Cigar Weekly

Highlights of the week in cigars and smoking from

For the week of June 28-July 2, 2010

Los Angeles – In an economic environment which may be worse now than at any time in 2009, cigar imports showed a definite slowdown in April.

While the figures issued by the Cigar Association of America – based on U.S. Customs Service data – noted a majestic 77.55% increase for April 2010 over April of 2009 thanks to last year’s crash following the imposition of the SCHIP tax increase, the real comparison should be with 2008, a more "normal" year. And the comparisons aren’t good.

In April of 2008, some 23.86 million premium cigars entered the U.S., almost 5.7 million more than the 18.16 million entering in April 2010. For the first four months of 2010, the premium-cigar import total stands at 63.99 million, down 15.3% from the 75.56 million that came in during the first third of 2008. By country:

=> The Dominican Republic led all nations with 8.04 million cigars exported to the U.S. That’s only slightly more than the depressed April of 2009 figure of 7.81 million post-SCHIP cigar imports and almost 23% less than the 10.39 million that came in in April of 2008. For the year, Dominican premium-cigar exports to the U.S. are down 51% against 2009 and 20% against 2008.

=> Nicaragua continues to show strength, with 5.97 million cigars exported to the U.S. in April 2010, way up from the post-SCHIP total in April 2009 (1.17 million) and up against the April 2008 figure of 5.52 million. For the year, Nicaraguan premium exports to the U.S. total 23.62 million, close to last year’s total of 27.37 million and ahead of 2008's 20.13 million total through four months.

Nicaraguan exports of premium cigars to the U.S. have increased six years in a row and show no signs of slowing down.

=> On the other hand, Honduras has fallen back. Its 2009 annual total was the lowest in six years and 2010 isn’t starting off well at all. Only 4.12 million premium cigars were exported to the U.S. in April, up from the post-SCHIP April of 2009, but down by 48% from the 7.89 million that came in during April of 2008. For the first four months, Honduran exports of premium cigars to the U.S. are down 45.5% vs. the same period in 2009 and more than 36% from the first third of 2008.

=> Tiny amounts of cigars came in from Costa Rica and Mexico in April 2010, but even the totals for those countries are down vs. both 2009 and 2008 through the first four months of the year.

The movement of machine-made and little cigars continues to be strong, however, increasing again in 2010 even against the floodtide of imports in March of 2009 to avoid the SCHIP tax:

=> Machine-made and little-cigar imports for April 2010 totaled 148.70 million against 61.73 for April 2009 and 84.54 million in for April 2008.

=> For the first four months of 2010, machine-made and little-cigar imports totaled 595.37 million, astonishingly well ahead of 2009 (459.16 million) and even further ahead of the 2008 January-April total of 301.55 million.

Even with strong imports of machine-made cigars, retailers are watching their inventories more closely than ever before. A report from the U.S. Alcohol and Tobacco Tax and Trade Board noted that U.S. cigar inventories in distributor’s warehouses were down to 614.53 million, down 20% from the April 30 total in 2009 and the lowest total in more than a year and a half.

>> A monster cigar of more than 1,000 pounds and three feet thick is now making its way to the U.S. and, hopefully, into the Guinness Book of World Records.

The giant cigar – "El Gigante" – was commissioned by the Gran Habano Cigar Co. of Miami and was produced in its GR Tabacalera Unidas factory in Danli, Honduras. According to Gran Habano’s George Rico, "We wanted to make the world’s largest production cigar. We have the application from Guinness. It’s a way to showcase our brands of cigars."

Rico noted that the factory specifications for this cigar include a length of seven meters (23 feet) and a ring gauge of 1,920, or 30 inches! It reportedly includes more than 11,000 individual tobacco leaves.

"It weighs a little more than a ton – 2,200 pounds – with the furniture [support]," said Rico. The cigar alone is about 1,200 pounds. It’s my [Gran Habano] Corojo No. 5 blend, in the same percentages as in the smaller cigars we manufacture, replicated to a much bigger version. We have the [Corojo No. 5] bands here and they will be put on in the States."

What’s even more amazing is that the cigar is not just a showpiece. It can actually be smoked!

"We have a tip that can be attached and is connected to the head of the cigar," said Rico, "and you use a hookah hose and 200 people can smoke it at the same time. It really doesn’t work with less than 200."

And as Rico noted, it is a production cigar: "You can definitely order it. $200,000 is the price to order one, including shipping and everything."

Assuming this first edition clears U.S. Customs on time, it’s planned to be exhibited at multiple sites across the country over the next six months. "We’ll have it at the Cigar Expo [in Easton, Pennsylvania] this weekend, then on a road show while we promote out new cigar, the Gran Habano Azteca," said Rico. "We will definitely have it at the IPCPR show in New Orleans in August.

"We want to do a raffle with it across the country at the end of the year, for charity, but we haven’t worked out the details yet."

A team of 50 worked on the project for 20 days and the Austrian Times Web site quoted factory chief Libardo Reyes as noting "We think we have set the new world record for the thickest cigar."

