Sunday, November 30 2008
It didn't take long for the first seasonal
blend from Rocky Patel – the Summer Collection – to sell out after it was introduced in April. The Summer Collection featured an Ecuadorian
wrapper and
Cameroon binder around Nicaraguan-grown
filler leaves for a medium-to-full-bodied blend offered in boxes of 20.
The new blend, called the Autumn Collection, began shipping in October and has a creamy tilt, also in a medium-to-full-bodied blend. The tobacco is completely different, however, with a Connecticut Shade wrapper and Honduran binder around an interior combination of Dominican and Nicaraguan-grown leaves.
The new Autumn Collection is offered in four sizes: Robusto (5 inches by 52 ring), Toro (6 1/2 x 52), Churchill (7 x 50) and a giant Salomon perfecto (7 1/8 x 58), only in boxes of 20.
Production was reduced for the Autumn Collection; where 12,000 boxes of the Summer Collection were made (240,000 cigars total), 10,000 boxes of the Autumn blend (200,000 cigars) were made.
>> Almost any smokeshop owner will tell you that cigar sales are down this year and import figures for premium cigars continue to show a significant decline for 2008.
Figures issued by the Cigar Association of America, using U.S. Customs Service data, for the first nine months of 2008 showed total premium cigar imports into the U.S. at 195.67 million units. That's down 17% from the 2007 total for the same period of 235.74 million, but that figure included an unknown quantity of little cigars and cannot be used for direct comparison. But imports are down.
As usual, the difference is the Dominican Republic. For the first nine months of 2008, Dominican cigar imports are down by more than 36% and little cigars cannot be blamed for all of that. Some 80.79 million premium cigars have been imported from the Dominican in the first nine months compared to 126.73 million in 2007. In September alone, Dominican import totals were down by 30%. At the current rate, Dominican imports may end 2008 at their lowest level since 1996.
Honduras, the second-largest exporter of premium cigars to the U.S., was up in September over 2007 and is up for the year! American imports of Honduran cigars totaled 9.05 million in September compared to 8.26 million in 2007 and for the first nine months, 62.18 million Honduran cigars came into the U.S., 8.3% ahead of last year's total of 57.41 million.
The no. 3 supplier of premium cigars to the U.S. is Nicaragua, also showing a small increase for the year to date. U.S. imports of Nicaraguan cigars fell slightly in September to 5.71 million, but through September 30, some 50.56 million Nicaraguan cigars had entered the U.S. this year, 3.5% ahead of the 2007 total (at the same date) of $48.88 million.
Those three countries accounted for 98.9% of all U.S. cigar imports, with small amounts coming in from Mexico (1.09 million), the Philippines (516,000) and the Bahamas (465,000) as well as Costa Rica and Jamaica.
If one looks at the total cigar import picture, the scenario is quite different: total imports are up!
For the first nine months of 2008, total cigar imports into the U.S. of premium, machine-made and small cigars jumped to 1.045 billion. That's 18.0% ahead of the first nine months of 2007. Machine-made large cigar imports have increased by 37.9% to 561.99 million in 2008 and little-cigar imports are up 18.6% to 287.32 million, although there is a question about whether about 126 million machine-made cigars from Colombia are large cigars or little cigars.
These figures, which do not include the massive machine-made cigar operations in the U.S. from Swisher International, John Middleton or Altadis U.S.A. in Puerto Rico, show the increased popularity of smaller and less expensive cigars, a worrying trend for makers of premium cigars.
>> In its first report of its full-fiscal-year performance since its $22.3 billion acquisition of Altadis, S.A. in January, Imperial Tobacco showed a 66% gain in total revenue and a 51% increase in profits from operations.
The British tobacco giant had total revenues of $36.6 billion (converted from British pounds) in fiscal year 2008 (ending September 30) and saw its operating profits rise to $3.97 billion (up 51%), including about eight months of combined operations with Altadis. Even without Altadis, Imperial's revenues were up by 11% for the year with profits from operations up about seven percent.
Imperial sees cigarette volumes declining by 3-5% in American and European markets, but continues to expand its reach around the world. In contrast to Altadis, which reported on the financial performance of its cigar business in detail, Imperial includes much less information since cigars are such a relatively small aspect of its operations. The highlights that were reported include:
Altadis's cigar revenues totaled $712.5 million for the eight months it was part of Imperial (since January 25, when the acquisition was completed) with operating profits of $184.3 million or a 25.9% operating margin. That's down somewhat from the 31.0% margin from Altadis's full-year report for 2007, so its profitability in the cigar sector has been impacted by some challenging market conditions.
In the U.S., Imperial's report noted that while it continues as the leader in the large-cigar market – counting handmade and machine-made cigars – smoking bans and the economic slowdown have had an impact on sales of premium cigars, with smaller sizes doing best. In the machine-made sector, cigars with natural-leaf wrappers such as Dutch Masters and Backwoods continue to do well and have been aided by the introduction of new flavors. Imperial noted that two price increases were made during the year.
- Rich Perelman in Los Angeles
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Reprinted by permission. "Heard in the Humidor" is a publication of Perelman, Pioneer & Company. Copyright 2008; All rights reserved.
