Cigars, Cigar Information and where to find Premium Cigars, Discounted Cigars and even Cheap Cigars - HALF-YEAR REPORT SHOWS CIGAR IMPORTS STRONG

HALF-YEAR REPORT SHOWS CIGAR IMPORTS STRONG

HALF-YEAR REPORT SHOWS CIGAR IMPORTS STRONG

Plus: Altadis emerging from first-quarter cigar slump

Los Angeles, August 31 – Ten years ago, the Cigar Boom hit its highest point ever with a ridiculous 417.8 million cigars imported into the U.S. That figure has never been approached.

But the second-highest total on record came in 1998 when 334.6 million cigars came into the U.S. and that mark could be challenged in 2007.

Cigar import figures for the first six months of 2007 have been distributed by the Cigar Association of America and show another powerful year in imports. Through June of this year, some 140.8 million premium (i.e., handmade) cigars have been imported into the U.S., an excellent 8.3 percent gain over 2006, which ended with 311.0 million cigars imported.

But just as interesting is that the 140.8 million figure is also ahead of the 2005 pace, in a year when 329.5 million cigars were imported, close to the 1998 total at the end of the Cigar Boom. The CAA report for the first six months of 2005 showed that 138.3 million cigars were imported.

Leading the charge, of course, is the Dominican Republic, the world’s largest cigar producer. O the 30.5 million cigars exported to the U.S. in June, more than half originated there: 16.8 million or 55 percent. Second place goes to Honduras, with 7.3 million with Nicaragua third at 5.5 million. Smaller amounts came in from The Bahamas (almost all Graycliff) with 389,000, followed by Mexico (250,000), the Philippines (79,000), Indonesia (19,000) and Jamaica (6,000), although the latter is probably a reporting error.

For the year, Dominican exports to the U.S. have reached 76.3 million, trailed by Honduras (32.5 million) and Nicaragua (30 million, up 20.7 percent this year!).

America’s love affair with cigars is going far beyond premium brands, however. Imports of large cigars, including machine-made favorites like Swisher Sweets, White Owl and Phillies are up almost 16 percent through the first six months of this year to a stunning 399.5 million. The Dominican Republic is again the leader, but this time with 279.2 million cigars exported to the U.S., meaning that 202.9 million machine-made cigars from the Dominican – more than 72% of the island’s total – came into the U.S. at the same time as the 76.3 handmades!

And little cigars are going like hotcakes! Compared to 2006, little cigar imports, primarily from Brazil and India, are up 102 percent to 165.9 million for just the first six months of the year. Wow!

The figures are now only about imports, either. The U.S. is one of the world’s leaders in the production of little cigars and has exported 103.6 million units in the first six months of 2007; that’s an increase of more than 66 percent. That’s a lot of cigars being smoked by a lot of people across the country and around the world. So much for smoking bans . . .

Altadis six-month results show small cigar slump
While the financial markets watched the back-and-forth story of whether Altadis, S.A. would be sold and to whom, the company continued to sell cigarettes, cigars and run its logistics support businesses, quite successfully.

For the six months ended June 30, Altadis announced that its gross sales and net income were both up over 2006 half-year figures: 1.94 billion Euro (about $2.64 billion U.S.) in sales and 247 million Euro (about $337.0 million). The Cigar Division took a major hit in the first quarter, down 11.4 percent in sales, due mostly to problems in the U.S. These were solved in the second quarter, as Altadis U.S.A.’s performance was quite a bit better. A poor exchange for the dollar against the Euro didn’t help Altadis’s bottom line and for the first half as a whole, the Cigar Division’s sales total was down 4.5 percent in dollars but down 11.7 percent in Euros to 413 million (about $567.6 million U.S.).

Cigar Division earnings were still strong (with a 31.5 profit margin) at 130 million Euro ($177.4 million), down only a little in the second quarter after being off by 16 percent in the first quarter.

Altadis noted that its U.S.A. subsidiary emphasized its premium cigar lines in the second quarter and made a push behind Dutch Masters in the machine-made segment to regain profitability. “Underlying consumption remains strong in volume terms,” said the company’s report, “but the unfavourable exchange rate variation and the very strong comparison base of 2006 added to the challenging market trends, with a much more aggressive competition and consumers moving towards smaller sizes products in both natural and sheet wrapper, to drive the performance of the semester.

“Altadis has taken important measures to address these challenges and this reaction began to show positive results in that quarter in which Altadis USA has changed the trend and returned to growth driven by the Natural & Premium segment. New Altadis products were launched focusing on the cigarillo category, new flavours (as for instance, grape and coffee) and product presentation innovation.”

Altadis noted continuing growth in the sales of Cuban cigars of 6.8 percent in dollar terms, but a loss of 1.2 percent in Euros because of the exchange rate issues at 69 million Euro (about $94.1 million U.S.). Sales were strong in Germany, Italy and Spain and moving up in emerging markets such as Asia, Latin America, Morocco and Russia.

The company’s core business – cigarettes – did well in the first half of 2007. Sales totaled 881 million Euro (about $1.2 billion U.S.) with strong performance in Spain, Morocco and the Middle East.

Nearing the end:
If you’re a fan of Havana cigars, then Min Ron Nee’s 2003 masterwork, An Illustrated Encyclopedia of Post-Revolution Havana Cigars is a must-have.

No matter than it is big, unwieldy and heavy. The depth of information, much of it provided by former Habanos executive Adriano Martinez, is excellent and the illustrations are second to none.

The original edition sold out a long time ago, but a few copies of the 2005 re-issue, which cleaned up some grammatical and typographical errors, are still available. One source is a direct-sales outlet called Cigar-Wisdom.com and if you are a true enthusiast, then Nee’s book is de rigeur for your cigar library.
~ Rich Perelman

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