2023 Cigar Insider Retailer Survey: Majority Of U.S. Tobacconists Say Sales Are Up
It’s a good time to be a cigar retailer. Our latest Cigar Boom that was ignited by Covid-19 after nationwide lockdowns inadvertently led to an increase in cigar consumption, and those trends continue today.
2023 Cigar Sales Compared To 2022
| Status | Percent |
|---|---|
| Sales are up | 69.1 |
| Sales are down | 6.2 |
| Sales are flat | 24.7 |
Source: Cigar Insider
When the pandemic hit in 2020, the entire cigar industry, from manufacturers to tobacconists, had no idea how it would impact business. As it turned out, sales of cigars started to grow toward the end of 2020. The pandemic had an unexpected side effect: cigar smokers stuck at home during lockdown were smoking more. From there, the numbers kept steadily rising, and in 2021, the U.S. even higher in 2022, and while imports might be leveling off, business is still quite robust. Only 24.7 percent of retailers reported that sales were flat this year over last, and a mere 6.2 percent reported a decline.
Has The Cigar Boom Leveled?
| Status | Percent |
|---|---|
| Leveled | 59.0 |
| Has not leveled | 25.6 |
| Unsure | 15.4 |
Source: Cigar Insider
Prices And A Post Boom Economy
As for whether or not we’re still in the midst of a Cigar Boom, the year isn’t over, but 59 percent of retailers believe that the Boom is leveling while 25.6 percent think it’s still going strong.
“I think we were experiencing very organic growth in the industry,” says Luis Rodriguez. He owns two Mickey Blake’s cigar shops in Connecticut. “I also feel the period during Covid definitely gave the industry a massive shot in the arm that, though wonderful for revenue, was in no way sustainable.”
Craig Cass, who owns several Tinder Box shops in and around Charlotte, North Carolina, agrees that the boom seems to be leveling. “The unbridled spending has been tempered,” he says. “Sales are still holding steady with increases, but we are heavily promoting to drive that number.”
Only 15.4 percent of retailers said they weren’t entirely sure if the Boom is leveling or not.
One thing that retailers were definitely sure about—prices are going up. An overwhelming 95 percent of the retailers we polled said they’ve observed an increase in manufacturers’ suggested retail prices this year. It’s probably no coincidence that 93.8 percent of retailers also reported they had to raise prices this year themselves.
“It is getting harder and harder to find a good quality cigar under the $10 price point,” says Colton Rawls, owner of Cavalier Cigar Co. in College Station, Texas. “Customers are buying a lot more $6 to $10 items trying to maximize their funds.”
For some retailers, their customers remain higher prices.
“Our customers want cigars and are willing to pay more for them,” says Paul “Rev” Davenport, owner of Perfecto Lounge in Roseville, California. Cass echoes Davenport’s observation: “They are amazingly open to higher price points if the cigar can hold up to the hype.”
In Virginia, Gary Pesh sees a sharp divide between customers throughout his many Old Virginia Tobacco Co. locations. “There is a clear division between consumers,” he offers. “There are those buying fewer cigars or buying more value-priced cigars and those for whom price is no object.”
Spending is a bit more conservative in Chicago. “Consumers seem to be sticking to their budget more rigidly,” says Kevin Levi of Iwan Ries & Co., the Windy City’s oldest cigar shop. “It’s hard to upsell.” Scott Baily of The Cigar Merchant in Roswell, Georgia, sees similar behavior, saying that his customers are “still buying, but buying cheaper.”
Julie Neumann is the co-owner of Neumann’s Cigars & More, which has two Illinois locations, one in Libertyville and one in Long Grove. She puts it plainly: “Consumers are getting tired of $20-plus cigars.”
Logistics, Inflation And The Internet
With Covid lockdowns behind us, supply chain issues aren’t quite as dire as they were a few years ago, but according to retailers, they still exist.
“Most manufacturers are back to a timely shipping process,” says Laura Wanke, general manager of Chaloner & Co., an Adrian, Michigan store that’s one of the oldest cigar shops in the United States. “Some others take a bit more time, but our guests are usually very understanding and have no problem waiting.”
Along with most industries in the United States, inflation has naturally affected the cigar business. Nearly half (48.7 percent) of retailers report that inflation changed the buying habits of their customers.
Has Inflation Changed Buying Habits?
| Status | Percent |
|---|---|
| Changed habits | 48.7 |
| Has not changed habits | 33.3 |
| Has somewhat chnaged habits | 18.0 |
Source: Cigar Insider
“Customers are moving away from brands that they were once loyal to due to the price increases, says Erik Wanland owner of Lordsburg Cigar Lounge in La Verne California.
A notable 33.3 percent of retailers say that inflation made no difference, showing that some consumers may be immune to changing costs, and 17 percent were unsure.
Most of the retailers we polled are exclusive brick-and-mortar shops with no Internet business. Only 37 percent of stores said they sold cigars online, and the majority—63 percent—only sell cigars in person. According to the retailers who also sell cigars online, Internet transactions make up 22.6 percent of their overall sales on average.
While cigars can usually be purchased cheaper online, a lounge creates an incentive for people to purchase cigars at their local shop and enjoy the social setting. With factors like state-wide smoking bans for most businesses and the onset of colder weather, it’s almost become a necessity for cigar shops to offer a lounge. And cigar lounges have become the norm: 81.5 percent of the retailers we surveyed have a cigar lounge.
The Cigar Association Trade Show
For decades the PCA trade show (formerly called the IPR and the RTDA), was held in the summer. And for decades, retailers have complained about the inconvenient timing. The PCA decided to heed the , and next year, the annual trade show is happening in the spring. Now that so many retailers got their wish, our survey reflects that the PCA made the right move. A convincing 67.5 percent of retailers responded that they approve of the new date. Only 10 percent didn’t like the change and 22.5 percent say they really didn’t care.
In Portland, Oregon, Jeff Ball, owner of 11th Avenue Liquor—which has a large and extensive walk-in humidor—is happy with the new date. “Our peak season is the summer, he says. “And it would be nice to get bulk orders and new product at the beginning of the peak season.”
Rodriguez is also happy with the decision. “Asking a New England shop owner to leave their business during the peak of our sales season is not an option,” he says, referring to summers in Connecticut. “That, coupled with late-year fulfillment of trade show orders isn’t fiscally prudent for shops whose sales season end in autumn.”
What’s On Their Minds?
As the news from the retail front is positive overall, there are still some issues troubling cigar shop owners, and they’re nothing new. When asked the one thing they would change in the cigar industry, the overwhelming answer had to do with taxes. This response segues straight into another industry-wide gripe among retailers—the Internet. Many tobacconists in states with high tobacco taxes would like to see some tax relief, but they’d also like to see Internet cigar sales taxed at the same rate of brick-and-mortar transactions for a more even playing field.
Pesh has a more all-encoming, if not idealistic, wish: that people would better understand the difference between cigars and other tobacco products. “Oh, what a world it would be if politicians, anti-smokers and health groups understood our culture.”
To see the Cigar Insider retailer survey on the hottest cigar brands, click here.
To see the Cigar Insider retailer survey on best-selling sizes, click here.
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