Sunday, August 13 2006
Last year was one of the best on record for premium cigars in the United States. More than 321 million were imported, third-best ever, as imports rose for the sixth consecutive year.
That was last year. 2006 is a much different story.
Figures released by the Cigar Association of America showed that through May, imports of premium, handmade cigars were down 28.5% for the year with nearly all of the decline reported from the Dominican Republic.
Last year, premium cigar imports into the U.S. totaled 108.3 million after the first five months of the year, but only 77.5 million in 2006. Import totals for Nicaragua are up for the current year - 20.1 million against 18.1 million in 2005 and Honduran totals are down just a little (27.7 million this year vs. 28.7 last year). Totals for other, small exporters are about even.
But the Dominican Republic, the world's largest cigar-producing nation, is way down. After five months last year, some 60.1 million cigars had come to the U.S. This year? Only 28.3 million: down about 53%!
However, that may not be bad, as Cooper Gardiner, Senior Vice President of General Cigar noted last month.
"We need sustainable growth," he said in an interview at the Retail Tobacco Dealers of America trade show in Las Vegas. "Not like last year's spike, where imports [of handmades] went up more than 13%. That's too much. But four or five percent a year would be fine."
The total number of large cigars - premium and machine-made being imported into the U.S. continues to grow, however. A tsunami of machine-made cigars is coming from the Dominican this year now totaling 49.0 million through May compared to just 10.8 million in 2005! If one counts the machine-mades, total imports of large cigars are actually up for the five months through May at 270.45 million against 258.52 million in 2005.
Despite the import decline, Swedish Match, parent company of General Cigar, reported good earnings for the second quarter ended June 30, with an increase in cigar sales of 6% from 841 million Swedish Kronor (abbreviated SEK) to 888 million (or from $118.2 to $124.8 million U.S.) and half-year sales up 5% from 1.57 billion SEK to 1.65 billion ($221.2 to $231.4 million).
Profit margins in cigars remain handsome at 22.7%, a little better than in 2005 (except for a restructuring cost item).
The company reported that "Delivered unit volumes improved significantly in Europe while volumes were somewhat lower in the U.S. market for machine-made cigars and stable in the U.S. premium segment."
Think theres nothing new in cigars? Check out C.A.O.'s unique "Poker Night Humidor Carry Bag." It's a "why didnt I think of that" item that incorporates two decks of cards, 300 chips and five dice on one side of the bag and space for a dozen or more cigars on the other. Made from black ballistic nylon, it even incorporates Spanish Cedar lining and a Humidipak on the cigar side to keep the smokes fresh. Considering the popularity of poker and cigars, it's a great idea, lacking only a cutter and matches to be complete. The bag has a carry handle and a shoulder strap and retails for $200.00.
Short fillers: Tabacalera Perdomo's new "Caddy" pack is now available, with four Perdomo Golf balls (made by Callaway), a cutter and four Perdomo Golf Double Eagle Tubos, all for $39.95 . . . the U.S. Patent & Trademark Office told the Cuban government-owned company which held the U.S. trademark for Havana Club rum since 1976 that its renewal application was denied, handing the mark to Bacardi, which bought the rights to it from the pre-Revolutionary Cuban owners in the 1990s. Bacardi, wasting no time, is debuting its version of Havana Club, based on the original Arechabala family blend, in south Florida immediately . . . find our latest tasting review, of the five blends in the Savinelli USA line, in our News & Views archives for August 11.
- Rich Perelman in Los Angeles
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Heard in the Humidor is a publication of Perelman, Pioneer & Company.
Copyright 2006; All rights reserved
Photo credit: Ben Askew (visit his site at Cigar-Mogul.com)
