ENCOURAGING RISE IN JUNE IMPORTS

cgr_pix-warehouse_a_150x250Los Angeles, August 26, 2010 – Times are tough in the cigar trade . . . but they could be much worse.

The Cigar Association of America's figures for June showed surprising strength with 22.74 million premium cigars coming into the U.S., some 29.4% better than the anemic figures from the post-SCHIP period in 2009, but also 17.3% better than the 2008 total of 19.39 million.

And for the first six months of 2010, the import total of 108.94 million is well behind the 147.59 million SCHIP-influenced total of 2009, so a better comparison is to 2008, where the first six months had 116.22 million, only 6.3% less. The details:

  • As usual, the import parade was led by the Dominican Republic, with 9.12 million cigars sent to the U.S. in June, 23.4% better than in 2009 and 55.8% better than 2008! For the first half of 2010, Dominican cigar exports to the U.S. totaled 45.92 million, well down from 2009 (76.46 million), but slightly ahead of 2008 (46.02 million).

  • Nicaragua continued its torrid pace with 7.53 million cigars sent to the U.S. in June, well ahead of last year (5.09 million) and 2008 (5.31 million). For the year, Nicaraguan premium-cigar exports totaled 38.33 million, nicely ahead of 2009 (35.49 million) and 2008 (31.53 million). The popularity of Nicaragua as a production center has been aided not only by the brands resident there, but also a shift in cigar making of some brands from Honduras. In any case, a sixth consecutive annual rise in exports from Nicaragua appears likely for 2010.

  • Honduras continued in third, sending 5.77 million premium cigars to the U.S. in June, better than in 2009, but well down from the 8.11 million exported in 2008. The half-year totals, however, showed how deeply production has been reduced: from 37.58 million in 2008 to 34.19 million in 2009 to only 23.99 million this year.

    • Small amounts of cigars from Mexico, Panama and the Philippines were also sent to the U.S. in June, but the "big three" accounted for 98.6% of all U.S. imports.

    In the meantime, the staggering rush of machine-made cigars into the U.S. continued with no let-up in sight. In June, total imports of large and little machine-mades reached 186.77 million as against 153.63 million in June of 2009, and the year-to-date figures are even more staggering:

  • 2010: 941.62 million large and little machine-mades
  • 2009: 714.09 million
  • 2008: 471.31 million

    • That's a year-over-year rise of 31.8% and a two-year gain of an astonishing 99.8%, some of which is accounted for by the movement of production to the Dominican Republic from what were U.S. factories. Still, it's a lot.

    These figures are fairly good news in view of very tight inventory controls being exercised by retailers nationwide. U.S. government figures on cigars held in U.S. warehouses at the end of June showed just 640.83 million on hand, well down from the 800 million-plus levels of January-March of 2009. Retailers are taking in what they think they can sell and not more.

    Amid the taxes and smoking bans, the continued increase in total cigar sales is a positive. For premium cigars, the import figures are mixed; this is no renaissance, but the strong Dominican and Nicaraguan figures show that the American market is still a resilient one, roughly maintaining its balance with the past three years, on pace for 270 million cigar imports for 2010.
    ~ Rich Perelman

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