Cigars, Cigar Information and where to find Premium Cigars, Discounted Cigars and even Cheap Cigars - HOUSE PASSES SCHIP BILL WITH $3 TAX CAP ON CIGARS

HOUSE PASSES SCHIP BILL WITH $3 TAX CAP ON CIGARS

HOUSE PASSES SCHIP BILL WITH $3 TAX CAP ON CIGARS

Plus: cigar imports remain steady

Los Angeles, September 27 – The U.S. House of Representatives passed the compromise bill negotiated with the Senate to re-authorize and dramatically expand the State Children’s Health Insurance Program (SCHIP) late Tuesday night.

The House passes the measure by a vote of 265-159, with 45 Republicans supporting the bill and eight Democrats against it. That’s well short of the number of votes that would be needed to override a promised veto by President George W. Bush; it would take 289 votes to override the President's veto. However, the “yes” votes were up significantly from the first vote on the measure, which passed the House by just a 225-209 margin.

The Senate held debate on the measure yesterday and is expected to pass the same bill this week and sent it to the President for signature. The vote in the Senate is anticipated to be more than the two-thirds majority needed to override any veto; however, with the House still short of votes, the measure is likely to fail.

President Bush has said that he will veto the legislation because it costs too much: an expected $35 billion in all. He has supported a $5 billion increase in the program.

The current bill funds the insurance program on the backs of tobacco users, raising cigarette taxes by 256 percent from 39 cents to $1 per pack. For cigar smokers, the tax rate on large cigars will also be raised by about the same percentage, but the tax cap on cigars would go from $0.4875 per cigar to $3.00, a 6,154 percent increase!

As we have reported, there is no floor-stock tax in the House-Senate bill, good news for retailers since such a tax would likely result in the closure of many stores across the country.

Cigar imports hold steady:
Despite the cloud hanging over the industry because of the pending SCHIP taxes, cigar imports remained strong in July and are perking along at a very strong pace for 2007 as a whole.

The Cigar Association of America’s figures for July show 30.8 million premium cigars entered the country, a tiny 0.9 percent improvement over the 2006 total of 30.5 million.

For the year, however, imports continue to run ahead of last year’s totals by almost seven percent, at 171.5 million. That would project to year-end totals of about 332.5 million, third-best on record and just short of the 334.6 million in 1998, the last year of the Cigar Boom.

As usual, the Dominican Republic is the leader with 15.8 million cigars imported in July, actually down a sizable 16.5 percent from 2006. Honduras continued its steady position in second at 7.9 million, just slightly from 7.1 million a year ago. But Nicaraguan imports went told, totaling 6.9 million in July, a 176 percent rise from the 2006 figure of 3.9 million.

Of the four other countries registering on the imports column, only Mexico had more than 100,000 cigars imported (105,000).

For the seven months ended July 30, Dominican imports represent 53.7 percent of all imports, with Honduras second at 23.6 percent and Nicaragua at 21.5 percent. That’s 98.8 percent of the U.S. premium market. Imports of all large cigars – including machine-mades – decreased slightly in July, by 4.7 percent in July, but the year-to-date figures show continued expansion. Through July 30, imports of all large cigars has increased 12 percent to 470.6 million cigars!

Little cigars, which could be taxed almost out of existence by the proposed SCHIP funding bill, are still going wild, with imports up 134.9 percent over last year for July. Year-to-date, little cigar imports are currently up 106.9 percent to 198.8 million cigars. The biggest exporters of little cigars to the U.S. in July were India (13.9 million or 42 percent) and Paraguay (7.3 million or 22.2 percent). For the full year so far, India and Brazil are the biggest exporters of little cigars to the U.S.

The U.S. is also a big producer of little cigars and the craze for these cigarette-sized smokes is not confined to this country. U.S. little cigar exports are up 53.1 percent so far this year to 128.2 million units, with the biggest markets in Canada (45.8 percent), Russia (23.4 percent) and Japan (6.4 percent).

C.A.O. “The Sopranos” cigars popular at Emmy Awards:
It’s not unusual for a cigar maker to be present at an awards show. But C.A.O.’s presence at the HBO Emmy Awards Luxury Lounge in Beverly Hills in mid-September was unusual because it produces an HBO-licensed cigar line, C.A.O. “The Sopranos” Edition.

C.A.O. distributed its C.A.O. Sopranos Gift Pack to interested celebs that included a significant number of “The Sopranos” cast members including series stars James Gandolfini, Michael Imperioli and Lorraine Bracco. Others who received the gift included “Entourage” stars Kevin Dillon, Perrey Reeves and Jerry Ferrara plus “Boston Legal” star William Shatner, whose character (Denny Cline) always seems to find time for a cigar in almost every show.

The next market: India
As one of the world’s most populous nations and with a growing economy, it appears to be just a matter of time before cigars are now only more widely sold in India, but made there as well.

News reports have indicated that the country’s largest cigar distribution, Godfrey Phillips, now plans to begin manufacturing cigars in India in about two years. Chief Executive Amrish Anand said that sales are skyrocketing from 2.5 million cigars in 2006 to an expected 8 million in 2007, with Godfrey Phillips owning roughly a 65 percent market share. The company imports cigars from Altadis U.S.A. and has recently arranged for cigars from Villiger of Switzerland. Says Villiger President Heinrich Villiger, “We are convinced that India is going to become the largest market for Villiger in Asia,” a remarkable statement considering that the company is already selling well in China.
~ Rich Perelman

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