Category: Cigars

Cigar/Pipe Rules and Fees Upheld in Court

Photo: shaiith
The U.S. Food and Drug Administration properly implemented federal law when it extended certain cigarette rules to other tobacco products and when it assessed fees on cigars and pipe tobacco, the U.S. Court of Appeals for the District of Columbia Circuit ruled on June 20, according to Reuters.
The court unanimously rejected a challenge by the Cigar Association of America, Cigar Rights of America and Premium Cigar Association to aspects of the FDA’s Deeming Rule subjecting cigars and pipe tobacco to the same regulatory framework as cigarettes.
The FDA adopted the Deeming Rule in 2016, identifying a wide range of tobacco products, including cigars and pipe tobacco to be subject to its regulatory authority under the Family Smoking Prevention and Tobacco Control Act of 2009.
The industry groups challenged the rule in the District of Columbia. Some aspects of that challenge have been successful, as when the D.C. Circuit last year overturned a warning label requirement for cigar and pipe tobacco products.
In its recent ruling, however, the appeals court upheld the FDA’s authority to require cigar and pipe tobacco products to undergo premarket review or for manufacturers to provide “substantial equivalence reports” (SE) showing that a product is equivalent to one already on the market before 2007.
The cigar groups had challenged that rule on the grounds that the FDA failed to provide product-specific instructions on how to prepare SE reports and did not consider the cost and benefits of premarket review specifically for each industry or product. They also challenged the user fees on the grounds that the agency did not impose similar fees on other newly deemed products such as e-cigarettes.
Circuit Judge Judith Rogers wrote that it was unnecessary to address whether the law required the FDA to provide the instructions because the agency had said it would give companies 18 months to submit SE reports. She argued that even if the FDA were required to provide instructions, it did not have to do so as part of the rule but could do so later.
Rogers also upheld the agency’s user fees on cigar and pipe tobacco manufacturers and importers, arguing that the Tobacco Control Act specifically gave the FDA authority to impose fees on cigarettes, cigars, snuff, chewing tobacco, pipe tobacco and roll-your-own tobacco.
Anti-smoking activists described the court ruling as “a win for kids, their families and the public health.”
“The D.C. Court of Appeals’ unanimous decision upholding the premarket review provisions of the FDA’s Deeming Rule for cigars will finally force cigar makers to show that their products are substantially equivalent to products that were already on the market before the passage of the landmark Tobacco Control Act,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, in a statement.
“Cigarettes have been subject to FDA regulation since the enactment of the Tobacco Control Act in 2009, but cigar makers were entirely unregulated for seven years until the Deeming Rule subjected them to minimal regulations.”
July 23, 2021
A Long and Winding Road
Photo: dimasobko
The regulation of flavored cigars in the United States
By Barry S. Schaevitz and Phil Langer
In late April 2021, FDA announced its intention to move forward with proposed product standards that would ban all characterizing flavors in cigars and menthol in cigarettes. This announcement, and the ensuing media frenzy, warrants much unpacking and, specifically, examination of three questions in relation to flavored cigars: What historic efforts have there been to ban flavored cigars at federal, state and local levels; is there scientific evidence (or legal precedent) to support an FDA-level flavored cigar ban; and what does FDA’s announcement actually mean going forward?
Historic Efforts to Ban Flavored Cigars
This is not the first time FDA has sought to ban flavored cigars. In May 2016, FDA released its Final Deeming Rule regulating cigars (and other products). While the Final Deeming Rule did not ban flavored cigars (or other flavored products), the version FDA submitted to the White House Office of Management and Budget (OMB) did contain such a provision. OMB did not clear the provision; it was subsequently removed and did not appear in the Final Deeming Rule. Thereafter, in 2019, FDA released its Draft Guidance, indicating it would seek to remove premarket review enforcement discretion for certain ENDS products and for flavored cigars that entered the market after Feb. 15, 2007, and before Aug. 8, 2016, an action that would have significantly impacted the flavored cigar category. This action was necessary, said FDA, due to a concern that youth would migrate from flavored electronic nicotine-deilvery system (ENDS) products to flavored cigars. The Final Guidance, however, did not include the section regarding enforcement against flavored cigars and only removed enforcement discretion for certain flavored ENDS products.¹ Suffice it to say, FDA has had its eye on banning flavored products, including cigars, for some time. A threshold question, of course, is how would FDA define “flavored”? The Tobacco Control Act itself does not define “flavor” or “characterizing flavor,” and, to date, FDA has not defined either term.
Separate from FDA, there have been efforts at the state and local levels to ban flavored cigars (and other products) for years, taking various approaches and realizing a variety of outcomes. It is worth noting that different jurisdictions have approached the definition of “flavor” or “characterizing flavor” differently—some focusing on marketing and statements by manufacturers as the sole criteria and some focusing more on the actual manufacturing and underlying ingredients of the products. These various approaches have created different effects throughout the market, making it more noticeable that there is no federal definition.