Completed last week, the cigar is now moving – carefully – through U.S. Customs on its way to the Gran Habano warehouse. It’s so big that it is perched on a custom-made wooden cart, complete with rollers, and protected by a giant wooden covering similar in style to a cigar tube!

Gran Habano’s effort is for girth rather than length, as the world record for the longest cigar was set at last year’s Tampa Cigar Heritage Festival at 196 feet, 3 inches by Wally and Margarita Reyes. That cigar, however, had a ring gauge of "only" about 64, or one inch and weighed 112 pounds at completion.

The previous record for cigar girth is believed to be 24 inches; the largest in-production cigar currently on the U.S. market is the La Tradicion Cubana "Big One," a 12-inch-long cigar with a ring gauge of 192 or three inches thick, made in the Dominican Republic.

>> Accurate statistics concerning the Cuban cigar industry are often hard to come by, but The Guardian, a widely-respected British newspaper, reported that the island’s cigar export total had dropped by 66% over the past three years.

The story, posted on June 22, referred to figures released in Cuba over the past week and noted that exports were down to 73 million cigars in 2009 compared with 217 million in 2006. Habanos, S.A., co-owned by the Cuban government and Britain’s Imperial Tobacco, has not announced unit sales volumes for several years, providing only revenue totals at the annual Festival del Habano.

The reduction follows announcements from last year that the amount of land to be used for tobacco would be reduced. "There was a reduction in planting due to limitations in resources caused by the economic crisis," was the line in Guerrillero, the Communist Party newspaper in the Pinar del Rio region which Cuba’s best cigar-tobacco acreage is located. The same comment was used when the 30% reduction in planting was announced last year.

Imperial spokesman Simon Evans said that the sales decline "was largely due to the impact of the global recession on consumers. There has been an impact following the introduction of smoking bans, but this tends to be an initial dip in consumption which ameliorates over time."

Duty-free shopping accounts for about 25% of all sales of Cuban cigars – no doubt including some purchases by Americans – and the historic 3.5% decline in worldwide passenger traffic in 2009 didn’t help. U.S. passenger traffic dropped by 6%.

>> The lead sentence of the Associated Press story covering the New York state budget crisis said it all:

"New York's Legislature has voted to make the state the nation's most expensive place to smoke . . ."

The legislature approved, for the 12th week in a row, an emergency spending bill to keep the state government running while continuing the deadlock on a budget which has been reported as $9.2 billion in deficit as of the beginning of the fiscal year on April 1.

The new tobacco taxes will up the price of a pack of cigarettes to about $9.20 across the state on July 1 and to almost $11.00 in New York City. The new law will also try to collect taxes from cigarettes sold by Native Americans to non-tribal members on their reservations, but that is sure to be challenged in court. The bill was passed essentially along party lines with all but one Republican voting no between the two house of the legislature and all Democrats voting yes.

For cigar smokers, the existing "OTP" (for "other tobacco products") tax rate of 46% will be raised to 75% of the wholesale price, effective August 1!

>> There are so many limited-edition cigars on the market today that smokers can become blase. But when you’re asked to make a special cigar for the U.S. Navy’s special-operations unit, the SEALs, it’s something special.

"They asked me to make their victory cigar," said Gurkha chief Kaizad Hansotia in an interview. "You have to be a Navy SEAL to buy it.

"The way it works is that a SEAL who wants them has to call a store and ask them to order it, then show his Navy SEAL identification to buy it. There are only 105 boxes, each with 20 cigars in just one size, a Churchill of 52 [ring] by seven [inches]."

As usual for Hansotia, the box is hardly ordinary. Themed for the SEALs (an acronym for Sea-Air-Land), these cigars come in an ultra-tough, Pelican-type, water-tight box which includes the 20 cigars and a special, custom-made knife inside.

"We’ve been a supporter of special operations and a supplier of cigars to units like this in the past," said Hansotia. "This is a special, proprietary blend we had made in a factory in Cuevas in the Dominican Republic. It was a cigar that we were already making, then we tweaked the blend for the SEALs. It’s extremely, extremely strong."

Although the SEALs cigar will not be available to smokers generally, Hansotia is finishing a similar cigar which will debut at August’s International Premium Cigar & Pipe Retailers Association convention and trade show. "It will be called ‘SpecOps’," he said, "made in the same factory and also extremely strong. It will be a little different blend, but will also be packed in a Pelican-style box and include a custom-made, limited-edition knife.

"We found some really good tobacco and we wanted to share it; SpecOps will be a standard production line that will be available to the general public."

Hansotia is also working on a new lounge concept, recognizing that smokers have less and less options for enjoyment outside the home. But he is also optimistic about the future, even in the face of the continuing creep of smoking bans and higher tobacco taxes.

"They tried to do the same thing [Prohibition] with alcohol, but it didn’t work," he notes. "Everyone knows that. People are not going to stop smoking and our approach has always been completely different than the rest of the industry. And we’re going to continue that way."

>> Short fillers: Find our latest tasting review, of the latest blends from the Oliva Cigar Co. in our News & Views archives for June 25.