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

PUNCH THIS!

Plus: Swedish Match third-quarter report shows steady results

Los Angeles, October 31 – “We knew the Punch figure was rare and would generate interest, but the final sale price exceeded our wildest dreams.”

That was the reaction of auctioneer Philip Weiss to the sale of a 19th Century, five-foot-tall figure of Punch credited to Samuel Robb on October 21 in Oceanside, New York. Estimated to bring in from $100,000 to perhaps $150,000, the hammer finally came down at a staggering $542,400!

Weiss reported that the identity of the actual winner of the item is unknown as a representative of the Kennedy Galleries in New York did the actual bidding. The bidding started at $50,000 and ran up in increments of $500, finally stalling at $400,000, but got going again with a bid for $405,000 and ran on to the final total.

The Scottish-born Robb was a well-known carver of tobacco-shop figures, with Punch and American Indians his most common subjects. The Punch figure sold was reported to be in very good condition, but had some chipped paint thanks to its age.

The figure came from the personal collection of Joseph Kedenberg, a musician known as “Keden on the Keys,” who died in 1983. His enormous collection of advertising memorabilia of all kinds had never been exposed to the public and the two-day sale included 1,600 lots and grossed more than $1.6 million.

Swedish Match nine-month report shows steady sales:
Cigars remained the biggest seller for Swedish Match during the first nine months of 2007, but there may be some tougher times ahead for the Swedish owner of General Cigar.

In the latest financial report, released last Thursday, showed Swedish had $388.3 million U.S. in cigar sales through the first nine months of 2007 (converted from Swedish Kronor). That was down three percent from the 2006 figures, although sales were even in the third quarter for 2007 compared to 2006.

Operating profits were another story, with cigars second in importance to snuff. Cigars yielded $84.7 million in profits (21.8 percent margin) for the first nine months of the year, down 10 percent from 2006. Snuff was a much bigger earner at $144.6 million (40.1 percent margin), but even that figure was down 20 percent from last year.

“Mix changes and higher marketing costs had a negative impact on the operating margins,” read part of the commentary on the cigar segment, which also noted that the new, machine-made Garcia y Vega Game line has been a hot seller after being introduced in the spring.

The report also noted that the two major acquisitions made by Swedish Match in the third quarter – Bogaert Cigars and Cigars International – both helped with earnings: “Excluding the impact of acquisitions, sales in local currencies were either unchanged or declined in all cigar segments compared to the third quarter previous year.”

Bogaert makes machine-made cigars and cigarillos that are well known in Europe (Bogart and Hollandia brands) and are made in Belgium and Indonesia; it had sales of a little more than $26.3 million last year. Cigars International has a retail store, but more importantly a massive mail-order and Internet retail sales business and a small but growing wholesale division. It had sales of about $62.5 million in 2006. However, the future might be a little tougher. “Acquisition-related costs, including amortization on acquired intangibles, and somewhat weaker prospects for the rest of the cigar business imply that the operating margin for cigars in the fourth quarter 2007 could be lower than the average for the year.”

Moreover, the report indicated that the decline in operating profits were due to “a weaker performance in premium cigars.” Watch for General, already aggressive with hundreds of in-store events each year and unique holiday promotions, to be even more focused in the fourth quarter.

A good humidor, but not for cigars:
With all of the talk about the humidor at Coors Field in Denver used for baseballs during the recent World Series, a number of reporters took a tour of the facility. It’s not large at nine feet square and seven feet high, and is one of two adjoining rooms used for storage; the larger one is used for beer.

While it can hold about 400 dozen baseballs, the Coors Field humidor wouldn’t do much for cigars. Temperature is good at 70 degrees (F), but the relative humidity is only 50 percent, much too low for cigars (70 percent is considered optimum).

However, the humidor has worked for the Rockies to make their home park not quite the hitter’s paradise it has been in prior years. The controlled temperature and humidity negate the effects of altitude, which was shrinking and therefore hardening the baseballs by a small percentage before the humidor came into use. Now you know.

Imperial acquisition of Altadis put off two months:
Imperial Tobacco chief executive officer Gareth Davis said that his company’s acquisition of Altadis, S.A. would probably close in January of 2008 rather than in November. Acknowledging some frustration with the slow pace of the Spanish securities authorities, he told reporters during an earnings announcement that “It’s just a matter of time” and “it’s pretty imminent.”

Once the Spanish government has had its say, Altadis will have to formally approve the deal in a shareholder’s meeting. It is possible that another bid could be offered right up until that moment, but none seems to be in the offing. Imperial has already arranged for the financing of the purchase of Altadis’s shares for about $18.2 billion U.S.

In the meantime, Imperial reported good earnings for its fiscal year, with a six percent increase in pre-tax profits to £1.24 billion (about $2.57 billion U.S.). Davis said that smoking bans in Britain had reduced cigarette sales volumes by about four percent, but would increase over the next 12 months to settle at a reduction of just two percent. Two percent!
~ Rich Perelman

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