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Some prominent examples of state and local efforts to ban flavored cigars over the years include:
Maine was the first state to ban flavored tobacco products, with efforts dating back to 2008 when a bill was passed prohibiting the sale of flavored cigars unless they had been on the market prior to 1985. The prohibition was repeatedly amended until it was ultimately repealed, except for its application to nonpremium cigars.²
Philadelphia first passed an ordinance in 2007 seeking to ban the sale of flavored cigars in the city, driven in part by a stated interest in preventing youth smoking. The ordinance was ultimately struck down by the Supreme Court of Pennsylvania on the grounds that the ordinance was preempted by state law. In 2020 in a next attempt, Philadelphia made it unlawful to sell flavored cigars (Philadelphia also passed a separate law relating to vapor products), except in a limited number of tobacco businesses. The ordinance was challenged in federal court, and the Eastern District of Pennsylvania enjoined enforcement of the ordinance in November 2020, finding it preempted by state law. The decision enjoining enforcement of the ordinance is on appeal before the United States Court of Appeals for the Third Circuit.
New York City passed an ordinance broadly prohibiting the sale of flavored tobacco products in 2009, banning the sale of any “flavored tobacco product” (excluding cigarettes) except in a defined “tobacco bar.” The ordinance was challenged in federal court, and the United States Court of Appeals for the Second Circuit ultimately affirmed the constitutionality of the ordinance in 2013. The flavor ban, however, has two prongs. The first immediately bans products that the manufacturer says are flavored; the second allows the city to seek removal of other products that the city believes are flavored.
Massachusetts banned all flavored tobacco products, including menthol cigarettes, effective June 2020. The commonwealth uses a manufacturer “certification” as a means of initially determining if a product is flavored. This statewide ban was preceded by numerous local-level flavored tobacco bans, such as in Bedford and Cambridge.
California passed a statewide flavor ban of tobacco products, including menthol cigarettes, in 2020. Much like Massachusetts, this statewide flavored tobacco product ban followed numerous city and county level bans enacted across the state. Enforcement of the statewide ban was postponed until after a voter referendum, scheduled for November 2022. Until that time, it cannot be enforced.
FDA’s Announcement
With respect to flavored cigars, FDA announced in April 2021 that it is “working toward issuing proposed product standards within the next year to ban menthol as a characterizing flavor in cigarettes and ban all characterizing flavors (including menthol) in cigars.”³ FDA stated that “with these actions, the FDA will help significantly reduce youth initiation.” According to FDA, “after the 2009 statutory ban on flavors in cigarettes other than menthol, use of flavored cigars increased dramatically, suggesting that the public health goals of the flavored cigarette ban may have been undermined by continued availability of these flavored cigars.” FDA posits that “flavored mass-produced cigars and cigarillos are combusted tobacco products that can closely resemble cigarettes” and “are disproportionately popular among youth and other populations.”

