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Cigar Imports for 2013 Reach Highest Point in 15 Years
David Savona, Gregory Mottola
Posted: April 2, 2014
America has a healthy appetite for fine cigars. Imports of premium, handrolled cigars—propelled by an exceptional year for Nicaraguan cigars—climbed to 317.6 million units in 2013, up from 305.1 million in 2012. It has been 15 years since the cigar industry saw shipments at this level.
"This is a place where there's a lot of action—it reminds me of the craft beer market," said Jim Young, president of Davidoff of Geneva (FL) Inc., makers of Davidoff, Avo and Camacho cigars. He called cigars an affordable luxury, and felt that consumers are responding for those they deem worthy of the investment. "I'll pay a little more for a great cigar—but make sure it delivers," he said. His company's sales were up considerably, especially in the Davidoff and Camacho brands.
The Dominican Republic, which has held a leading role in the premium cigar industry for decades, making such big brands as Arturo Fuente, Davidoff, Macanudo and Montecristo, remained in the No. 1 spot for 2013 with exports of 133.6 million units, even though its shipments were essentially flat, slipping 0.7 percent from the 134.5 million shipped stateside in 2012.
Nicaragua ranked second, with shipments of 118.9 million cigars, and Honduras ranked third with 63.3 million. Like the Dominican Republic, Honduras also saw a slight decrease in exports in 2013, with shipments decreasing by roughly 2 million units, or 3.1 percent. Nicaragua, known for such brands as Flor de las Antillas, Oliva, Padrón and many Rocky Patel brands, posted extremely strong growth for the year.
Nicaraguan premium cigar shipments grew by 15.1 percent in 2013, the tenth year in a row the nation has posted an increase in cigar shipments. No other country can match that result. In 1996, Nicaraguan cigar shipments were only 16 million units, putting it in third place by a narrow margin, not far ahead of Jamaica (15.5 million at the time) and Mexico (14.5 million). But Nicaraguan cigar shipments have grown dramatically over the years.
Recent visits to Nicaragua by Cigar Insider show that the country is brimming with activity in the cigar sector. New factories seem to be appearing each week, and many companies that have been making cigars in Nicaragua for some time are in expansion mode, opening or expanding existing factories and creating new brands for an American market thirsty for Nicaraguan smokes. Shipments from Nicaragua increased by 18.7 percent in 2011, 1 percent in 2012 and 15.1 percent in 2013. If Nicaragua can grow at a high rate in 2014, and Dominican shipments remain flat, the cigar industry will have a new leading producer for the first time in modern memory.
"There has been a substantial switch to Nicaraguan tobacco and you can see how the economy has improved just by going into Estelí," said Rocky Patel, speaking of the biggest cigar city in Nicaragua. "There are more car dealerships open, more restaurants and business is booming in that town like I've never seen it... So many tobacco families are buying up land in Nicaragua and it's all because of the country's great cigar economy."
Prior to 1993, premium cigar sales were stagnant at or around the 100 million unit level. The industry soared to life in the mid 1990s, with imports rising above 300 million units, eventually reaching as high as 417.8 million units in 1997, when supply caught up to, and ultimately exceeded, consumer demand. The post-boom years saw a period of contraction. The annual import numbers have been well below 300 million since 1998, with spikes in 2004 and 2005 (286.5 million units and 297.8 million units, respectively) and a return to the 300 million mark in 2012 when 305.2 million cigars were shipped to the United States.
During that time, the premium cigar industry went from a multi-nation market to one truly defined by the three major producers: the Dominican Republic, Nicaragua and Honduras. In 1996, seven countries shipped upwards of 1 million cigars a year into the United States, including the Canary Islands, Jamaica, Mexico and the Phillippines. In 2013, Mexican cigar shipments accounted for only 623,000 cigars, only 3,000 cigars came from Jamaica, and the Cigar Association of America no longer counts shipments imported from the Canary Islands. In the modern premium cigar world, countries other than the top three primary producers account for only 1.8 million cigars, or less than 1 percent of the total U.S. market.
These figures are shipments, and not sales, but they are a very strong indicator of newfound strength in the American premium cigar market. The vast majority of premium cigars smoked in the United States today are produced offshore, so shipments at this level point to a vibrant market.
Comments 3 comment(s)
Shawn Poteet — Winona, Minnesota, USA, — April 2, 2014 6:48pm ET
Roberto Zee — USA, — April 8, 2014 6:05pm ET
Mike Bogdan — Maumee, Ohio, United States, — April 9, 2014 8:46pm ET
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