Jamaicans for decades have bought cigarettes by the stick and by the carton at corners shops, from streetside sellers, and a multiplicity of businesses that make money off a habit that is hard to kick.
What has been absent up to now is a dedicated retail channel focused solely on smokers, and selling cigarettes alone. That changed in July when the first U-Roll’em shop was opened in Kingston by a Jamaican couple resident in Florida.
It gets better. Customers get to hand-roll their own sticks – customise their own products – in an extension of the ‘grabba’ market, which offers the same options but in a more informal way. It’s not unusual for some smokers, for example, to season their grabba packets with marijuana.
The two Jamaicans behind the cigarette retail shop venture, Damian and Susan McKenzie, have a more sophisticated operation than the grabba trade, however. The husband and wife team owns 51 per cent and 49 per cent of the business, respectively.
The McKenzies are principals in the Palm Beach, Florida-based Tobacco Central LLC, which has set a target of 29 Caribbean countries to roll out their network of RYO – roll your own – retail outlets stocked with tobacco filling-station machines under a distributorship arrangement with owners of the RYO technology, Ohio-based RYO Filling Station Machine LLC. The American company also supplies the tobacco through a network of international sources.
The McKenzies, who migrated from Jamaica two decades ago, say that they have been pursuing different ventures for 20 years – putting them in a group dubbed ‘serial entrepreneurs’ – and are also owners of Total Sign Solutions and CNC Inc in Palm Beach.
They set up their first U-Roll’em Jamaica store on July 2 at The Domes Plaza on Hagley Park Road in Kingston, operated by their local subsidiary RYO Jamaica Limited. The tobacco is supplied by RYO from international sources.
On Tuesday, when Sunday Business walked in, customers drifted through the store, which, modelled on its US counterparts, is set up like a lounge where clients can relax.
Wood panelling was everywhere, and noticeable for its absence was the smell of smoke in the open-plan room.
“U-Roll’em is a personalised space for consumers. Smoking is very personal,” said general manager of U-Roll’em Jamaica Limited David McCallum.
“It is not an easy barrier to cross, in terms of getting people to change. But nothing beats repeat business, and that is what we have been getting,” said McCallum. “It was what tells us that the product has been accepted.”
A second store will be open by September, the McKenzies said in an interview from Florida via Skype.
Jamaica’s cigarette distribution market, which the couple estimates at close to 100 million sticks annually, is dominated by Carreras Limited.
Carreras acknowledged Friday that the U’Roll’em set up appeared to be a first for Jamaica.
The McKenzies, by their investment, are betting that RYO Jamaica Limited/U-Roll’em Jamaica Limited can score a substantial portion of that market.
U-Roll’em’s filling machine users who buy at least one carton, or 200 sticks, pay J$18 per stick inside the Hagley Park Road store, compared to the J$30-J$35 per manufactured stick sold on the local market.
The minimum purchase per customer is 10 sticks, which costs J$250, including tobacco, tubes, and machine use.
Noting that of all the Caribbean territories, Jamaica is one of the most lucrative tobacco markets, price-wise, Susan McKenzie said Tuesday that the start-up costs for the first outlet at The Domes was just about US$100,000 (J$8.6m).
This included design of the club-like decor and installation of three machines ranging from a desktop to a 200-stick, multiple-carton machine.
The newness of the venture makes it a bit difficult to predict performance, but if its commercial appeal tracks with US stores, then a rough estimate for sales would be “32,400 pounds, or 32,000 cartons, and one box with the minimum amount of machines in the smallest Jamaican ‘territory’,” said Susan McKenzie.
“The gross income from one carton of 200 sticks is J$3,000 plus GCT,” she said.
The term ‘territory’ is an internal designation of geographic distribution zones as demarcated by RYO Jamaica.
RYO Jamaica wants, eventually, to take the retail chain nationwide through a network of operators.
“We have divided Jamaica into 24 territories each with the potential of five or six machine locations. We are seeking operators for the other 23 zones in Jamaica and hope to build out the network within three years,” said Susan.
According to the entrepreneur, Tobacco Central will provide all machines and consumables needed for operation. Operators who install machines will buy them outright and then pay Tobacco Central a royalty fee that will cover servicing. Tobacco, sticks, and other consumables would be paid for separately.
Susan said that Kingston as a designated territory was being considered for another five U-Roll’em stores. The second is set to open at the end of September in a “high-traffic area”, she said, in response to the demand of current clientele to locate shops within a three-mile radius of their homes.
The development of stores, McKenzie noted, however, is not a core-expansion strategy. The company wants instead to distribute the machines – which she claims can pull traffic into any shopping location – but the outlets are being pursued to demonstrate the business to potential partners and as training centres.
All 24 Jamaica territories, based principally on major towns, are expected to be taken up in three years. Locations, McKenzie said, will be routinely inspected for quality of service.
McKenzie said the RYO Filling Station Machine, since its placement on the market in 2008, has cut rolling time of one carton of 200 sticks from the one hour on standard machines to eight minutes.
authorised RYO agents
The machines are distributed by a list of authorised RYO agents, whose names and locations are listed on the company’s website.
The names of the McKenzies and their two companies do not appear on the list, but Susan says Tobacco Central’s deal with RYO was signed 12 months ago and that the website does not capture international agents.
“The terms are private. The website is for US distributors, and an update is currently being developed for international clients,” she said.
“Anyone can call to find out who is the Caribbean distributor.”
Tobacco Central was formed one year ago in Florida. While the original intent was to open five to seven stores in the state in the first year, the McKenzies said RYO Filling Station Machine LLC offered them the Caribbean distributorship instead.
Jamaica is their RYO venture, where McKenzie says her market research shows neither anti-smoking campaigns nor the cut in income occasioned by the recession has made a dent in local demand for cigarettes, although Jamaicans have been searching for cheaper alternatives.
That search led to the grabba market – small dollops of tobacco sold in packets large enough to make a hand-rolled cigarette.
At U-Roll’em, store clients are offered “fresh” tobacco as well as tubes, cases, lighters, and other ancillary products. McKenzie touts as one of the biggest selling points the use of pure tobacco with no additives or fillers.
Smoking is personal, she said, and customers have responded well to the offer to roll their own products at a cheaper cost and free of additives.
By Avia Collinder