Cigar Weekly

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Los Angeles – The common wisdom is that after distributors loaded up on cigars to beat the April 1 imposition of the new Federal taxes, sales would plummet in the second quarter and possibly into the third. Maybe not.

Lars Dahlgren, the youthful chief executive officer of Swedish Match, told Reuters in early June, "There is a risk that people are too pessimistic on the cigar numbers from the U.S. for the second quarter because we have a very strong underlying business on the mass market side."

That sounds a little ominous for the premium side of the ledger for the U.S. market leader, but Dahlgren was the company’s chief financial officer before taking over the top job at Swedish Match, so he has some idea of what he’s talking about. "Margin-wise," he noted, "it’s probably going to come out stronger than previously expected for cigars. It’s not necessarily a given that it will be below 20 percent, despite the unwinding of the hoarding."

The company’s big brands in the machine-made segment include Garcia y Vega, Game (an offshoot of the GyV brand) and White Owl in the large-cigar segment and the famous Tiparillo brand in little cigars. Swedish Match is the no. 4 player in the U.S. mass-market segment, behind Swisher International, Altadis U.S.A. (a unit of Imperial Tobacco) and Altria’s John Middleton, Inc.

As Swedish Match’s sales soared in the first quarter because distributors and retailers were stocking up on pre-SCHIP-priced products, the operating margins for cigars zoomed to 24.3%, up from 14.8% in the tough first quarter of 2008.

Dahlgren was less optimistic about margins on the company’s leading products, snuff and snus, which had profit margins of more than 40% for 2008 and in the first quarter of 2009. Although cigars and smokeless tobacco go back and forth as the leading sellers for Swedish, smokeless tobacco is much more profitable.

>> Some of the most surprising blends are those constructed around a special leaf. That’s what Alec Bradley Cigar Company founder Alan Rubin is hoping for with his new Select Cabinet Reserve line, due in stores in mid-June.

The key to the new blend is a wrapper leaf grown in Trojes, Honduras. The entire project, said Rubin, "is built around a mid-priming Trojes wrapper that allowed us for focus on the natural sweetness of the leaf. The blend is buttery smooth, and possesses an abundance of complex flavors and aromas that will hold your attention from start to finish."

Rubin and his team had been accumulating this mid-priming leaf for several years and decided this was the time to do something with it given its unique flavor profile. After discussing the options, Rubin said that "when we got back to the factory, we went to where we store all of the wrapper tobacco and opened a few bales for inspection.

"I grabbed a hand of tobacco, containing 25 leaves, plucked two of them, de-stemmed them, and rolled a sample. These caramel-colored leaves were glorious to the touch and look fantastic. Even better, they smoked every bit as good as I expected." That was about a year ago and the cigars are now in transit to Alec Bradley retailers nationwide.

The Select Cabinet Reserve is also uniquely presented, without cellophane, in lacquered boxes of 20. Five sizes are available from the start: Corona (5 1/2 inches by 42 ring gauge); Robusto (5 x 50); Gran Robusto (5 1/2 x 60); Churchill (7 x 48) and Torpedo (6 1/8 x 52).

Rubin has been on a roll of late (please pardon the pun!) with the success of the Alec Bradley MAXX and Tempus lines. While full-bodied, the Select Cabinet Reserve appears to offer a taste profile that will complete a full range of tastes, emphasizing more sweetness compared to the bolder tones of the last two Alec Bradley introductions.

>> Like thousands of others, the Garnier Cigar Company prospered in the "Golden Age" of American cigar manufacturing in the late 19th and early 20th Centuries and then disappeared.

The Livingston, Montana factory was one of several in the town, but turned out the best-known brand, the Montana Sport. Charles Garnier, Sr. founded the enterprise – one of several he owned – in 1886 and it flourished into the 1930s before it declined and died in 1944. At its height, Garnier turned out 40,000 cigars a month with a staff of 50; that made the company the second-largest in the town, behind only the Northern Pacific Railroad.

For half a century, it lay dormant until Robert L. White came along as the Cigar Boom gathered steam and started it up again in 1996. Once again, the Montana Sport band with the sad-eyed spaniel began making the rounds in local cigar circles and he took the brand national in 2006.

Now, however, the cigars themselves are made in Guayaquil, Ecuador of all-Ecuadorian-grown tobaccos at the Puros de Armando Ramos factory. White has done well enough with the Montana Sport brand – the label pictures his own pet spaniel, Millie – to introduce a second brand, that pays homage to one of the great icons of the American West, the buffalo.

The new White Buffalo brand, while also made by Puros de Armando Ramos in Ecuador, is a more full-bodied blend than the Montana Sport, featuring an Ecuadorian wrapper with a choice of Rosado or Oscuro shades. The interior blend includes an Ecuadorian-grown, Sumatra-seed binder and filler leaves from Ecuador (both corojo and criollo types) and ligero from Peru.

The four sizes in the line are the popular Churchill (7 inches by 48 ring), Robusto (5 x 50), Toro (6 x 50) and Torpedo (5 1/2 x 50) and all are offered in boxes of 25. Retail pricing is $7 each, regardless of size, with boxes available at a modest discount, at $125 each.

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