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GOOD TIMES ROLLING IN THE GATOR STATE! |
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 Plus: tobacco taxes backfire in Germany
Los Angeles, May 18 – Although it’s unfashionable to smoke and the anti-tobacco zealots are screaming for new laws and taxes, it’s a cigar boomtime in Florida. A bubbly story in the Brandenton Herald detailed strong performance from two area distributors, DomRey Cigars – makers of Cusano – and Heaven, famous for its promotional “Angels” as well as their extensive line of handmade, flavored cigars:
• Reporter Dana Sanchez filed a spirited report on Michael Chiusano and his expanding Cusano lines, including an eye-popping report that Cusano sales grew about 41 percent last year!
Chiusano has nurtured the business from a standing start and has recently found winners among serious smokers with his Cusano 18 line introduced in 2003 and the Cusano Corojo ‘97 which debuted in 2004. These are good cigars that are priced right.
The irony of that came through loud and clear when the Cusano Corojo ‘97 was mentioned in the tony Robb Report on the same page as a note about a $1,000 pair of jeans. Chiusano chuckled, “It’s amazing that they keep putting us in there because we’re not the $1,000 jeans.” The Cusano 18 had been noted previously in Robb.
The Herald reported that Cusano sales were $3.4 million in 2004 and on a pace to increase for 2005, with a staff of 13 now shipping to the U.S., Canada and Europe.
The company is also getting more aggressive in its promotions. Working with Cx2, local retailers in the Pittsburgh area and the Pittsburgh Pirates, Cusano hosted a smoker’s night at PNC Park earlier this season (Chiusano is pictured above, throwing out the first ball). The smoker’s area was tented and away from other fans and given the dismal attendance at Pirates games this season, was a smart way to get 100 more fans through the turnstiles . . . a practice which other low-attendance clubs would be wise to emulate.
Chiusano also had an insightful comment on the current rise in cigar sales. “Its more politically correct to smoke cigars than cigarettes,” he told the reporter. “It’s like the renegade thing, the anti-politically correct.” He may have something there.
• The article also quoted multi-store Tobacco World vice president Bill Holliway, who has seen interest expand in the 22-32 year-old-set, considered “kids” by most cigar smokers in their 40s and beyond.
“The younger group is going to cigars versus cigarettes,” he said, noting that cigarettes are getting most of the anti-tobacco publicity and cigar smoking tends to be a social or group activity (i.e., the Pirates game). The latter aspect is perhaps more important that given credit for and would account for the continued rise of cigar clubs, especially in Florida, but also in other locations nationwide.
• Sanchez’s article in the Herald closed with a lively yes-no debate over flavored cigars, championed by Heather Phillips’s Heavenly Cigar Company in Naples, Florida.
Flavored cigars traditionally been looked down upon by most cigar enthusiasts, although many pre-nationalization Cuban brands offered models with sweetened tips. At the start of the Cigar Boom in the early 1990s, a Cognac-infused cigar called El Sublimado was taken quite seriously as a new taste thanks to its extraordinary construction, top-grade tobaccos and delicate matching of the leaves with the Cognacs used. They had a top-end price to boot, too.
Phillips has taken the flavored cigar concept, retained the quality of a handmade cigar, then run wild. With flavors like Orange Dreamsicle, Raging Rum, Chocolate Thunder and Cupid’s Cherry Cream, the line has been aimed primarily at younger smokers and women since its introduction in 1996.
She told the Herald that 40% of her market is new smokers in their 20s and early 30s.
Now, she is also reaching out to the more traditional male smoker with an emphasis in its 10th flavor, the Celestial Cognac line. “It is unique among Heaven flavors,” noted Phillips. “We developed a special flavoring treatment that adds two more steps to our secret five-point process.
“This cigar delivers more authentic cognac flavor, which is a hit with those who appreciate the flavors of good cognac and a fine cigar.”
British tobacco chief chides Germany over taxes:
Imperial Tobacco Group chief executive Gareth Davis had plenty to say after a German revenue report showed a precipitous drop in tobacco tax revenue for the full year of 2004.
He told reporters on a recent conference call that two successive tax increases by Germany simply sent German smokers to buy their cigarettes in other, lower-tax countries. The Bloomberg news service reported that legal tobacco sales (i.e., fully-taxed in the country of final sale) fell in both France and Germany last year after sharp tax hikes: France by 21% after a 40% tax hike on cigarettes in 2004 and Germany by 500 million Euro (about $630.8 million!), when they had been expected an increase of more than a billion Euro!
Davis attributed the declines to the simple decision of smokers in these countries to buy from lower-tax nations, over the Internet or by rolling their own. The German government estimated the number of cigarettes entering its borders from other countries via these routes at 25 billion!
Governments which continue to see alcohol and tobacco taxes as salvation for ailing budgets are finding out the hard way that consumers are hardly interested in carrying social welfare programs on their backs. The market comes into play . . . but then what would European socialists know about that?
~ Rich Perelman
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