It would be an understatement to say that the current economic and political climate in the United States is not conducive to growth in the cigar industry. The founding fathers are wincing in their graves as taxes on cigars and pipe tobacco invoke memories of a certain point in the nation’s history when the King of Britain was told to shove off. Indeed, not only are local cigar shops faced with this burden, but cigar hobbyists are confronted with the challenge of finding a bar or hotel they can still smoke in. Interestingly, Cigar Aficionado has reported this month that these efforts to oppress hobbyists have largely failed. 2004 was the biggest year for cigar sales since the peak of the 90’s cigar boom in 1997.
Cigar sales within the United States increased 12.3% in 2004, allowing imports to flirt with the 300 million mark for the first time in seven years. To put this in context, the cigar boom of the 90’s peaked at 400 million imports in 1997. This crest dropped off sharply over the next three years, flattened in 2001 and has been rising steadily since.
It is not uncommon for booms to be followed by a second, failed attempt at a rally – as anyone in the stock industry knows, but it is interesting that this second rally is able to subsist in an adverse economic and political climate. Again, those familiar with stock trading know that it’s one thing for a company to be strong when conditions are ripe, but it’s an entirely different beast when that company can continue to build strength when the cards are stacked against it. Companies of this nature largely become top candidates for hedge funds and mutual funds.
Could the current growth of the cigar industry in the United States be a reflection of an underlying strength that politicians and even industry insiders were not anticipating? More importantly for state legislatures across the country: are they shooting themselves in the foot as they try to balance budgets without the $8 million a year in cigar-related revenue that is being driven to the internet and black-market smugglers because of their epic taxation?
There could be more opportunity in the cigar industry than anyone has realized. Hell, there could even be enough opportunity for everyone.Powered by Sidelines