Commentary: Prediction for IPCPR 2015 — $10 Cigars
2 Jul 2015
The annual International Premium Cigar and Pipe Retailers Association (IPCPR) Trade Show opens just two weeks from tomorrow in New Orleans. Many new cigars that will debut at the show have already been announced, with even more to come in the next two weeks.
Looking at the trends among new cigars is always interesting because it tells you the answer to this question: What do cigar makers think cigar smokers will buy? Many cigar makers are very passionate about their craft, but they are still businessmen (and women) and, ultimately, the idea is to make cigars that will sell.
Steve Saka, formerly of Drew Estate, who will be launching his new cigar venture called Dunbarton Tobacco & Trust, recently kicked off a discussion about the trends expected at the show with a question on Facebook about what cigar smokers want to see, and what they expect to see.
My colleague responded to the latter question with the following: “More San Andrés, less Conn. Broadleaf. More thick cigars, but also a few lanceros too. More cigars packaged in 5- or 10-count boxes, rather than 20+.”
In terms of the cigars we’ll see, I agree. But I would add another prediction, this one about price: Get ready for lots of cigars with a retail price of $10 or more.
This prediction isn’t about what cigar makers think cigar consumers want (although the trend towards higher-priced cigars has been going for a while now) but rather a reaction to the pending FDA regulation of cigars.
As we’ve explained, under the regulations which may go into effect any day now, every new cigar will be subject to FDA pre-approval before it can be brought to market. The only possible exception is under “Option 2” of the proposed regulation which calls for an exemption for cigars with a retail price of $10 or more. (Although, I’ve spoken with people familiar with the federal rulemaking process who say a small change to that number could be implemented without the need for an additional comment period, such as a change from a retail price limit to an equivalent wholesale price of, for example, $5.)
Still, right now the best hope of escaping a costly and time-consuming FDA pre-approval process—assuming most cigars could get through it at all before going bankrupt—is to set your retail price at $10. It’s as natural as it is depressing, and it will especially impact cigars that might otherwise sell for a few dollars under the $10 cap.
So while other new cigar trends, whether we like them or not, are a natural response to what consumers want and what cigar makers can make with the tobacco they have available, maybe the most distinctive trend from the 2015 IPCPR Trade Show will be overpriced cigars. Not because cigar makers want to gouge their customers; because of the inevitable response to FDA regulations that haven’t yet gone into effect.
–Patrick S
photo credits: Stogie Guys
Patrick Ashby
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George Edmonson
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I don’t want to pay $10 for a cigar, so I’m stockpiling my favorites. I don’t have much faith in the FDA to be fair to the cigar industry. The only thing that has worked in our favor is the glacial pace by which the bureaucracy works. We could be years away from any meaningful decision.
With regard to the “possible” rule that would exempt $10 cigars, can that possibility also be read to mean the exemption might be eliminated entirely, rather than just tweaked slightly?
No exemption is entirely possible, in fact it is the first of the two options in the proposed rules:
Option 1 – No exemption, all cigars introduced since 2007 would require pre approval.
Option 2 – Cigars over $10 retail that are also handmade and don’t have flavoring characteristics (which is very broad and undefined), would be exempt while all others would need FDA pre-approval to be marketed and sold..
Plenty of less expensive cigars could still be available, especially for established brands and blends. Cigar makers will likely decide it’s worth it to go through the approval process for some products aimed at a cheaper market.