Thursday, April 16 2009
Reported by Rich Perelman (
CigarCyclopedia.com)
Los Angeles – It's a confusing time for cigar makers, retailers and smokers as prices are changing everywhere due to the imposition of the new Federal taxes on cigars and other tobacco products to create expanded funding for the State Children's Health Insurance Program (SCHIP). The new tax added 35.4 cents to the price of each
cigar (now 40.26 cents total) or about $8.85 to the wholesale price of a
box of 25, although many manufacturers have simply added the full tax amount, or about $10.07 to each box of 25.
However, Nick Perdomo has staked out a bold position on his Tabacalera Perdomo brands, which he outlined in a letter to the trade which we reprint below:
Many people are still in the dark on what cigar manufacturers are going to do with this tax. While many in the industry are telling us that most are having price increases on their cigars and passing the tax on to the consumers. With our prices going up every day, I can truly understand their positions. I cannot speak for other companies, but I felt it was very important to speak to you directly on Tabacalera Perdomo's stance.
Here it is:
1. We will absorb (eat) all the SCHIP tax on over 70 percent of our portfolio (Yes, you read that correctly).
2. On all Perdomo Reserve 10th Anniversary, we will eat the entire SCHIP tax (Yes, you read this correctly also).
3. On Perdomo Reserve 10th Anniversary, we will also be having a Price Decrease (Again you read this right). We are dropping our prices on all our Perdomo Reserve 10th Anniversary by $25.00 to $37.00 per box at retail!!!
4. [On] Perdomo2, Perdomo Habano and Perdomo Lot 23, we will just pass on the tax. Believe me, the prices are still fantastic on these great and popular cigars.
If we don't then I will have to start walking the street with a tin cup in my hand asking for money.
You might ask yourself "Has Nick gone Crazy?!" Well friends, I am doing this because in my heart I don't think we can afford to raise prices. Matter of fact in the last 16 years in this business I have raised my prices only once and that was a nickel. I also believe in these tough times, going against the tide and eating most of this tax and in some cases dropping our prices on a very popular brand shows our true commitment and good will to each of you, our loyal customers. As most of you know, we don't spend much money on magazine advertisements. We spend our hard earned money on grass-roots efforts in events and shows. That's where I and my staff have met tens of thousands of you. We spend our money in growing the finest Cuban-seed tobaccos. As you can clearly see, our priorities are our customers. And by the grace of God, we have grown this small family-run company yearly, where even my mom still works. You are all to thank for this. Our retailers and consumers have spread the word on Perdomo throughout the years and this is our payback to the industry that I dearly love. In these tough times, we are all taking it on the chin.
I truly believe that I have made the right decision and we also believe that we will continue growing our company and continue growing the Perdomo name by offering great cigars at even greater prices.
Again from the entire Perdomo team here in the United States and in Nicaragua, we want to thank you for your support.
Sincerely,
Nick Perdomo
President
Tabacalera Perdomo S.A.
Source: CigarCyclopedia.com News & Views (April 17th, 2009)
