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April./May
2002

Finally,
Cigar Imports Show
Signs of
Strength

The slide in cigar imports ended in 2001, while the top three supplier countries of premium cigars continued to expand their market dominance at the expense of numerous would-be contenders.

By E. Edward Hoyt III, Editor

It wouldn't have seemed likely that 2001 would end up being the year to mark a positive turnaround for cigar imports into the U.S. Yet, despite a slumping economy and the tumultuous fallout of the last year's terrorist attacks, 2001 marked the end of a three-year decline in cigars imported for consumption.

The final tallies revealed a number of otherwise surprising facts: the nose-dive in premium cigar imports had actually turned around to a post a tiny (.84%) increase over 2000 in imports (which itself had seen a whopping 22% decline over 1999). As a whole, large cigar imports fared even better, posting a 12.6% increase in 2001, while the big growth star of the industry, little cigars, posted a heartwarming 103% increase in imports for the year.

Premium cigar imports, as released by the Cigar Association of America - which incorporates its own adjustments to compensate for estimated discrepancies in Dept. of Commerce data - reached 255.1 million sticks last year, an increase of 2.1 million units or .84% over 2000. As a group, imports of all large cigars totaled 540.8 million units, an increase of 60.3 million units Little cigar imports reached 67.98 million units, up from 33.5 million in 2000.

According to the CAA, a portion of machine-made cigars imported from the Dominican Republic and classified by the U.S. Bureau of the Census as premium cigars are in fact machine-made, causing U.S. government totals for premium cigars to be overstated. For several years now, the CAA has attempted to establish accurate estimates of the discrepancy and issue adjusted totals.

The Dominican Republic accounts for the lion's share of the U.S.'s large cigar imports (66.7% or 360.8 million) and premium cigars specifically (57.6%), which were estimated at 146.96 million sticks last year, down 3.8% from 152.7 million in 2000. Honduras accounted for 17.6% of large cigar imports last year (95.3 million units), and 27.5% of all premium cigars, an increase of 10.2% over 2000 ranking it firmly in the number two position.

Third-place Nicaragua continued to gain share of the domestic premium cigar market, accounting for 10.9% of all imports or 27.4 million units last year, up from 7.7% or 19.2 million units in 2000. Mexico, which for years ranked in fourth place behind Jamaica (whose own imports dwindled last year), saw its imports to the U.S. drop continue fall, a loss of 11.9% to 3.8 million units, compared to 4.3 million in 2000. Its cigars accounted for just 1.5% of all premium cigars imported last year. Together, these top four supplying countries commanded 98.4% of all premium cigar imports.

Costa Rica's shipments of premium cigars to the U.S. fell by 40.5% to 1.59 million sticks, down from 2.68 in 2000, due primarily to its largest producer, Tabacalera Tambor, moving its operations to Nicaragua last year. Jamaica, once a powerful supplier of premium cigars, saw U.S. exports plunge 85.5% last year due to factory closings there by both Altadis and General Cigar, both of which moved production to existing facilities primarily in the Dominican Republic. All told, only 686,000 Jamaican cigars were imported last year, all of which were classified as premium, down from 4.73 million in 2000 and a peak of 23.3 million in 1998.

Remaining supplier countries largely lost share as primary producers continued to reassert market dominance.

Indonesia, which rose from obscurity in the 1990s to gain a small foothold in the premium cigar segment, saw total large cigar shipments to the U.S. nearly double last year, reaching 1.24 million units, a jump of 91% from 650,000 units in 2000. About 541,000 of its cigar imports were classified as premium last year, a jump of 211% over 174,000 in 2000.

Premium cigar imports from Spain/Canary Islands dropped by 41.8%, from 791,000 units in 200 to 460,000 last year. Consider its recent peak of 5.2 million cigars in 1997 and its recent low of zero premium cigars in 1999, and the Canary Island's difficulty in cultivating a stable presence in the U.S. market becomes particularly evident. In 1977, long before the Caribbean basin and Central America's current dominance, the country exported 21.4 million premium cigars to the U.S.

Panama, which saw its U.S.-bound premium cigar shipments surge to a peak of 1.59 million in 2000, suffered an 80.6% plunge in U.S.-bound exports, totalling only 258,000 last year.

More Cigars, But Valued Less
While quantities of large premium, large non-premium, and little cigars all rose last year, aggregate declared values for two of the three categories fell.

The total declared value of large premium cigars last year was $233.6 million, compared to $244.9 million in 2000, a drop of 4.6%, or $.915 per stick last year compared to $.969 in 2000.

Total declared value of all small cigars rose 11% to $2.84 million, or $.04 per cigar. The total declared value of large, non-premium cigars rose 22.2% to $31.7 million, or $.11 per stick.

The total declared value for all cigar imports was $268.1 million in 2001, down 1.9% from $273.4 million in 2000. The average declared value of all imported cigars was $.44 last year, compared to $.53 in 2000.



SMOKESHOP - April/May, 2002