Will Cigar Sales Stagnate?
In 2023, total premium cigar sales were approximately 450 million, reflecting a slight decline from 2022. I anticipate that we will observe stagnant sales in 2024. The years 2021 and 2022 experienced a surge in cigar sales, marked by breakout performances. As individuals resume office work and increase travel, we've noticed cigar sales stabilizing at a new, heightened rate. In the early days of the COVID-19 pandemic, people took advantage of the opportunity to enjoy cigars more frequently, either at home or in local lounges while working. Additionally, the visibility of young celebrities like Andrew Tate and football teams engaging in cigar smoking has attracted some attention to the hobby, particularly among a slightly younger audience.
Who Will STG Purchase?
Scandinavian Tobacco Group (STG), the owner of Cigars International and General Cigar Co, recently made a significant acquisition. While rumors surrounding the potential sale of Rocky Patel and Davidoff persist, no concrete details have emerged. However, I believe they won't limit themselves to Room 101 and Alec Bradley. This move provides them with a chance to expand their presence in local retail shops' humidors and supports the growth of their catalog.
Are More Price Increases Coming?
The introduction of new cigars accompanies a higher Manufacturer's Suggested Retail Price (MSRP). Elevated tobacco prices and increased costs for skilled rollers are squeezing margins for manufacturers. Although some major players have made minor adjustments to their core line prices, it seems none are eager to be the first to implement significant increases on long-standing products. Instead, they are opting to release new offerings with healthier profit margins.
What Happens With Flavored Cigars?
In August 2023, the premium cigar industry marked a significant victory, but the battle continues. The FDA has appealed the court's decision to stop premarket product approval, testing, and marketing restrictions. While I predict (and hope) for a successful rejection of the appeal, I anticipate heightened FDA efforts in regulating flavored cigars. Although this might not markedly impact our retail sales, it remains a substantial source of revenue for the industry as a whole.