Smokeshop

26 SMOKESHOP April 2016 P remium, hand-made cigar imports into the United States edged up 1.5 percent in 2015 to 314.6 million sticks, a gain of 6.9 million units over 2014, setting yet another high mark since 1998, representing a solid 26.7 percent expansion over 1999 when imports bot- tomed out at 248.3 million sticks and be- gan a gradual 16-year rise. It also marked the highest annual import total since 1998, when 334.6 million sticks were im- ported, according to annual estimates released by the Washington-based trade association the Cigar Association of America (CAA). The trade group tracks U.S. Bureau of the Census import data from seven key supplier countries that ship large cigars into the U.S., equating those as having an import value of 76 cents or greater per stick as premium cigars. Based on import information voluntari- ly reported by its manufacturer mem- bers, the CAA then subtracts known totals of machine-made cigar imports (27.5 million in 2015) from a second cate- gory of large cigar imports—those hav- ing an import value between 23 and 76 cents which are a mixture of premium and popular-price cigars—to arrive at its premium hand-made import estimates. The Dominican Republic, and to a lesser degree Honduras, are both producers of machine-made cigars while Nicaragua has no known machine-made cigar pro- duction at this time but could become a factor in the future given the labor costs, increased access to raw materials, and ever-improving infrastructure in the Central American nation. The top three supplier countries of premium cigars to the U.S.—the Do- minican Republic, Nicaragua, and Hon- duras—accounted for 99.5 percent of premium cigar imports, up from 98.4 percent in 2014, representing the com- plete dominance of a marketplace that once showed greater diversity. BIG THREE SUPPLIER ORIGINS CON- SOLIDATE, DOMINATE While the gap between the current num- ber one and number two suppliers of premium cigars to the U.S. continued to narrow—reaching its slimmest margin ever—the Dominican Republic remained in the lead in 2015, accounting for 40.1 percent of premium cigar imports or 126.1 million sticks last year, a statistical draw over 2014's estimated total of 126.3 million. Nicaragua, the number two sup- plier with 37.9 percent of imports, also posted a small increase (1.3 percent), ris- ing from 117.8 million premium cigars shipped to the U.S. in 2014 to 119.3 mil- lion in 2015—its highest total ever. The difference between the two nations' U.S. exports—a mere 6.72 million cigars last year—was the smallest ever, following Nicaragua's 16-year rise from a distant third place supplier to overtake Hondu- ras in U.S. exports in 2009 and continue to gain share. Since 1999 (when the cigar "glut" that followed the cigar "boom" bottomed out and market supply-and-demand and distribution channel inventories largely normalized), the "big three" supplier na- tions of premium cigars have essentially dominated the category, consolidating production facilities in the same nations where tobacco farming and processing are based. Dominican Republic's premi- um cigar shipments to the U.S. contracted overall by 15.7 percent; Honduras' rose by 8.4 percent; and Nicaragua's grew by 562 percent. In 1999, Nicaragua accounted for 7.3 percent of U.S. premium cigar imports and today it commands 37.9 percent. Honduras holds a slightly smaller share at 22 percent now, versus 25 percent in 1999. Regarding origin diversity, the key supplier nations beyond the "big three" saw their portion of premium cigar im- ports to the U.S. drop from 18.3 million sticks in 1999 (or 7.5 percent of premium imports) to only 3.59 million in 2015 (or .5 percent of imports). Trends among the remaining four or- igins tracked in the seven key countries Premium Cigar Imports Post 1.5% Gain in 2015 Showing negligible growth last year, premium cigar imports continue to reach ever-higher post-boom heights. >E. EDWARD HOYT III Estimated 2015 U.S. Premium Cigar Imports (thousands of cigars) Origin * 2015 Share 2014 % Change Dominican Republic 126,067 40.1% 124,126 -.2% Nicaragua 119,347 37.9% 117,844 +1.3% Honduras 67,627 21.5% 63,784 +6% Philippine Republic 1,005 .32% 975 +3.1% Mexico 586 .09% 286 -51.2% Costa Rica 250 .08% 216 +15.7% Bahamas 29 .01% 81 -64.2% Grand Total 314,611 100% 309,838 +1.54% Source: U.S. Bureau of the Census Report IM 146, Imports of Merchandise for Consumption, based on data from U.S. Customs Service, and derived estimates from Cigar Association of America (CAA). *Key supplier countries tracked by CAA. All Others .5% Nicaragua 37.9% Dominican Republic 40.1% Honduras 21.5% CIGAR IMPORTS >

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