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April,
2004

Premium Cigar Imports:
Modest Growth in 2003


For the second year in a row, premium cigar imports have shown small gains, posting single-digit growth. It’s not a boom, but it is a positive trend.

By E. Edward Hoyt III, Editor

Premium Cigars — which weathered an intensely volatile market during the past decade — have again showed slow growth in year-over-year import statistics.

For the second consecutive year, total premium cigar imports were up, rising 4% in 2003 to reach 275.3 million sticks. This followed similar growth in 2002 (up 4.8% over 2001), firmly entrenching the segment into a period of slow but steady expansion. The top three supplier supplier nations to the U.S. — the Dominican Republic, Honduras, and Nicaragua — accounted for a combined 97% of all premium cigar imports, collectively dominating the market.

The remaining three percent was spread among 22 supplier nations, each of which accounted for less than 1% of shipments, led by Mexico, Indonesia, the Philipines, and the Bahamas, which each held at least 1/10th of one percent.

The leading supplier nation to the U.S. market, the Dominican Republic, accounted for 57% of all premium cigar imports alone, or 159.6 million sticks, a rise of 5.3% over 2002. Honduras, the number two supplier, captured 27.9% of the imports last year (versus 25.9 in 2002) and posted a large year-over-year gain of 12%, having shipped 77.7 million sticks to the U.S. versus 69 million in 2002. Collectively, the Dominican Republic and Honduras accounted for 85.3% of premium cigar shipments, compared to 82.7% in 2002.

Whereas the Dominican Republic and Honduras both gained momentum in the U.S. market last year, Nicaragua posted an abrupt dip, with U.S.-bound shipments sliding by 12.5% to 33 million sticks, compared to 37.8 million in 2002. For 2003, Nicaragua’s share of premium cigar imports fell to 11.9% compared to 14.1% in 2002. Since 1999, Nicaragua has posted significant overall growth in the U.S. premium cigar market, posting double-digit increases in each of the two previous years (38% in 2002 and 11% in 2001). The average declared value of “Class H” (premium) cigars in 2003 was $.83 per stick.

Among the remaining supplier nations can be found remnants of oncesignificant players in the U.S. premium market.

Mexico, which ranked number four in 2003, saw its share of premium cigar imports fall below 1% for the first time ever, following an eight-year slide extending back to 1996. In 1995 Mexico accounted for about 10% of all premium cigar imports to the U.S., but last year held only .8% of the total imports, or 2.45 million cigars.

Indonesia, which had shown a wild jump in premium cigar imports in 2002 (up 372% to 2.6 million cigars) posted a 40% decline in 2003, to 1.5 million cigars. The remaining supplier nations shipped fewer than 1 million cigars each to the U.S. in 2003, and each accounted for less than 1/10th of one percent of the overall shipments.

The Philippines ranked in 6th place last year with 799,000 cigars, a 117% jump from 2002, while the Bahamas jumped 69% to 733,000 sticks.

Costa Rica vanished entirely in 2003 from all import tracking, while the Canary Islands — which has been unable to regain any significant U.S. market share since its glory days in the 1970s — nearly vanished, holding on to a tiny 20,000 U.S.-bound premium cigar shipment total for year. Jamaica rebounded a bit, but with only 26,000 cigars shipped to the U.S. in 2003 (versus 20,000 in 2002, or a 117% increase), the once-significant U.S. supplier has remained a non-player since General Cigar closed down its production of Macanudo there. In 2000, Jamaica was ranked the number four supplier to the U.S., but only number 14 last year.

Premium cigars enter the U.S. under the highest tariff category for cigars, those valued at 23˘ or greater. In 2003, the average declared value of premium cigars at the time of importation was 83˘, up from 81.1˘ in 2002.

Non-Premium Cigars
While 278.8 million “large” cigars that entered the U.S. last year were classified as “Class H” or premium, another 206.4 million large cigars came in under the Class A-G designation (under 23˘ per stick in declared value).

The Dominican Republic (72%), Honduras (6.6%), and Nicaragua (6.3%) collectively accounted for 85% of these imports, followed by the Netherlands (4.3%), Brazil (3.1%), Belgium (2.3%), Ireland (1.4%), and Denmark (1.3%). The average declared value fell from 15˘ per cigar in 2002 to 11˘ per cigar in 2003.

Consumption imports of small cigars, meanwhile, totaled 170.9 million in 2003, led by India with 45 million sticks (22.4% of U.S. imports) and followed by Brazil with 41.3 million (20.5%), Honduras with 23.3 million (12.1%), Philippines with 19.2 million (9.5%), the Netherlands with 14.8 million (7.4%), and Germany with 9.8 million (4.9%). The total declared value of all small cigars at the time of import was $5.2 million.

The overall market grew last year. In all, a total of 685.5 million cigars were imported to the U.S. for consumption in 2003, up 15.2% over 2002’s total of 595 million. The total declared value was $290.1 million.


SMOKESHOP - April, 2004