Thursday, February 08 2007
The recent news that the Danish Skandinavisk Tabakskompagni acquired Nashville, Tennessee-based C.A.O. International through its wholly-owned subsidiary ST Cigar Group was only the latest in a continuing trend of European acquisition of the American cigar industry.
But the purchase now places most of the top U.S. cigar distribution companies in European hands, a trend which is likely to continue. Until the Cigar Boom of the mid-1990s, almost all of the major cigar distributors serving the U.S. market were American owned. That changed quickly toward the end of the decade:
1997: Tabacalera of Spain bought its way into the American market with the purchase of machine-made giant Havatampa, Inc. and handmade distributor Hollco-Rohr, which owned the American trademarks for important Cuban brands such as Juan Lopez, Romeo y Julieta and Saint Luis Rey.
1999: Swedish Match purchased the machine-made cigar business of General Cigar, giving Swedish control of brands such as Tiparillo and White Owl. Then it bought Miami-based El Credito Cigar Co. from Ernesto Perez-Carrillo, who owned the U.S. trademarks for La Gloria Cubana, El Rico Habano and Los Statos De Luxe, among others.
Later that same year, SEITA, the French tobacco monopoly, purchased Consolidated Cigar Corporation for $370 million and assumed debt, placing the largest U.S. cigar distributor in foreign hands. By the end of 1999, Tabacalera and SEITA merged to form Altadis, S.A., bringing Consolidated, Hollco-Rohr and Havatampa under one roof.
2000: Swedish Match took control of General Cigar, and completed its purchase in 2005. The acquisition made Swedish Match the second-largest premium cigar company in the world, behind Altadis.
2003: Altadis purchased a controlling interest in J-R Cigars, the largest retailer of cigars in the U.S., with the option to buy the rest in 2008.
Another large U.S. player, Davidoff of Geneva, has always been European-owned, leaving the J.C. Newman Cigar Company as the only top-tier U.S. premium cigar company not owned by European interests today. Among the machine-made cigar distributors in the U.S. market, giant Swisher International – home of King Edward and the Swisher Sweets line – continues to be U.S. owned and operated.
Of course, there are other, smaller companies which are not Europe-based: Camacho Cigars, Rocky Patel Premium Cigars, Tabacalera Perdomo, Torano Cigars and others. But there are more discussions taking place. It may not be long before the only thing American about the cigars we smoke is the Surgeon General's warning!
The do-gooder City Council of Charleston, South Carolina passed an indoor smoking ban by a 9-4 vote on January 23. The measure permitted smoking to continue in retail tobacco shops, in existing cigar bars and in some hotel rooms.
But a lawsuit is now expected as there is only one "existing cigar bar" in Charleston – Club Habana – whose entrance is through a Tinder Box store. The cooperative arrangement supports both businesses, but prevents other stores from expanding into the same arrangement. Nice going, Charleston.
With better information now coming from member companies, the Cigar Association of America distributed its U.S. import-export report for the 11 months ended November 30, 2006, showing only a slight decline for the year as a whole.
Through the end of November, some 282.4 million premium cigars entered the U.S., compared to 296.7 million in 2005, a reduction of 4.8% for the year. The entire decline is attributable to imports from the Dominican Republic, now accurately reported to have shrunk by 10.02% through November to 156.4 million, while imports from Honduras have been level and Nicaraguan imports have risen by 8.7% to 50.65 million.
Nevertheless, with the usually-strong month of December to go, it appears almost certain that imports will top the 300 million mark, a level only achieved in 1997 (417.8 million), 1998 (334.6), 2004 (307.6) and 2005 (329.5). If December imports are in the range between 2005 (32.4 million) or 2004 (26.8 million), the annual total will reach between 309 and 315 million, fourth-best ever.
- Rich Perelman in Los Angeles
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Reprinted by permission. Heard in the Humidor is a publication of Perelman, Pioneer & Company. Copyright 2007; All rights reserved.
