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The cigar boom

The cigar boom

The Cigar Boom

In a previous article we talked about the near demise of the hand rolled cigar. Cigarettes were incredibly popular and after the 1920's, when a cigar rolling machine was invented, hand rolled cigars became less popular. A series of events during the 20th century would leave a long lasting legacy. No doubt the Cuban revolution had a massive effect in the world of cigars. The diaspora of Cuban cigar rollers took their trade to various countries around the world. Cuba enjoyed unprecedented growth in its tobacco industry while cigar sales stagnated in the US. The cigar boom took place by the end of the 20th century.

The years after the Cuban embargo

Cuba had lost access to the US market and it focused its efforts on conquering the European, Asian and Soviet markets. Cuban cigar sales fluctuated between 79 million pieces in 1958 to 120 million in 1976. Disaster struck in 1979 when blue mould decimated almost all of Cuba's tobacco plantations and tiny amounts of cigars were exported in the following years. By the mid 1980's Cuba was exporting around 50 million cigars a year. The Cuban government decided to appoint an economist to oversee the industry. Francisco Padron, the appointee, took exports to over 110 million cigars per year in just 10 years. The quality of Cuban cigars in the late 80's and early 90's was superb. The 'Special Period' affected the Cuban cigar industry massively. Cuba was in dire need of cash, its exports had collapsed and all aid from the Soviet Union had evaporated. Francisco Padron managed to source huge cash injections into the tobacco economy. He did this by asking his largest buyers to pay in advance for future cigars. This decision would cost him his job in 1994 however, his predictions turned out to be accurate and tobacco output grew and grew. The Cuban government at some point aimed to export 200 million sticks per year, a goal that proved to be too ambitious. The 160 million cigars that were exported between 1998 and 2001 were of inferior quality and had construction issues.

The boom

We are meant to be talking about a boom industry, how come we're talking about the massive crisis in the Cuban cigar industry? This is because the cigar boom started not in Cuba but in the US. There, Cigar Aficionado magazine would rate cigars every month and give scores. Cigars worth in some cases just 2 US dollars were given top marks. Demand for those and similar cigars skyrocketed. By 1996 imports of fine cigars were up 66.7% and some 293 million cigars were being sold every year. Some companies trebled their sales in just 4 years and tobacco growers were inundated with orders and back orders. In total, some 50 million cigars were in back order in the US market alone. By the same year (1996) the cigar boom had reached Cuba. The top scorers in Cigar Aficionado magazine were impossible to find in Cuba. The Cuban government even launched new brands. The increased demand inevitably had a negative impact on tobacco growing in Cuba and the New World. Sub-standard blends were common sight. In the year 1997 not a single cigar scored 90 points. Cigars had also gone up in price and many companies were trading shares in the Stock Market hoping to increase the value of their companies.

The bubble bursts

Even more cigar factories opened up in unlikely places like Canada, Peru and Indonesia. By 1997 however, well established cigar factories were already fulfilling their back orders and realising that in many occasions, the back orders had been inflated at the peak of the cigar boom. Many new-comers to the cigar manufacturing world were left stunned when the bulk of cigar buyers lost interest in their cigars and chose the cigars from well established brands that were then fulfilling back orders. Entire boxes of cigars sold at the peak of the boom for 200 US dollars, sold for as little as 10 US dollars after 1997. Wall Street abandoned the cigar industry and many companies were forced to buy back their stocks. The cigar market is a long term commitment that does not return the quick profits brokers and traders expect. Many take overs and mergers occurred, gigantic companies were formed and the market became a lot less saturated. These days Cuba has a healthy supply of tobacco and a market eager to welcome Cuban cigars. Nicaragua, has risen to stardom and its cigars are a favourite of many cigar connoisseurs and aficionados.

Cigars today

These days cigars from all over the world are available for enthusiasts and connoisseurs. Nicaragua and The Dominican Republic lead the way in the American market. Europe and Asia-Pacific prefer the classic, history-rich Cubans. Discerning aficionados enjoy both Cuban and New World cigars. Will cigar producing countries in the vicinity of the US be affected by Trump's nationalist policy of 'buy American and hire American'? Time will tell, however it will be interesting to see what comes out of America (cigar wise) as companies move or start operations in the US using American raw materials. Read what happened prior to the Cuban Embargo here.
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