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Is There Evidence and Data to Support a Ban on Flavored Cigars?
FDA’s focus on flavored cigars appears to be largely premised on the theory that flavors contribute to youth usage of cigars and that, following the ban on characterizing flavors in cigarettes in 2009, youth moved to flavored cigars. Scientific evidence supporting these positions, however, is lacking. There has not been an increase in youth usage of cigars generally, or flavored cigars in particular, to scientifically legitimize the rationale of the FDA’s ban. As of 2019, only 1.4 percent of youth were past-month cigar smokers, decreasing from 4.1 percent in 2006.⁴ Similarly, in 2019, only 5.7 percent of high school students were reported to currently use a cigar, a decline from 8 percent in 2017 and 13.6 percent in 2007.⁵
Moreover, the 2020 Monitoring the Future Survey (MTF) reported declines in past 30-day use for all types of cigars (regular little cigars, flavored little cigars and large cigars), and flavored little cigar use has continued on a steady decline since 2014 and declined from 5.5 percent in 2018 to 3.1 percent in 2020. The 2020 National Youth Tobacco Survey (NYTS) also reports a significant decline from 2011 to 2020 in high school usage of cigars from 11.6 percent to 5 percent, and the 2020 NYTS reports only 3.5 percent of students of any age using cigars.
Therefore, while FDA continues to speculate that youth could migrate to flavored cigars in response to a ban on flavored e-cigarettes, there is no data in support.
In fact, certain industry members engaged Consilium Sciences to determine what the relevant universe of scientific information is, whether this universe has been fully examined and what it shows. As presented at the Society for Research on Nicotine and Tobacco, Consilium concluded that based upon a review of seven publicly available data sources, “the results do not support an association between use of flavored cigar products and differential behaviors related to public health.”
In its announcement, FDA failed to explain a science-based rationale for pursuing a ban on flavored cigars supported by actual data, instead reiterating speculative concerns and suppositions it has raised in years past.
The Pros and the Cons
A federal ban on flavored cigars offers few positives other than the prospect of a federal uniform standard for the regulation of flavored cigars—which is the level at which such regulation should occur, if at all. The panoply of varied regulations on flavored cigars, and the varied definitions of “flavored,” from some of the smallest towns to the largest cities in the country, offers obvious obstacles to compliance for manufacturers, distributors and retailers. It also presents enforcement problems, with multiple, inconsistent restrictions. A federal standard would cure some of these obstacles.
The cons of a federal ban on flavored cigars are many. To begin, as indicated above, FDA has not yet provided any scientific justification for such a ban. FDA continues to ignore the simple truth that adult consumers should have access to products of their choosing based upon their own informed choice. Instead, FDA continues to make broad pronouncements on the communities impacted by the availability of flavored cigars (such as youth) in the absence of supporting data.
Further, FDA has yet to address the unintended consequence of such a ban. Regulating entire product categories out of existence almost certainly poses the distinct risk of creating an illicit black market for the products. Or, perhaps worse, a market where consumers or others try to flavor products themselves, using unacceptable substances to do so.
Another certain consequence of banning flavored cigars entirely would be the loss of tax revenue at both the state and federal levels. While it is difficult to calculate the precise amount of tax collected at both levels from the sale of flavored cigars, the revenue is no doubt significant as the cigar category paid $641 million in federal excise taxes alone in 2019. State taxes increase this number dramatically. Notably, several states tax little cigars (often flavored) at the same rate as cigarettes. These tax revenue consequences are of particular significance in the current federal landscape given that Congress is exploring an increase in the federal tobacco excise tax.
What’s Next?
As is usually the case, the road ahead will be long and unpredictable. It could be years before we see a final result. FDA’s announcement represents but a first step toward a ban on flavored cigars. According to FDA, the proposed product standard will come “within the next year.” Even if FDA meets this goal, the proposed rule will be subject to at least 60 days of public comment. This public comment period could—and often does—last even longer. It is not until FDA reviews and considers the comments submitted that it may publish a final rule, which has a lead time to an effective date. Finally, once a final rule is published, it could well be subject to legal challenge, including requests to enjoin its enforcement.
Only time will tell how quickly and aggressively FDA will pursue a ban on flavored cigars. But FDA’s commitment should—and must—prioritize legitimate science, research and data. FDA’s actions to date on flavored cigars, including this most recent announcement, do not demonstrate that this has yet been part of the process.
Barry S. Schaevitz is a partner at Fox Rothschild LLP.

Philip Langer is an associate at Fox Rothschild LLP

References
¹ See “Modifications to Compliance Policy for Certain Deemed Tobacco Products–Draft Guidance,” Section V, Mach 2019.
² The ban applies to all cigars except those that weigh more than 3 pounds per 1,000 cigars and are wrapped in whole tobacco leaf.
³ This initiative appeared in FDA’s recently released Spring 2021 Unified Agenda, which indicates a target date of August 2021 for a Notice of Proposed Rulemaking. The agenda did not indicate a more specific timetable.
⁴ 2019 National Survey on Drug Use and Health
⁵ 2019 Youth Risk Behavior Surveillance System
July 1, 2021
Newman Petitions to Import Cuban Tobacco

