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Cigar sales see worldwide slump

The Cuban cigar has historically been a status symbol among wealthy businessmen and, for Americans, forbidden fruit. But the recession has forced many to rethink their spending on amenities, and Cuban cigar sales plummeted last year. As a result, cigar producers and local cigar bars have begun targeting a new and perhaps unlikely segment of smokers: women.

More than 30 million cigars are sold annually in the Czech Republic, according to the General Directorate of Customs, adding up to millions of crowns in profits for the industry and, for the government, about 10 million Kč ($521,376) annually in taxes. But cigars are losing their luster for some smokers as the realities of economic recession set in.

The Habanos group, producer of popular Cuban cigar brands such as Cohiba and Romeo y Julieta, registered a turnover of $360 million in 2009, an 8 percent decline that is not lost on Czech cigar distributor Peter Forman.

"I've seen a 10 percent to 15 percent fall in midrange cigars and a 30 percent fall in lower end, machine-made cigars," he said.

Cigar culture has become increasingly popular in the Czech Republic since 1995, when Forman became the first importer and distributor of Cuban cigars in the country. Thanks in part to Forman's marketing efforts, cigar bars and humidors have popped up throughout Prague as business culture embraces the experience of a Cuban cigar, the most popular of which sell for between 700 Kč and 1,000 Kč.

"Once we began introducing Cuban cigars to middle and high society, they became quite popular, and sales increased rapidly," he said.

Forman remained the largest Cuban cigar distributor on the Czech market until 2006, when Tabak Invest signed an exclusive contract to distribute Habanos cigars in the Czech, Slovak and Hungarian markets. According to Petra Amis, spokeswoman for Tabak Invest, Cuban cigar sales have slumped most significantly in Hungary.

A sales decline in the Czech Republic has mostly affected less expensive Habanos cigars, Amis said, adding that, amid sinking sales, one of the keys to Cuban cigars' long-term stability has become clear.

"People who can afford to smoke Cuban cigars regularly will always have money to buy them," she said.

People may be buying fewer cigars, but, when they do, they still tend to choose Cuban brands, according to Amis, who said "premium Cuban cigars market themselves." This has been good news for Prague's smoke shops and Cuban cigar bars, including Bar and Books in Old Town, which sells a variety of Cuban cigars ranging from 300 Kč to 1,100 Kč.

Martina Peštová, manager of Bar and Books, said its core clientele of cigar-smoking businessmen has kept business steady over the past year. But a drop in tourism has had a noticeable effect on the number of foreign customers who are willing to pay for premium goods, she added.

"We don't see any tourists with money these days," she said.

The price of cigars depends on the quality of the tobacco, the style of rolling and the length, with longer cigars typically being more expensive. Peštová said people are not only buying fewer cigars, but many have changed their cigar of choice.

"I've had to shorten the length of cigars we offer because we have a problem selling the longer cigars," she said.

Falling sales of some types of Cuban cigars have led to more significant changes in the shape and sizes of cigars being produced, as many companies begin reaching out to women, a portion of the smoking population that has, until now, remained untapped.

The Habanos group has announced a new focus on thinner, milder cigars aimed at women, who make up only 5 percent of the Czech cigar-smoking population, according to Forman. At the same time, Bar and Books has begun offering a weekly ladies' night, where women get complimentary cigars. The events are gaining popularity - according to Peštová, they give away about eight cigars per week - but the female-smoker segment remains a decided minority, she said.

"Some of the ladies smoke the cigars, but many of them take one puff and give it to their boyfriends," she said.

Such concerted efforts to attract new customers could prove popular, but cigar companies will have to overcome a stigma - and lack of knowledge - among female puffers, Peštová said.

"Occasionally, women will come in to smoke a cigar with their rich boyfriends and show how 'sophisticated' they are, but most women have no idea what they are smoking," she said.

Wednesday, March 03, 2010

Source: The Prague Post

Cigar sales see worldwide slump