Cigars, Cigar Information and where to find Premium Cigars, Discounted Cigars and even Cheap Cigars

WHERE ARE WE NOW?

Plus: Cigar imports steady in May, stay ahead of 2006

Los Angeles, August 1 – In this summer of the smoker’s discontent, where are we now?

As authorization for the State Children’s Health Insurance Program (SCHIP) heads toward an end date of September 30, 2007 – ten years after the program was created – the fight for funding in the U.S. Congress is heating up on the edge of an August recess that won’t see Congress back in session until after Labor Day.

At present, S. 1893, introduced by Max Baucus (D-Montana) has been submitted to the Senate Legislative Calendar for debate and vote. In the House of Representatives, H.R. 3162 was introduced on July 24 by Michigan representative John Dingell (D) with nine co-sponsors. It has passed through the House Ways and Means Committee but has yet to be reported out of the House Energy and Commerce Committee.

There are substantial differences in the bills as regards cigars and cigarettes:

• The Senate bill changes the tax rate for large cigars (which would include virtually all premium cigars) from 20.719% of the wholesale price to 53.13% with the cap on such taxes rising from 4.875 cents per cigar to $10.00 per cigar.

• The House version changes the tax rate for large cigars from 20.719% of the wholesale price today to 44.63% and changes the cap from 4.875 cents per cigar today to $1.00 per cigar.

• On cigarettes, the current rate of 39 cents per pack would be raised to $1.00 per pack in the Senate version and from 39 cents today to 84 cents per pack in the House bill.

Both are enormous increases in taxation and President George W. Bush has threatened to veto any bill with a tax increase in it.

The inanity of this funding mechanism for the SCHIP project becomes clear from a July 30 study sent to House Ways and Means Chair Charles Rangel (D-New York) from the Congressional Budget Office (CBO). In it, CBO Director Peter Orszag notes:

“On balance, the spending and revenue changes would reduce federal deficits by $1.4 billion through 2012, but would increase federal deficits by $72.9 billion for the 2008-2017 period.”

Moreover, as to cigars, the Congressional Research Service (CRS) notes that “cigarette taxes account for virtually all tobacco tax revenues.” So, the Congress – our representatives – is ready to devastate the cigar industry for not much money at all.

And it gets worse: the CRS suggests that state tobacco taxes would be levied on the manufacturer’s wholesale price plus the new federal levy. Ouch!

What can you do to help? You already know: call or e-mail your Senator (about S. 1839) and your Representative (about H.R. 3162) . . . now!

Cigar imports continue strong:
U.S. cigar import totals continue to be strong for 2007 according to the May import report from the Cigar Association of America. Based on Customs Service data, a total of 26.33 million premium cigars entered the country, just slightly better than the 26.18 million total of a year ago.

For the year as a whole, imports continue to rise above 2006 levels, now 7.2% ahead at 110.26 million cigars compared to 102.90 million a year ago. At that rate, imports for the year would challenge the 1998 total of 334.58 million for second-highest ever. As usual, the Dominican Republic leads the way with 13.92 million imports for May, well ahead of the 12.40 million total for 2006. For the year-to-date, Dominican imports total 59.48 million or 53.9% of all premium imports, also head of last year’s five-month total of 56.99 million.

Nicaragua passed Honduras for the second-highest total of imports in May at 6.21 million, a big jump over the 5.26 million imported in May in 2006. For the year, Nicaraguan imports are also up, at 24.36 million, 21.1% ahead of the 20.11 million imported in 2006.

Imports from Honduras lagged a little in May at 6.12 million, down from 8.03 million in 2006. For the first five months of the year, Honduran imports were up a little compared to last year at 25.20 million compared with 24.38 million in 2006.

Combined, these three countries accounted for 98.9% of the import total into the U.S. through May.

Other import totals included 61,000 cigars from Mexico, 11,000 from the Philippines and 7,000 from Jamaica. Even though no imports were registered in May, the no. 4 exporter of premium cigars into the U.S. is the Bahamas – meaning the Graycliff Cigar Co. – with 422,000 cigars for the first five months of 2007. In fifth place is Mexico at 378,000 followed by the Philippines at 334,000.

Little cigar imports continued to race ahead in staggering numbers. For the first five months of 2007, some 148.33 million little cigars were imported into the U.S., compared to 64.33 million a year ago. That’s an increase of 231%!

The U.S. is also a major exporter of little cigars. Exports for May totaled 15.94 million little cigars, an increase of 53.4% over last year. And for the year-to-date, exports reached 81.11 million units . . . up 84.9% compared to 2006! The largest markets for U.S.-made little cigars include Canada (43% of the market) and Russia (25.5%).

Hammer time:
Cigar Auctioneer.com has been running a series of auctions for various sizes of the much-prized Ashton Virgin Sun Grown line. So far:

• A lot of 24 individual Sorcerer cigars (7 inches by 49 ring), with a suggested retail price of $9.80 brought 10 winning bids in an auction that ended July 23. Winning prices ranged from $10.00 to $24.10 and the biggest spender bought four cigars for a total of $48.00. The total for the 24 cigars (one full box) was $276.75 compared to the standard retail price of $235.20.

• In yet another demonstration that the robusto is king, a lot of 24 individual VSG Robustos (5 1/2 x 50), with a suggested retail price of $9.25, went for a total of $322.72 in an auction that ended July 30. That’s a considerable premium on the retail price of a full box, which retails for $222.00. There were nine winning bidders, paying from $10.00 to $25.87 each. Although one bidder got six cigars and another got five, the biggest spender was the high-payer of $25.87 who got three cigars for $77.61 or $4.70 the inch!

This week, 24 individual VSG Belicoso No. 1s (5 1/4 x 52) are up with the auction ending on Monday evening, August 6 at 9:59 p.m. Eastern time. The Belicoso No. 1 has a retail price of $9.25.

On eBay, three well-known Cuban Humijars sold last week for fairly strong prices:

• Two Partagas Humijars sold within an hour of each other for widely varying prices. The first to go was a good specimen which drew only two bids and finally sold for $457.74. Perhaps prospective buyers were using that auction to gauge the second, which drew 22 bids and sold just 35 minutes later for $699.95!

• A Ramon Allones Humijar, also in good condition, drew only one bid and sold for $399.99, even though it’s considered to be rarer than the Partagas!
~ Rich Perelman

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