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Let the Good Times Roll

Cigar Sales are Going Through the Roof as Premium Cigars Become Increasingly Difficult to Find
Gordon Mott
From the Print Edition:
Bill Cosby, Autumn 94

(continued from page 1)

Of course, the manufacturers' problem is a problem that any producer of a luxury good wants to have--more demand than product. But the producers are one step removed from the consumer. Retailers are out front every day, opening the locks on their stores and awaiting customers who always seem to want what isn't on the shelves. Oscar Boruchin of Mike's Cigars in Miami can't keep up. "We were here until 11 o'clock last night filling UPS orders, and we didn't catch up. We didn't even do half of what we have on order."

"They've been blaming me," says Bruce Goldstein, the owner of Arnold's, a retail shop in midtown Manhattan. "I can't do anything about it. [The consumer] still doesn't understand that cigars are a handmade product and they take time to make. They just think I'm not doing my job." Goldstein says that even when an order arrives from a manufacturer or distributor, it is usually incomplete. In any given brand with 15 different sizes, even for a big company like General Cigar, there will be four or five sizes on back order, Goldstein says.

Trendy cigars, such as La Gloria Cubana, are almost impossible to find, even in stores like Goldstein's that get some deliveries. "They are simply not for sale to anyone but my regular customers," says Goldstein. In a recent development over the past two years, Goldstein even has waiting lists for Wavell and Torpedo sizes of La Gloria Cubana. "There are hundreds of customers' names on those lists," says Goldstein.

The quick rise in popularity of some cigars is also laid at the feet of Cigar Aficionado. DiMeola says cigar brands used to be built by "wearing out shoe leather," but now, he says, a peripheral brand can get a write-up in the magazine and everybody wants to try it.

A brand's sudden popularity represents a different challenge for retailers. Joe Howe of Jack Schwartz Importers in Chicago says he used to carry about 40 cigar brands. "I could more or less dictate to customers. If I wanted to pick three Dominican Republic, Connecticut-shade-wrapper cigars, I could do it and decide for my customers what was worthy of smoking. Today I have to carry everything. They want to experiment and they want it now. I don't even know how many brands I'm carrying today. I added three last week alone."

Last May, standing in an inch of water from an early-morning pipe rupture, Howe was outwardly calm about having at least 3,000 damaged cigars in his display cases. "I'm not worried about the money. There's insurance. But at least 25 percent of these cigars I won't be able to replace right away because they are not available." It's a day-to-day problem for him now. "It used to be I had six-to-eight items on back order, and now it's a rotating list with over 40 items on it." Howe says he not only keeps a waiting list for scarce brands, but if "I get 10 boxes of La Gloria Cubana in, I have 20 people waiting. At no time in the 17 years I've been in the business have I broken open boxes and allocated cigars to people. But that's what I do now, so everybody gets some cigars."

Another factor is affecting the marketplace, too. For the first time in nearly 20 years, there are new cigar markets overseas for non-Cuban-produced cigars and new cigar outlets opening up in the United States. These both put increased pressure on the production pipeline. Lew Rothman, the owner of J.R. Tobacco, which sells more than 40 million cigars a year, says he is shipping 600,000 cigars to Europe this year--the number was zero less than two years ago. In addition, Rothman says, "there are nontraditional outlets that are calling up asking for premium cigars." Instead of selling a box or two, Rothman says, "you have new vendors ordering thousands of cigars."

One of those new vendors is the Gold Standard liquor-store chain in Chicago owned by Harold Binstein. Binstein sold cigars more than 30 years ago but had abandoned the business to concentrate on his wine and liquor trade. After Cigar Aficionado began publishing in September 1992, Binstein decided to get back into the business. He expects to do more than $1 million in sales this year. Mike Trella, Gold Standard's cigar buyer, says the bulk is in cigars costing $3 and more, usually bought by people "who haven't normally smoked cigars in the past." As Binstein says, "We made a huge commitment and it wasn't big enough."

The combined stresses on manufacturers and retailers only reflect what's happening on the street--there are new cigar smokers joining the ranks. That's right, there are more people competing for the output. The entrance of younger smokers into the market is the most likely explanation, but there's also been a change in the way regular smokers are buying. According to most people, older smokers had a brand, they'd buy a box weekly or every two weeks or whatever and that was that. Now they walk in and buy some of their favorite cigars, but then they also will want a half dozen brands to experiment with.

Sherwin Seltzer, vice president of marketing and sales for Villazon, the makers of Honduran Hoyo de Monterrey Excalibur, Punch, Bances and other brands, says the real reason for the surge is new, younger smokers. "The crowd at a smoker dinner is much younger than I ever remember," says Seltzer. He says that Villazon's cigars are generally perceived as stronger and "we didn't get guys smoking our brands until they were older. Not now." Retailer Goldstein agrees and notes that if he were to guess the average age of cigar buyers, he would venture that it has dropped by 10 years, below the fortysomethings into the thirtysomething group.

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