Photo: danmir12
J.C. Newman Cigar Co. has asked the U.S. Department of State for permission to import Cuban tobacco grown by “independent Cuban entrepreneurs” into the United States. The State Department currently allows American companies to legally import coffee and a few other products from Cuba. If granted, J.C. Newman will be able to import the first Cuban tobacco into the United States in 60 years.
“My family has a long history with Cuban tobacco,” said Drew Newman, great-grandson of company founder J.C. Newman, in a statement. “From 1895 until President Kennedy imposed the Cuban Embargo in 1962, my grandfather and great-grandfather imported millions of pounds of tobacco from Cuba through Tampa. Our last shipment of Cuban tobacco was the subject of a legal dispute decided by the Supreme Court.”
J.C. Newman saved its final bale of Cuban tobacco, which is now the last bale of pre-embargo Cuban tobacco in the United States. This 60-year-old tobacco continues to age in the basement of J.C. Newman’s historic El Reloj cigar factory in Ybor City.
Under the so-called Sec. 515.582 program, the State Department allows “commercial imports of certain specified goods and services produced by independent Cuban entrepreneurs” in order to “help promote [the Cuban people’s] independence from Cuban authorities.” To help support Cuban independence, J.C. Newman is requesting that the State Department include raw tobacco grown by independent farmers in this program.
Authorizing the importation of raw tobacco grown in Cuba would allow us to support independent Cuban entrepreneurs and to prove, once again, that we can roll better cigars with Cuban tobacco than Cuba can.
Drew Newman
“Prior to the Embargo, far more cigars were rolled with Cuban tobacco in Tampa than in Cuba because Tampa was home to the world’s best cigar factories,” said Newman. “Authorizing the importation of raw tobacco grown in Cuba would allow us to support independent Cuban entrepreneurs and to prove, once again, that we can roll better cigars with Cuban tobacco than Cuba can.”
June 17, 2021
MPs Urged to Champion Vaping During Debate
Photo: Gerry
The U.K. Vaping Industry Association (UKVIA) is asking Members of Parliament to champion the public health benefits of vaping as the Department of Health and Social Care looks to publish a new Tobacco Control Plan (TCP) later this year to support the government’s smoke-free 2030 ambition.
The U.K. House of Commons will debate the “Recommendations for the forthcoming Tobacco Control Plan” on June 10.
According to the UKVIA, the upcoming debate is a huge opportunity to refocus efforts in ensuring that England achieves its aim of becoming smoke-free by 2030. The U.K. is estimated to have a smoking prevalence of 14.1 percent, and the forthcoming Tobacco Control Plan is a chance to see this number decrease further, particularly in light of an uptake during the pandemic period, the association writes in template letter to local MPs.
The UKVIA letter urges MPs to make the following points during the debate:
The government must seize the opportunity presented by the U.K. having left the European Union. With the ongoing review of the Tobacco and Related Products Regulations (TRPR) and the forthcoming TCP, the government has the opportunity to diverge from EU law governing tobacco and nicotine policy to level up on health inequalities across the U.K. Independence allows for U.K. regulations to stay relevant, be easily adapted to changing consumer trends and any market and technological developments, with greater ease and less bureaucracy.
The government’s forthcoming TCP should be based on the significant and growing body of evidence showing vaping to be an effective alternative for smokers looking to quit and should cement the concept of harm reduction, placing the U.K. as the global leader in tobacco harm reduction. Vaping is twice as effective as other nicotine-replacement therapies, such as gum and patches. Research from University College London has found that e-cigarettes, in one year alone, helped an additional 50,000–70,000 smokers in England quit. Despite the overwhelming and growing evidence in support of e-cigarettes, perceptions of harm from vaping among smokers are increasingly incorrect and out of line with the evidence. This is despite ONS data from Great Britain showing that over half of smokers want to quit.
Misinformation and misperceptions about the relative risk of e-cigarettes must be challenged at every opportunity. To do so, the government must work with industry leaders to develop a series of policies that can help the vaping industry communicate directly with existing adult smokers. It is suggested that approved health claims and switching messages, alongside nicotine health warnings, should be available to vape manufacturers and retailers to communicate the facts about vaping. Such claims and messages could be used on both device and e-liquid packaging as well as on posters and leaflets. Similar proposals have been made by the governments of New Zealand and Canada.
In light of the University of East Anglia’s study to trial e-cigarettes in NHS A&E departments, greater support is also needed for medical practitioners. The new TCP should support medical professionals by ensuring that clinicians are signposted to the latest clinical evidence on e-cigarettes and that local stop-smoking clinics adopt a consistent approach to the advice given to smokers looking to switch to less harmful alternatives and/or quit smoking combustible cigarettes.
“Whilst on one hand the current regulations and the existing TCP have allowed the vaping industry in the U.K. to flourish, on the other, they have hindered the ability of the vaping sector to promote vaping as an effective way of switching to a less harmful alternative, thereby preventing the government achieving the aims set out in the Tobacco Control Plan,” the UKVIA wrote. “Parliamentarians should therefore be advocating for fair and proportionate policies and regulations of e-cigarettes to help reduce inequalities and improve public health.”
June 8, 2021
The Smoke That Thunders

