StogieGuys.com has confirmed that General Cigar, Altadis, Oliva, and Davidoff have told retailers that prices will be going up on many (though not necessarily all) of their cigars.
Altadis price increases ranged from 2.5% to 5%. Altadis USA makes Montecristo, H. Upmann, Romeo y Julieta, Trinidad, Siglo, Te-Amo, and many other well-known brands. Retailers also have been notified that Davidoff—maker of Davidoff, Winston Churchill, Camacho, Avo, and other lines—is also increasing prices.
General Cigar/STG, the largest producer of premium handmade cigars for import into the United States, raised prices around 3% earlier this week. However, the company’s CAO lines—only recently integrated into the company (details here)—were not included in the price hike. The CAO Cameroon and CAO Maduro cigar prices are decreasing, while the prices of other large cigars sold under the CAO name remain unchanged. According to the company, the increases were implemented “to offset the rising cost of tobacco, manufacturing, and logistics.”
Tobacconists we spoke with didn’t think the price hikes were unexpected. One shop owner felt that many companies had paused normal price increases immediately after the SCHIP tax went into effect to ease the burden on retailers, making the new hike understandable.
Another cigar shop owner was supportive of the increased prices “as long as these companies start committing the necessary financial resources to protect the premium cigar industry from being regulated and taxed out of business by the government.” General Cigar, Davidoff, Altadis, and Oliva are all listed as “friends of CRA” on the Cigar Rights of America website. [Disclosure: StogieGuys.com is listed as a “CRA Partner” on the same page.]
The practical impact of a 5% increase is that a cigar previously sold to the shop wholesale for $3 would now be $3.15, generally resulting in an increase of the retail price from $6 to $6.30. Time will tell whether consumers are willing to absorb the increase without changing their purchasing habits, or if they respond by purchasing less expensive cigars and/or decreasing the frequency of their cigar purchases.
[UPDATE: Originally this article noted a report on another site that Alec Bradley VP of Sales George Sosa said the company was planning a future price increase of an undetermined amount. That story has since been pulled on the basis that Alec Bradley withdrew confirmation.]
–Patrick S
photo credit: Stogie Guys