Shipments of handmade, premium cigars cooled in 2019, dropping 6.6 percent from their stunning 2018 levels and sliding back to 337.7 million cigars. The numbers, released this week by the Cigar Association of America, reveal a market that continues to be strong, but not as smoking hot as 2018.
While it was a reduction in shipments, and marked the end of four consecutive years of growth, the market remained strong overall, the eighth year in a row where cigar imports surpassed 300 million units.
The year 2018 marked a 20-year-high for cigar imports, putting American cigar imports at nearly 362 million cigars imported, a position unseen since the heady days of the 1990s cigar boom. Some market leaders suggest the 2018 numbers were not indicative of actual sales, but rather a reaction to other factors.
2019 U.S. Imports By Country
|Country||Imports (Total Volume)|
|Dominican Republic||106.2 million|
“We have to be extremely careful when using imports to determine the size of the cigar market, as those numbers many times include anticipated shipments. I think special circumstances in the countries of origin often affects the true numbers,” said Javier Estades, president and chief executive officer of Tabacalera USA Inc., one of the biggest cigar companies in the world.
“In our view, the industry over-imported, specifically Nicaraguan inventories in 2018 due to the political unrest in the country and over-imported in general due to the FDA regulatory deadline,” said Niels Frederiksen, chief executive officer of Scandinavian Tobacco Group, the parent company of General Cigar Co., another of the industry giants. “Last year, we looked into a total market that wasn’t growing as larger customers in the U.S. started to focus on and adjust their inventory.”
Nicaragua remained the leading provider of handmade cigars to the U.S. market, shipping 169.4 million cigars in 2019, down 1.9 percent from the 172.6 million shipped in 2018. The Dominican Republic ranked second, with 106.2 million in shipments, a 9.9 percent decrease from the 117.9 million shipped the previous year. Honduras was a distant third, shipping 60.3 million cigars, and it showed the largest drop in shipments among the major producers, with a 13.5 percent decline compared to 2018 numbers.
The big three combined for more than 99 percent of the market. Other producers such as Mexico, the Bahamas, Costa Rica and the Philippines account for the rest.
Both Estades and Frederiksen expressed concern over the Coronavirus pandemic, which has shuttered cigar factories around the globe and caused many cigar shops to temporarily close or modify their operations.
“I think it’s fair to say that we and the rest of the industry are in uncharted territory. And that estimating the effects of COVID-19 is premature simply because there isn’t any transparency yet on its impact on the industry in general and on the category in particular,” said Frederiksen.
“Besides the mentioned virus outbreak, I am optimistic about our industry; this is a very solid market and we will get back to normal at some point,” said Estades.