A startup cigar manufacturer hopes to move Zimbabwe’s tobacco exports up the value chain.
By Thulani Mpofu
When water flowing along Africa’s fourth longest river, the Zambezi, plunges over a cliff to a gorge 108 meters below at a point on Zimbabwe’s western border with Zambia, it produces a roaring sound and a spray of droplets visible from 48 km away.
From a distance, the immense collection of droplets looks like a pall of white smoke. The Tonga people, among the first inhabitants of western Zimbabwe, call the landform Mosi Oa Tunya, “The Smoke that Thunders” in English. It is now officially known as the Victoria Falls after Scottish missionary and explorer David Livingstone first saw falls on Nov. 16, 1855, and named them in honor of Queen Victoria of Britain. In addition to being Africa’s most famous waterfall and Zimbabwe’s foremost tourist attraction, Victoria Falls is one of the seven natural wonders of the world.
Zimbabwe’s first cigar maker, which started operating in March 2020, aspires to be what Victoria Falls is to local and global tourism while giving consumers a smoking experience that thunders.
“The naming of the cigar is not by coincidence,” Mosi Oa Tunya Cigars founder and CEO Shepherd Mafundikwa told Tobacco Reporter. “This will be the smoke that thunders!”

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Mafundikwa has never smoked but was motivated to consider investing in cigar making after he had a discussion with a friend while in the United States in 2019. They talked about Zimbabwe’s tobacco industry, its contribution to the southern African country’s economy, the level to which it is being beneficiated and prospects for growth. Cigar making featured prominently in their discussion. Mafundikwa had lived and worked in the U.S. for 15 years. Returning to his homeland, Zimbabwe, he and his friend Loy Veal started translating the casual conversation they had had into practice. Harare, Zimbabwe’s capital, was the natural choice for the setting up of the factory because the city is the center for tobacco trade in the country and is surrounded by four tobacco growing provinces.
Mafundikwa also travelled to Cuba and the Dominican Republic to learn more about cigar making as well as to recruit staff skilled in cigar rolling. He convinced several cigar rollers to come over from Cuba to help him launch the business, but after some time, most of them opted to return home. However, a veteran cigar roller from the Dominican Republic, Elias Lopez, stayed on and became the head of training. He has, since May, been training an all-female workforce of eight.

The Mosi Oa Tunya team. Elias Lopez is the fifth person from the left and Shepherd Mafundikwa is the sixth. (Photos: Mosi Oa Tunyaosi)
Lopez, who is also a cigar smoker, has been rolling them for 30 years in the Dominican Republic, Costa Rica, Nicaragua and Panama for companies such as Arturo Fuente, Davidoff and other legends. Prominent American film actors and producers Sylvester Stallone and Chuck Norris have smoked some of the cigars he has rolled during his time in the Americas, Lopez claims.
“When I agreed to come to Zimbabwe, I didn’t know what to expect,” Lopez said.
“I must say, I have been pleasantly surprised by the quality of the tobacco, the warmness of the people and the pace at which the students have grasped the cigar rolling skills. I’m proud to be associated with the first cigar making factory in Zimbabwe, and I look forward to being part of the growth this company will definitely experience. The world will soon know and love the Mosi Oa Tunya cigar brand.”
Zimbabwe is Africa’s leading tobacco growing nation and the sixth largest internationally. The three main types of tobacco grown in the country are Virginia flue-cured, burley and Oriental. Virginia accounts for over 95 percent of the leaf outputs, according to the Tobacco Industry and Marketing Board (TIMB).
Burley, which Mafundikwa says his company rolls into cigars, contributes between 2 percent and 3 percent of total yearly tobacco output in the country.
“Ninety-five percent of our cigar input is locally grown burley,” he said.
“The wrapper is imported. We are working with local experts to grow the wrapper, and hopefully we will soon have a 100 percent Zimbabwean cigar.”

