U.S. Imported 315 Million Premium Cigars In 2015; Up 2.3 Percent

U.S. Imported 315 Million Premium Cigars In 2015; Up 2.3 Percent

The United States imported 315 million premium cigars in 2015, which is an increase of 2.3 percent over 2014. This percentage amounted to an uptick of 7 million smokes. While it may not be statistically large, the increase shows 2015 as a positive year.

According to the yearly report from the Cigar Association of America, the Dominican Republic still remains the largest supplier of premium cigars to the United States, followed by Nicaragua as a close second. The difference is a margin of 6.8 million cigars between the two countries, or 5.4 percent. Although Nicaragua experienced a dramatic spike in exports from 2012 to 2013, it has stayed relatively even since.

"The U.S. premium cigar market is healthy and stable," said Javier Estades, president of Tabacalera USA. "Today's adult consumer, more than ever, demands well-made cigars with a unique concept. Lately, we're seeing that adult consumers are becoming more selective and moving towards higher-end cigars with complex and rich smoking profiles."

The three major cigar-producing countries—the Dominican Republic, Nicaragua and Honduras—were all slightly up in 2015.

The Dominican Republic took the No. 1 spot for 2015 with exports to the United States of 126.1 million units. That total constitutes an increase of 2 million more Dominican cigars imported into the United States over 2014 (1.6 percent). The Dominican Republic continues its decades-long lead in the premium sector, producing such prominent brands as Arturo Fuente, Davidoff, Macanudo and Montecristo.

Nicaragua ranked second, with shipments of 119.3 million cigars, and Honduras ranked third with 67.6 million (up 6 percent from 2014). Nicaragua, known for such brands as My Father, Oliva, Padrón and many Rocky Patel lines, posted an increase of 1.5 million cigars in 2015 (up 1.3 percent). This increase put Nicaragua back on its track for positive growth. Nicaragua has been showing precipitous growth for years, and appeared poised to take over the lead spot in the premium cigar industry, but it leveled out in 2014. 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).

The "Other" category in the table below consists of imports from the Bahamas, Costa Rica, Mexico and the Philippines. Collectively, this was the only category showing a decrease (15.8 percent) in 2015.

Nicaraguan cigar exports have grown dramatically over the years. Shipments from Nicaragua increased by 18.7 percent in 2011, 1 percent in 2012 and 15.1 percent in 2013. The upward trajectory plateaued and Nicaragua still remains in the No. 2 spot.

"Nicaragua's rise is due to a series of factors," said José Oliva, president of Oliva Cigar Co. "Chief among these are the similarities between Cuban and Nicaraguan leaf. Nicaraguan long-filler tobaccos are full flavored with great depth. The ligeros are especially sought after for these qualities." Oliva's Serie V Melanio Figurado was named the 2014 Cigar of the Year by Cigar Aficionado.

The annual import numbers were well below 300 million cigars from 1999 to 2011, with spikes in 2004 and 2005 (286.5 million units and 297.8 million units, respectively). Imports returned to the 300 million mark in 2012 when 304.7 million premium cigars were shipped to the United States. The numbers have stayed over the 300 million mark since.

These figures are shipments, and not sales, but they are a positive indicator of the strength in the American premium cigar market, which has consistently imported more than 300 million premium cigars since 2012.

"In our case," added Estades, "with operations in the Dominican Republic and Honduras, and associations in Nicaragua as well as other countries, we are able to use tobaccos from all of the many different tobacco growing regions to create cigars that really answer the needs of the market."

Despite the growth of 2015, the premium cigar industry still has many challenges and uncertainties ahead. In addition to the constant barrage of smoking bans and increased taxation, the premium sector awaits the final decision of the FDA, which is seeking to regulate the entire premium cigar industry. Depending on how onerous and severe the regulations are, the new laws could have an enormously negative impact on import numbers in the future.

Cuba could also be a factor. Recent diplomatic gestures by the Obama administration only raise more questions as to the possibility of lifting the Cuban embargo, and just how large a piece of the American market share Cuba could capture.

This article first appeared in the April 19, 2016 issue of Cigar Insider.