The Golden Age Is Now

| By Marvin R. Shanken | From Michael Douglas, May/Jun 98

You would think the end was near. Financial writers are suggesting that the cigar boom is over and cigar stocks are overpriced. The critics are kibitzing about the report by the National Institutes of Health on cigars and suggesting that it spells doom. The naysayers are looking at retail stores stacked high with cigars and chortling that no one wants cigars anymore.

They are all wrong. The Golden Age of Cigars is just beginning. There's no doubt that 1998 is the year that everyone who loves cigars has been waiting for. It will be the first time in three years when the growth of cigar sales won't rocket off the charts. Who doesn't think that's a good idea?

The industry has been hammered in many ways by the stupendous increase in demand. Every year, the owners and executives would plan for 25 or 30 percent growth, contract for certain quantities of tobacco and keep certain quantities of inventory, and then watch the growth rates come in at 50 or 60 percent. Then they wouldn't have enough tobacco to meet demand, opening the door for opportunists and fly-by-nighters to jam mediocre cigars into the marketplace at high prices.

Those days are over. For the first time in three years, you can walk into the top tobacconists and see boxes of the best brands in the market: Partagas, Macanudo, Don Diego, H. Upmann, Arturo Fuente, Ashton, La Gloria Cubana, among others--the very brands people have been clamoring for, sometimes even paying premiums just to get. On top of that, because of the general overstock situation and the demise of some of the high-priced, unknown brands, there is concern among the leading cigar executives about their own prices. Some have eliminated price increases planned for this year and some are not only forgoing increases but actually reducing their prices.

As the supplies catch up with the demand, it means that manufacturers are also rebuilding their depleted inventories. The annoyance of getting stuck with cigars that taste raw or need six months in a humidor before they are smokeable should, thankfully, become increasingly rare. The good manufacturers are going to give their tobacco more time in aging bales and let their cigars rest for a few more weeks in the cedar aging rooms before shipping.

What's more, those ill-informed Johnny-come-lately retailers who entered the industry for a quick buck are finding it harder to compete against the retailers who care about cigars and know what they are doing. The inferior shops are going to be closing, and it will leave the market to people who know their cigars and know how to help their customers. Sure, some pundits will cite those closings as another sign that cigars were just a fad, but again, they will be wrong. It's a net gain for cigar lovers.

As a cigar lover, you have witnessed one of the most extraordinary cultural and business phenomena of the past 50 years. It's been incredible to see cigars transformed from their pariah status in the United States into something that is associated with the good life. Yes, the huge boom created its own problems. But those will now disappear. As the market consolidates and stabilizes, it will be comforting to see the best brands take over, and all of us get to enjoy the true pleasures of smoking great cigars. Viva the Golden Age!

Editor & Publisher,
Marvin R. Shanken

Managing Editor
Gordon Mott