I have been pleasantly surprised by the quality of the tobacco, the warmness of the people and the pace at which the students have grasped the cigar rolling skills.
Elias Lopez, veteran cigar roller
Goodson Khudu, a research and extension officer at the Tobacco Research Board, said burley is grown in Burma Valley in eastern Manicaland Province near Zimbabwe’s eastern border with Mozambique.
“That area has the right climatic conditions for the crop,” said Khudu.
“We have had some German interest in contracting local farmers to grow burley there, and it has been very successful. However, output has been low in recent years, suggesting that the company (Mosi Oa Tunya Cigars) might want to consider promoting its growing in a bigger way so that local production meets all their requirements.”
The German tobacco firm Von Eicken has been supporting farmers in Burma Valley to grow cubra. In 2016, 11 tons were produced under the Von Eicken initiative. The volume expanded to 20 tons in 2017 and 24.5 tons in 2018.
Mosi Oa Tunya Cigars recognizes that a large proportion of locally grown tobacco is exported unprocessed, a weakness that is shared by other countries in Africa. The firm produces three blends—light, mild and strong. The light flavor is for beginners and is available in mini cigars.
“Our staff is still undergoing training, and at optimum production we will be producing 1,500 cigars a day,” Mafundikwa said.
“We want to scale up production, but the final figures will depend on market demand. Surprisingly, there is a very vibrant cigar smoking culture which we were unaware of. At the moment, all our output is being locally consumed, and there is potential to grow the market as more people become aware of our product.”
He is happy to be contributing to local tobacco beneficiation in a country that exports up to 90 percent of its leaf raw.
“This is not peculiar to Zimbabwe,” said Mafundikwa. “It’s a continental problem where countries find it easy to export raw materials. In addition, finances also hinder players getting into manufacturing. We at Mosi Oa Tunya are playing our part in value addition. Governments have to come up with policies and support to start manufacturing entities.”

Mosi Oa Tunya is confident the quality of its cigars is comparable to that of any brand anywhere.
The cigar manufacturing industry in southern Africa is small, with reports that there are only two companies in the region that are in the business—Zimbabwe’s Mosi Oa Tunya Cigars and Bongani Cigars in neighboring Mozambique. The latter, which considers itself Africa’s first in this luxury market, hand rolls 10,000 cigars every month with locally grown tobacco and wrappers imported from Cameroon across the continent in West Africa. It was founded in 2016 and, like its Zimbabwean counterpart, relied on a maestro from the Dominican Republic to train Mozambican rollers. It sells locally and exports to South Africa, Kenya and Nigeria, among other countries.
Mafundikwa is aware that breaking the stranglehold of legends in the elite cigar market will not be easy for his greenhorn. However, his company has already had expressions of interest from Vietnam, Romania, Dubai and the U.S.
“We are making an African cigar, and we believe the quality is comparable to any brand anywhere given the legendary status of Zimbabwean tobacco. The lure of a new exotic and authentic African product will be our trump card, and we will thrive on competition,” he said.
Mosi Oa Tunya Cigars has been received well by locals who are excited that at last their country has an exotic product to match their nation’s lofty standing as Africa’s biggest producer and one of the world’s top six growers.
TIMB chief executive officer Andrew Matibiri said the government always encouraged greater investment in tobacco beneficiation, but the response has been slow. There are about four cigarette manufacturers in the country, with British American Tobacco dominating. The entry of Mosi Oa Tunya into the market, he said, is a welcome addition.
“It is clear that, yes, we are the dominant growing nation on the continent and among the top six globally, but that dominance has not been matched by corresponding investment in adding value to tobacco,” Matibiri said.
“I am talking here about the flue-cured leaf, which is more than 90 percent of the national output. But like Oriental and others, we are exporting them in raw form. Therefore, we welcome Mosi Oa Tunya Cigars in the context of the national effort to boost value addition and hope that, with time, they will get all their requirements locally. We are excited that they have joined that niche market and wish them the best.”
June 1, 2021
China Announces Cigar Festival in Chengdu

