Sunday, April 05 2009
April 1 marked the effective start of new Federal taxes on cigars as a consequence of the passage of a bill in January to fund a major expansion of the State Children’s Health Insurance Program (SCHIP).
Characterized by Altadis U.S.A. chief executive Theo Folz as a "survivable" increase, the new taxes move the Federal tax on large cigars from 4.875 cents each to 40.26 cents each, an increase of 35.4 cents per cigar. That means:
=> On a pack of five cigars, the increased tax is $1.77.
=> On a box of 10 cigars, the increased tax is $3.54.
=> On a box of 20 cigars, the increased tax is $7.08.
=> On a box of 25 cigars, the increased tax is $8.85.
So prices will be higher, but a box of 25 that sells for $100 today should only cost you $108.85, right?
Not necessarily. An open question that potentially impacts every state except Florida, Pennsylvania and New Hampshire (where there are currently no state taxes on cigars) is how local tax boards will react to the new SCHIP costs. Since most states tax cigars based on the wholesale price charged to the tobacconist, will the tax be charged on the manufacturer’s actual sales price exclusive of the SCHIP tax? Or will a state insist that the manufacturer’s price include the SCHIP tax and therefore charge a state tax on the Federal tax?
This isn’t clear yet in many states, but it’s a significant issue in states where the cigar tax ranges upwards of 40% such as Alaska (75%), Arkansas (68%), California (45.13%), Colorado (40%), Minnespta (70%), Montana (50%) and Vermont (41%). Check with your local tobacconist on how they are handling this.
On the positive side, there is no retailer "floor tax" in the bill for large cigars, but there is for little cigars, cigarettes and other tobacco products. Little cigars, incidentally, will be taxed at the same rate as cigarettes now, at $1 per pack of 20.
>> There are three basic elements in any cigar: the filler, binder and wrapper leaves that are woven together by the skilled hands of the torcedor. But no matter how good the maker, if the leaves are not in harmony, the cigar is worthless.
That’s the point that C.A.O. President Tim Ozgener will be making on the new C.A.O. "eLements" tour that will debut next Tuesday at Tobacco Junction in Tyler, Texas. The program will feature a "deconstructed tasting" that gives an insight into the newest C.A.O. blend, the Lx2.
Introduced last year, the Lx2 – " ligero times two" – features two types of ligero leaves in a three-nation blend of Nicaraguan, Honduran and Dominican tobaccos in three sizes. It’s a full-bodied cigar that was one of the highlights of last year’s International Premium Cigar & Pipe Retailers Association convention and trade show.
"The eLements event will provide a very hands-on experience as to what goes into blending a particular cigar," notes Ozgener. "We break down the different ligero tobaccos that are utilized in the Lx2 blend into three individual ‘puros’ (cigars composed entirely of one type of tobacco), smoking each one on its own and cleansing the palate between cigars. In the end, we smoke an Lx2 Rob so that the participant can literally taste how all three tobaccos marry together in order to create the final desired flavor."
Beginning in April, the C.A.O. eLements Tour will crisscross the U.S. to demonstrate the impact of blending. Dates already set include stops in California, Connecticut, New Hampshire and New York with more to be scheduled. The program is expected to continue through the summer.
>> Careful cigar shoppers may have noticed new entries in many of the Altadis U.S.A. brands as additional sizes are being added for the benefit of fans of specific brands. Already in the works and available soon at the smokeshop near you:
=> A new Short Torpedo of five inches and 48 ring gauge in the popular Omar Ortez Originals series from Nicaragua. "We love the shape," said Altadis U.S.A. Vice President Janelle Rosenfeld, "and the brand is extremely popular. Everyone seems to love the blend, so we created this great new size."
=> A fourth Te-Amo World Selection: Cuba. Already available in the Dominicana, Honduran and Nicaraguan blends, the newest World Selection blend doesn’t use Cuban tobacco. But, as Rosenfeld notes, "Alberto Turrent is one of the great tobacco and cigar men alive. He knows tobacco and cigars as well as anyone and better than just about everyone. It is his special blend reminiscent of a Cuban cigar." It will be offered in all three World Selection sizes: Robusto (5 x 54), Toro (6 x 54) and Churchill (7 x 54).
=> New tins of four or five cigars in a short panatela size of 4 1/2 inches by 38 ring in six different brands: H. Upmann Vintage Cameroon, Montecristo Reserva Negra, Montecristo White, Romeo y Julieta Habana Reserve, Romeo y Julieta Reserva Real and the Trinidad Habana Reserve. All of these will be handmade.
=> Spectacular tins of 10 full-sized cigars in six of Altadis U.S.A.’s most popular blends in: H. Upmann Vintage Cameroon in Robusto, Toro and Belicoso sizes; Montecristo Classic (also in three sizes); Montecristo White (3 sizes); Romeo y Julieta Habana Reserve (3 sizes); Romeo y Julieta Reserva Real (3 sizes), and Trinidad Habana Reserve (also 3 sizes).
Altadis U.S.A. issued tins of three and four cigars in sizes up to Toro and Belicoso earlier in the decade with great results.
It will be interesting to see how this unique packaging works for what would have been, in the past, standard-style boxes of 10.
- Rich Perelman in Los Angeles
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Reprinted by permission. "Heard in the Humidor" is a publication of Perelman, Pioneer & Company. Copyright 2009; All rights reserved.
