18 May 2016
Uncertainty. Apprehension. Determination.
These seem to sum up the feelings of some of the smaller players in the cigar world. Small players whose business will be greatly impacted by the U.S. Food and Drug Administration’s new tobacco regulations. In statements both on and off the record, those who create and market boutique cigar expressed both anger and resolve to StogieGuys.com.
“You have to play the hand the best you can with what you have,” said Jeff Haugen, co-owner of Crux Cigars. “We’re going to have to adapt.”
While some were reluctant to openly discuss the potential impact or their plans, others were blunt.
“It’s a mess,” said Sandra Cobas, owner of the highly regarded cigar manufacturer El Titan de Bronze, located in Miami’s Little Havana since 1997. Cobas is confident she’ll be able to remain in business, but “it won’t be the same.”
Particularly troubling for her is the Feb. 15, 2007, grandfather date on which cigars had to be on the market to qualify for an exemption from regulation. While El Titan’s four lines should qualify, many of the smokes she produces for other brands will not. And that means her current level of eight to twelve employees will almost certainly shrink. “These are working people,” she said. “It’s very upsetting. Very upsetting.”
The economic impact will be widespread, she added, ticking off those impacted, from tobacco growers to box makers, cigar band lithographers to glue manufacturers.
“How about in Estelí? How about in the Dominican?” where cigar-making has boomed in recent years, she said. “They think they’ve got an immigration problem now? They don’t know what they’ll have.”
Mel Shah realizes his MBombay cigars will also face the full thrust of the regulations because they came to market only a couple years ago. Just what the FDA’s approval process will be, or how much it will cost, however, remains uncertain.
“Everything that we hear right now… it’s all speculation,” said Shah. “They’re going to charge this, they’re not going to charge this. The whole nine yards. There is nothing… in black and white as to how much it’s going to cost us. Once we have that, then it will be a more definitive strategy.”
Shah’s position as owner of both a cigar brand and a cigar shop (Fame Wine & Cigar Lounge in Palm Springs, California) provides a well-rounded perspective.
As a measure of what lies ahead, he noted that about 70 percent of the cigars on retailers’ shelves these days were introduced after 2007.
The FDA regulations, scheduled to go into effect this summer, offer a small window for cigars that aren’t grandfathered. Those on the market before Aug. 8 can remain on sale until Aug. 8, 2018, before having to apply for approval.
That’s led to conjecture that brand owners will rush cigars to market in order to take advantage. But Haugen, and others, said that’s not their plan.
“We’re certainly not going to knee-jerk any reactions of which way we’re going to move,” Haugen said, noting that all Crux lines are post-2007. “I’m not interested in just jamming a bunch of brands out there to get something going.”
One point of agreement was that, while it’s too soon to know the full impact, they will survive.
Most, in fact, echoed the sentiment of Ernesto Perez Carrillo in his response to the FDA: “We are here to stay.”
photo credit: Stogie Guys