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Nicaragua's Cigar Boom
Posted: November 28, 2012
Call this the golden age of Nicaraguan cigars. Twenty years ago, Nicaraguan smokes were virtually absent from the cigar industry. Ten years ago, they lagged far behind Honduras and market leader Dominican Republic. But if current trends hold, Nicaragua will end the year as the No. 1 producer of premium cigars by volume for the U.S. market, shipping more than double the cigars it did only six years ago.
Several prominent names in cigars have looked to Nicaragua for expansion in recent years. Rocky Patel Premium Cigars Inc., which for many years made all of its cigars under contract in Honduras, now owns its own factory in Estelí, Nicaragua. The location, known as Tavicusa, is making some of the company's top-rated cigars, such as the Rocky Patel Fifteenth Anniversary Torpedo (93 points), Cigar Aficionado's No. 6 cigar of the year.
J.C. Newman Cigar Co., which had all of its premium cigars rolled in the Dominican Republic from the 1980s through 2008, opened Puros de Estelí Nicaragua S.A., a 55,000-square-foot Nicaraguan cigar factory, in 2011. The location is dedicated to making the value-priced Quorum brand. The Newman family, owners of J.C. Newman, also make premium handmade brands elsewhere in Nicaragua under the names Brick House and El Baton, which have scored well in Cigar Aficionado and Cigar Insider blind taste tests.
Nicaragua's rise has been stunning. Imports have more than doubled over the past five years (see graph) rising from 48.5 million premium cigars in 2006 to 102.2 million in 2011, according to the Cigar Association of America. In 2006, Nicaraguan cigar exports ranked third among producers, trailing Honduras by nearly 30 million units and the Dominican Republic by 90 million cigars. In 2009, Nicaragua pulled into the No. 2 position as its imports grew 12.2 percent, to 78.7 million units, compared to the 70.1 million shipped that year by Honduras.
The country continued moving forward, and last year it posted a tremendous 18.7 percent export growth rate, far outpacing the industry, which grew by 7.7 percent. Nicaragua shipped 102.2 million cigars to the United States last year, putting it within reach of the Dominican Republic, which shipped 114.7 million cigars in 2011, virtually flat compared to the 113.2 million cigars it shipped in 2010.
For 2012 to date, the outlook for Nicaragua continues to show promise. For the first seven months of the year (the latest figures available as this issue was shipped), Nicaraguan cigar shipments rose by 3.4 percent over 2011 numbers. The Dominican Republic posted a 12 percent decline during the same time period, and if those numbers hold for the year, Nicaragua will pull ahead of the Dominican Republic and take the No. 1 spot, with approximately 105.7 million cigars shipped to the Dominican's estimated 101 million.
For much more on this story, see the current issue of Cigar Insider.
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