Photo: Chris Frenzel | Pixabay
The 2021 International Cigar Expo (ICE) will take place at the Tianfu International Convention Center in Chengdu, Nov. 8–10, 2021. The event will be hosted by China Cigarette Sales Corp. and China Tobacco International Group.
The organizers include China Tobacco Sichuan Industrial Co., China Tobacco Anhui, Shandong, Hubei Industrials Co., China Tobacco Hubei, Hainan, Sichuan, Yunnan provincial companies, and Shenzhen Tobacco Import and Export Co.
The ICE will focus on premium cigars and related products and boasts an exhibition area of more 10,000 square meters. In addition to the cigar night welcome party and the cigar industry development forum, there will be professional seminars and cigar tastings, among other events. A virtual exhibition platform will demonstrate cigar applications using virtual reality and big data, among other technologies.
The organizers expect more than 10,000 participants. Prominent brands, including Habanos, Davidoff, Bulldog and Scandinavian Tobacco Group, have already confirmed their presence, according to the ICE.
Chengdu is one of the largest cigar markets in China, with a solid industrial base and huge potential for the cigar industry. Moreover, Sichuan Province boasts the largest cigar production base in Asia and is a prominent producer of premium air-cured tobacco.
For more information, visit www.intercigarexpo.com.
May 13, 2021
STG Raises Guidance After Strong Quarter

Photo: STG
For the first quarter of 2021, Scandinavian Tobacco Group (STG) delivered a stronger than expected organic growth in net sales and earnings before interest, taxes, depreciation and amortization (EBITDA). The results were driven by a continued high demand in handmade cigars in the U.S., synergies from the integration of Agio Cigars and the transformational program Fueling the Growth, according to STG. Additionally, the results were positively impacted by timing of orders between quarters.
Net sales were DKK1.88 billion ($304.53 million), reflecting with 12.5 percent organic growth. EBITDA before special items was DKK527 million, with 49.1 percent organic growth. The EBITDA margin was 28 percent compared with 18.5 percent in the comparable 2020 quarter.
The integration of Agio Cigars is ahead of plan, according to STG, which has revised expected cost savings upward.
“Demand and consumer behavior remain positively impacted by the Covid-19 pandemic with high consumption of handmade cigars and smoking tobacco products in the U.S.,” the company wrote in a press release. “The integration of Agio Cigars is running ahead of schedule and is now expected to deliver about DKK100 million in synergies for the year and about DKK250 million run-rate by the end of 2022. The combined market shares for machine-rolled cigars in key European markets continue to develop satisfactorily.”

Despite the continued challenges and uncertainty created by the Covid-19 pandemic, our business continues to do well.
Niels Frederiksen, CEO, STG
At the same time, STG noted that Covid-19 is creating significant uncertainty in the second half of the year. “Consumption of handmade cigars and purchasing patterns between online and brick-and-mortar retail stores in the U.S. cannot be forecasted with the normal level of accuracy,” the company stated. “Both are factors with significant impact on the group’s performance. Consequently, a range is introduced for the expected organic EBITDA performance as well as the cash flow before acquisitions.
For 2021, the company now expects organic EBITDA growth in the range of 12 percent to 18 percent, up 7 percent over the earlier forecast.
“Despite the continued challenges and uncertainty created by the Covid-19 pandemic, our business continues to do well,” said STG CEO Niels Frederiksen. “For the first quarter of the year, we can present strong growth in both net sales and EBITDA. I am particularly pleased to see that numerous initiatives across the organization are resulting in strong net sales, growing market shares as well as increased operational performance and efficiency.”
May 6, 2021
China Now Top Market for Cuban Cigars

Photo: Timothy S. Donahue
There is a new leader in the Cuban cigar market. During the Habanos World Days event today, Leopoldo Cintra Gonzalez, the commercial vice president for Habanos, made the announcement at a virtual press conference from Havana. “For the first time in our history, China has become our No. 1 market in the world,” he said.
Spain was the previous market leader, and in 2019, China was No. 2. However, growth has accelerated in China; sales to that country increased by more than 50 percent over the past six years. Last year alone, China’s demand for Cuban cigars grew by 5 percent, according to Habanos. While China ranks No. 1, Europe is still the largest region for Cuban cigars. In 2020, 60 percent of Habanos sales came from Europe, according to Gonzalez.
Spain has become the second most valuable market for Cuban cigars, followed by France, Germany and Switzerland to complete the top five markets worldwide. Asia has been the leading growth market for Habanos, according to Gonzalez. He said the region has grown more than 10 percent in the last year, even with the difficulties presented due to the Covid-19 pandemic.

