Tuesday, December 29, 2009

Top Cigar Stories of 2009 - #10 to #6...

Re-post of 2009 Top Stories in Cigar Industry from Rich Perelman...

Los Angeles, December 28, 2009 - Charles Dickens died in 1870, but he accurately summed up the U.S. cigar industry in 2009 in the opening line of A Tale of Two Cities:

"It was the best of times, it was the worst of times . . ."

Maybe it was a bit worse than better, as we recount our choices for the top-10 cigar stories of this tumultuous year:


[10.] Two giants lost as Schneider and Lara pass

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Two men intimately connected with the ascension of the Davidoff brand to worldwide success were both lost during the month of October: Ernst Schneider and Avelino Lara.

Schneider died at age 88 in Basel, Switzerland on October 13. He was the head of the Oettinger Group that purchased Zino Davidoff's store in Geneva and its associated brand name in 1970 for the unheard-of sum of four million Swiss francs (about $970,000 U.S. at the time), but he knew what to do with it. In Dieter Wirtz’s 2006 book, Davidoff: Legend - Myth - Reality, Schneider remembered "We badly wanted a brand of our own and wanted it to be known worldwide. That is why I engaged Zino with his charisma and his magical name to be ambassador for five years. But I stayed in the background."

It was Schneider who had the idea to take the Davidoff name that was so highly regarded in cigar circles and expand it to leather goods, apparel, toiletries and many other items that are today available under the Davidoff name. He took over the reins at Oettinger Imex in 1962 when it was simply a tobacco-products distributor in Switzerland and when he handed control to Reto Cina in 1998, it was doing business in more than 100 countries with sales of more than two billion Swiss francs annually (about $1.96 billion U.S. at today’s rates).

Lara worked for many years as a roller and later as the head of the legendary El Laguito factory outside of Havana. He told interviewers that he worked not only to create the commercial version of the Cohiba blend in 1968, developed strictly as a diplomatic gift for the Castro regime, but also with Zino Davidoff to develop the Davidoff series in 1969 (it went on sale in 1970).

Lara retired as the chief of the El Laguito facility in 1996 and, so the story goes, had been to the Bahamas as a tourist and met Graycliff owner Enrico Garzaroli and arrangements were then made to allow Lara to relocate to the Graycliff complex and begin rolling cigars for patrons of the resort’s top-shelf restaurant.

The obvious quality of the cigars and the skill of the then-75-year-old Lara led Garzaroli to ask him to create a special blend just for Graycliff and just a year later – 1997 – the Graycliff brand was born. That blend is still available today in the Graycliff Original brand, with a red-and-gold band.

Lara died, also at age 88, on October 27 and was buried in Havana.


[9.] A new world-record cigar!

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Jamaican sprint star Usain Bolt has stunned the world two years in a row by not just setting new world records in the 100 m and 200 m dashes, but smashing marks thought to be untouchable for years to come. So it was for Wally and Margarita Reyes, who set a new world-record for the longest cigar in history in November.

On November 21, they completed a stunning 196-foot, 3-inch long cigar (59.82 m) to highlight the 11th annual Cigar Heritage Festival held in Centennial Park in Tampa, Florida to raise money for the Ybor City Museum Society.

The final assembly was done in the presence of a validator from the Guinness Book of World Records, and if certified, would an amazing 47 feet, 6 inches to the old record of 148-9 by Cuba’s Jose Castelar Cairo set last year. It would be the second record for the Reyeses, who created a then-record 101-foot-long cigar (pictured above) that weighted more than 53 pounds at the 2006 Festival. This edition weighed in at about 112 pounds. Both were created, for the most part, at the Reyes’s shop, the Gonzalez Habano Cigar Co. in Tampa.


[8.] Cuban planting and production both down


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Even the Cuban cigar industry is feeling the punch of the worldwide recession.

"Cuba slashes tobacco acreage amid flagging demand" read the headline on a story from the Reuters news agency on October 5, noting a Cuban National Statistics Office posting on its Web site that 30% less tobacco is expected to be planted this year.

The stark reduction was attributed to "financial restrictions that made it impossible to count on the necessary resources." The National Statistics Office notice indicated that the expected crop yield for the upcoming 2009-10 season is 22,500 tons, down 16% from the previously-planned total of 26,800 tons. The acreage to be planted with tobacco will shrink to 49,000 acres, well down from the 70,000 acres planted for the 2008-09 crop.

Habanos S.A. officials told attendees at February's Festival del Habano that the island’s cigar business dropped by 3% in 2008, but the Reuters story also noted a forecast for 2009 that sales would retreat another 15% in 2009 "because of the recession and the smoking bans adopted in a growing number of places as a public health measure." Reports that several of the major Cuban cigar factories had seen layoffs and were well below their full production capacity were also confirmed in the Reuters report.


[7.] Smoking bans continue their march across America

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After years of debate, Michigan became the 38th state to adopt some form of smoking ban in public places in 2009 and smoking bans in bars, restaurants and even in outdoor settings such as parks and restaurant patios continued to proliferate.

Although primarily aimed at cigarettes, the smoking bans obviously impact cigar smokers and there was some push-back against such bans, notably in Indianapolis (where a ban was tabled), in Los Angeles (where a ban on smoking in outdoor dining areas has been trimmed) and in Texas, where a furious battle ended with no statewide ban adopted, but with anti-smoking forces vowing to continue.

The push against outdoor smoking has one anti-smoking academic - Michael Siegel of Boston University - so concerned against eventual blowback that he started a Web site - http://www.tobaccocontrolintegrity.com/ to catalog the quarter-truths, half-truths and outright lies being told in the advancement of the anti-smoking case.


[6.] More brands than ever before!

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One would think that with so many negatives, the number of brands available to U.S. smokers would be diminishing. Exactly the opposite is happening.

There are more nationally-marketed brands being sold to U.S. smokers than ever before. According to the 2010 edition of our Perelman’s Pocket Cyclopedia of Cigars, more than 1,473 brands are in production, with 1,321 handmade brands, even more than at the height of the Cigar Boom in 1997 and 1998.

Many came from established manufacturers adding new lines. Gurkha introduced nine new brands in 2009; Rocky Patel had six, Alec Bradley five and even four new lines of Montecristos came to market. But there were also brands like Doublegun, Fogo, White Buffalo and Zoidian that are being marketed by small distributors, all looking for a piece of the world's largest cigar market.

Is a crash coming for these brands as well as those of established manufacturers and distributors? That’s a 2010 story.

We'll review our top-five stories of the year on Tuesday.

~ Rich Perelman

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