resounding success with positive customer feedback. Instead of trying to emulate big tobacco’s model, Pearls is offering what companies like Backwoods have abandoned: dedication to a quality product. Instead of buying a factory, Pearls bought a farm in Nicaragua and began growing Madura leaves.
The leaves are then aged for two years for the absolute best quality possible and hand-rolled into premium rolls. The cone-shaped final product is finished with a glass tip, and patent-pending easy tobacco exit system for rolling blunts. The value of their brand lies not in keeping up with big tobacco, but in changing the rules of the industry.
New York Herald 