By Frank Seltzer
Operating in Hawaii is a tough business, but for Christopher Maxwell it is like a hobby on steroids. Maxwell is the owner of Tobaccos of Hawaii on Oahu, the Big Island of Hawaii. His time with the store began in 2007, but the name goes much further back.
Tobaccos of Hawaii was initially a cigar shop in the Ala Moana mall back in the 1970s. When the owner died, the family closed it in 1982. James Holeman was a former U.S. Marine who was working at another store, but he wanted to do his own thing, and in 1994, he asked Jack Richeson—the son of the then-owner of Tobaccos of Hawaii—if he could use the name. Richeson said yes, and Holeman opened his new store, Tobaccos of Hawaii, on Atkinson Street, just down the road from the Ala Moana mall.
Maxwell became a regular customer of the store. At the time, he was working as a bartender. He never thought he would be working for himself because his dad was an educator and his mother was in real estate working for someone else; he was brought up to do well in school so he could go to work for someone. But while he was attending college in Oregon and working toward his chemical engineering degree, he started bartending. Rather than finishing at Oregon State University, he packed up and moved to Honolulu to seek his fame and fortune. Maxwell says he still misses it. “There is something about going to work and it’s a party. Everybody wants to be your friend. Many of my friends on the mainland are people I met while bartending.”
Maxwell would come into the Atkinson Street store about four times a week to relax with a smoke until the store went smoke-free. Business went up by about 30 percent with the change because people coming in to buy a product no longer smelled like they had been smoking all day in the 500-square-foot store. Maxwell stopped coming in regularly at that point, just stopping in once or twice a month to see what was new. One of those times, Maxwell asked the owner what was new, and he replied that he was selling the store. Maxwell’s response was, “You should sell it to me.”
It took about four months, but finally the deal was made. One of the main problems in the transaction was that the Atkinson Street store always had new landlords—the previous owner was on his fourth landlord—and transferring the lease was tough. In fact, within six months of the deal, yet another landlord took over.
One of the first things Maxwell did was add a smoking lounge. The beauty shop next-door to him had been vacant for several years, and at 1,000 square feet, it gave him room to expand the selling floor. Maxwell took the old store footprint, added ventilation and made that the lounge. He said it was not his best decision. “It seemed to be a no-brainer, but it was not a good decision, business-wise,” he says. “It tripled my rent without increasing revenue. But it was good to try.”
Nevertheless, the Atkinson Street store did well. It was the only cigar shop in the state with a smoking lounge. In 2010, Maxwell opened a second store in Wahiawa on Oahu, and then in 2012 he opened a third on the Big Island in Kamuela.
But the troubles with the landlords continued on Atkinson Street as the real estate was a prime location right across from the Hawaiian Convention Center. Maxwell says only about 5 percent of his business came from the convention center. Most of his customers were people who lived in the area, although he says his biggest day for the convention center was usually the day before the Honolulu Marathon. “You have 35,000 to 38,000 people running. If you get 1,000 of them buying a cigar, that’s a pretty good day.”
By 2015, Maxwell began looking for a new location. It was a good thing too because he got notice that the latest landlords were forcing him out in April 2016. In 2016, Maxwell opened his new location on Beretania Street. He cut back the Atkinson Street store to the original footprint, losing the smoking lounge because the new store had plenty of space for one. The April date moved to November, then to April 2017, then again to November 2017 and finally to April 2018. Maxwell kept the Atkinson Street location open until the end of 2017, giving it two holiday seasons and plenty of time to convert his patrons to the new store on Beretania Street. The new store has a 500-square-foot retail space and an 800-square-foot lounge. He also closed the Wahiawa location in June of 2017 because of a loss of business.
Hawaii has a 50 percent tax on cigars and a 70 percent tax on OTP, which makes the prices high. The Wahiawa store was located by Schofield Barracks—home to the 25th Infantry Division. The store used to have good sales from the servicemen and women until the base exchanges began carrying cigars. As Maxwell notes, cigars sold at base exchanges are exempt from Hawaiian taxes, putting him at a big disadvantage. The other issue was that when the state raised the minimum age to purchase tobacco to 21, the age at the exchanges remained 18. The exchanges do not carry as many cigars as his shop, so he often makes deliveries to his old customers near the barracks on his way home.
The base exchanges aren’t the only competition. The biggest challenges for Tobaccos of Hawaii are supermarkets, a wine store and liquor stores that all operate on different margins. R. Field is a gourmet part of the Foodland supermarket chain and features high-end food, wine and cigars. The company has eight locations across the state, with the biggest selection of cigars being about five blocks from Tobaccos of Hawaii’s location on Beretania Street. Fujioka’s Wine Times also carries a wide selection of cigars on Oahu. Then there is Tamura’s Liquor store, which has locations across the state.
But because it is a small state and community, Maxwell gets along with the others; they even coordinate events so they do not step on each others’ toes. In fact, some of the people who are his competitors can often be found in the Tobaccos of Hawaii lounge on Beretania Street in Honolulu.
For his product mix, Maxwell focuses primarily on the big guys, as he calls them—General, Altadis, Fuente, Drew Estate, Padron, My Father, Oliva and La Flor Dominicana. He is careful to avoid what the other stores have. He does carry some Tatuaje but notes Fujioka’s carries much more. R. Field is more heavily into the boutique brands, while Tamura’s carries a range of other boutiques.
Maxwell is also realistic about sales in the state. “A lot of the guys who smoke cigars in Hawaii buy on the Internet. They will come in to try a cigar, but then if you can buy something for two-thirds the price here, wouldn’t you? So if they like it, they will buy the boxes on the Internet, which is what I did before I owned a tobacco shop.”
While the state officially bans smoking in most places, there are bars on Oahu where you can light up a cigar. Tamura’s took over Row Bar, an outside venue where cigar smoking is allowed. Then there are the Irish bars, O’Tooles and others, where smoking inside is permitted. Maxwell also points out that while the state and county ban smoking on the beach, you can still do it. “You can smoke on the beaches that are not under the city, county or state control. If you are on wet sand, you can smoke legally. The city and county and state don’t have jurisdiction over that land because it is federal. Be on wet sand and you know you are within the high tide mark, and you are good to go.”
While his store on Oahu is a traditional tobacconist, avoiding most cigarettes other than premiums, he also chose not to embrace vapor or glass. Instead, he sells real pipes. The store in Kamuela is a different story. On the Big Isle, in addition to some cigars, the store sells a lot of glass pipes, roll-your-own and papers.
Maxwell continues to prove that even in a difficult environment, you can still do good business as a traditional tobacconist.