Scandinavian Tobacco Group, the parent of Cigars International and General Cigar released third-quarter earnings today, showing a small decline in sales and a small increase in profits as cigar sales remain strong, and consumers return to brick-and-mortar cigar shops.
Powered by the continued increase in cigar consumption that began in 2020, STG reported third quarter sales of 2.2 billion Danish kroner ($339 million), down 2.2 percent from 2.2 billion ($347 million) in the third quarter of 2020. Net profit rose from 356 million kroner ($55 million) to 383 million kroner ($60 million).
“The demand for handmade cigars remains strong,” said chief executive officer Nils Frederiksen during a conference call from Denmark explaining the results. “The demand for our products remains positively impacted in the change in consumer behavior….the higher demand for tobacco has proven more sustainable than originally estimated.”
“We are seeing a different dynamic for the North American online division,” said STG CFO Marianne Rorslev Bock, noting a shift in the buying habits of consumers moving away from online back to traditional retail channels as the pandemic situation improves across the United States. While the number of customers in that segment were down by more than 5 percent, she said “our number of active customers are still between 10 to 15 percent higher than before the outbreak of the pandemic.”
STG plans for the high demand in cigars to continue.
“Existing consumers are smoking more, but we also saw new consumers came into the category faster than normal rates,” said Frederiksen. “People have had more free time, more control of their time. Some previous smokers have engaged and some new smokers have come into the category…there is an increased consumption in new, small humidors.”
The company is opening a new Cigars International superstore in San Antonio, Texas, early next year.