2020 has been a challenging year, not just for our business [but also] for humanity.”
Leopoldo Cintra Gonzalez, commercial vice president, Habanos
The positive outlook from China, however, was offset by a 4 percent drop in Habanos’ total revenues in 2020. The pandemic was said to be the main cause of the drop, with stores closing and the lack of tourism dollars in many nations, but Habanos still earned nearly $507 million in total sales for the year, according to Gonzalez.
“2020 has been a challenging year, not just for our business [but also] for humanity,” said Gonzalez. “But if we analyze it in depth, we see that there are markets especially affected by the drop in tourism, such as Cuba.”
To prevent the spread of Covid-19, Cuba temporarily closed its borders to tourists in March 2020. A reopening in November caused infections to surge, prompting authorities to reduce flights and tighten restrictions again.
“If we discount the negative effect of this specific market, we would only be talking about a [cigar sales] drop in the 2 percent [region],” said Gonzalez.
Gonzalez said that, overall, the future for Habanos was still bright, and the company expects to exceed 2019 sales in 2021. “We must highlight the good mix of launches and actions carried out during the year,” he said. “This year, a total of 19 products have reached the markets to satisfy all the needs of fans where novelties in the standard portfolio are mixed with highly successful and profitable specialties, confirming the high demand in the super premium segment.”
The Habanos World Days event is going to be a new annual event for Habanos. During a Q&A session, Gonzalez told Tobacco Reporter that having an annual online event allows the global Cuban cigar community to learn about the company and experience all that the world of Habanos has to offer firsthand. —T.S.D.
Timothy S. Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.

May 4, 2021
Nicaraguan Cigar Festival Goes Virtual

Photo: Nicaraguan Chamber of Tobacco
Puro Sabor, the annual festival put on by the Nicaraguan Chamber of Tobacco, will be held virtually on March 15, reports Halfwheel.

“The Nicaraguan cigar industry is once again opening the doors of its factories but this time in an innovative digital format,” said Claudio Sgroi, president of the Nicaraguan Chamber of Tobacco. “Visitors will be able to virtually join Nicaragua’s most important tobacco producers and cigar manufacturers.”

The event will be presented by Light ’em Up World, a European-based digital platform focused on cigars.

The virtual event will include a series of master classes, panel discussions and round tables covering 11 topics, ranging from growing tobacco to blending, production and marketing. There will also be sessions focused on technology and innovation in the cigar industry and corporate social responsibility.

Reinhard Pohorec of Light ’em Up World and Ra’ed Saqfelhait of the Leaf Master Dubai will moderate and host the event.

Registration is required.
March 10, 2021
Court Won’t Throw Out ‘SE’ for Premium Cigars

Photo: Tobacco Reporter archive
The U.S. District Court for the District of Columbia on Feb. 4 refused a request to throw out the U.S. Food and Drug Administration’s substantial equivalence requirements for premium cigars, reports Halfwheel.
Three cigar trade groups had asked the court to “clarify” an August ruling that delayed those requirements until after the U.S. Food & Drug Administration completes a review of whether it should create a new, streamlined process for “premium cigars.”
As the court pointed out, that “clarification” was in fact a request to have the substantial equivalence requirements thrown out.
Judge Amit P. Mehta concluded that the court had no authority to vacate the substantial requirements under that argument. By giving the FDA the authority to regulate cigars under the Tobacco Control Act, Congress also gave FDA the authority to require premarket review for cigars, the court reasoned.
The next phase of the lawsuit will likely focus on the question of whether FDA acted properly when deciding to regulate “premium cigars” the same way as other tobacco products.
The plaintiffs will argue that FDA neither went through the proper steps nor had sufficient evidence to regulate “premium cigars” the same way FDA has chosen to regulate e-cigarettes, little cigars or hookah tobacco.
The FDA will not enforce its substantial equivalence requirements until it completes the review mandated in August. There is no established timeline for when that review might be completed.
February 7, 2021