Category: Cigars

  • Spreading the word

    Spreading the word

    Cuba’s 21st Habanos Festival ended on Friday in Havana with an auction of cigar humidors that raised about US$1.7 million, according to a Xinhua News Agency story.

    The proceeds of the auction will be donated to the nation’s health-care system.

    About 2,200 participants from 70 countries were said to have attended the five-day event.

    But Jose Maria Lopez, vice president of development at Habanos SA, said the use of social media had helped extend the cigar festival beyond its traditional boundaries, enabling people around the world to experience it.

    One of Habanos’ strategic objectives was to globalize premium cigar culture, he said.

    As part of the festival agenda, participants visited the best tobacco plantations in the western regions of Vuelta Abajo and Pinar del Rio, as well as traditional cigar factories.

    The value of Habanos’ sales increased by seven percent to about $537 million last year.

    Currently, Cuba’s main cigar customers are Spain and China. China was described as the top emerging market.

  • Cuban cigar sales increased

    Cuban cigar sales increased

    Cuba sold cigars worth US$537 million last year, up seven percent on the value of its cigar sales during the previous year, according to a story in The Havana Times quoting a DPA news agency report.

    Habanos’ vice president of business development Jose Maria Lopez Inchaurbe said on Monday that, for instance, the company had enjoyed a 100 percent increase in sales in Gulf countries last year.

    Lopez was speaking at the launch of the 21st Habanos Cigar Festival.

    Habanos is a joint venture formed by the state-owned Cubatabaco and Spanish company Altadis, owned by Imperial Brands.

    With brands including Montectristo and Cohiba, Habanos was responsible for 70 percent of the 140 million Cuban cigars sold worldwide last year.

    Cuban cigars are sold in about 150 countries, but their main markets are Spain, China, France, Germany and Cuba. The European market is said to account for up to 53 percent of Habanos’ cigar sales.

    But China appears to be the up-and-coming market. In January, Lopez told the Xinhua News Agency that his company would this year seek to expand and diversify its presence in China.

    Lopez said there was great potential for increasing sales in China, which, in the medium term, could become Habanos’ most important market.

    The story said that, according to ‘official figures’, China became the third largest market for the company in 2017, after Spain and France, with an increase in sales of 33 percent on those of 2016.

    Due to a growing demand for premium cigars in China, Habanos reached an agreement with the China National Tobacco Corporation in the summer of 2017 to increase sales and work together to promote a knowledge of, and taste for, Cuban cigars in China.

    Lopez said that Chinese consumers preferred Habanos’ most exclusive products, including its Cohiba brand, “which is our most important trademark and greatest exponent of luxury within the Cuban cigar market”.

    “Between 40 and 50 percent of the Chinese demand is concentrated in the Cohiba brand, which is very high,” said Lopez. “One of our intentions when we talk about developing the tobacco culture in that country is to educate the Chinese consumer that not all cigars are Cohiba.”

    Working with the State Tobacco Monopoly Administration, through which domestic imports are made to the Chinese mainland, growth rates of between 20 and 30 percent per year were expected, said Lopez.

  • Smokeless making headway

    Smokeless making headway

    Swedish Match’s volume shipments of snus in Scandinavia during the 12 months to the end of December, at 263.4 million cans, were increased by six percent on those of the year to the end of December 2017, 247.6 million cans.

    But despite the volume increase, SM’s share of Sweden’s snus market fell by 2.3 percentage points, from 65.7 percent during 2017 to 63.4 percent during 2018. And it’s share of Norway’s snus market fell by 0.8 of a percentage point to 51.3 percent.

    Meanwhile, SM’s volume shipments of moist snuff on the US market during 2018, at 126.3 million cans were down by one percent on those of 2017, 127.4 million cans.

    Also in the US, the company’s volume shipments of cigars in 2018, at 1,703 million, were increased by five percent on those of 2017, 1,629 million.

    But, during the same period, volume shipments of chewing tobacco, excluding contract manufacturing volumes, at 6,093,000 pounds, were down by four percent from 6,341,000 lb.

    SM’s worldwide shipments of matches during 2018, at 64.5 billion sticks, were down by one percent on those of 2017, 65.0 billion sticks.

    During the same period, worldwide shipments of lighters fell by nine percent from 368.1 million to 333.9 million.

    In announcing its results, SM said that, in local currencies, sales had increased by seven percent for the fourth quarter and by nine percent for the full year. Reported sales had increased by 12 percent to SEK3,301 million for the fourth quarter and by 10 percent to SEK12,966 million for the full year.

    In local currencies, operating profit from product segments (excluding larger one-off items and other operations) increased by eight percent for the fourth quarter and by 12 percent for the full year. Reported operating profit from product segments increased by 14 percent to SEK1,246 million for the fourth quarter and by 14 percent to SEK4,936 million for the full year.

    Operating profit amounted to SEK1,196 million for the fourth quarter and to SEK4,812 million for the full year.

    Profit after tax amounted to SEK925 million for the fourth quarter and to SEK3,578 million for the full year.

    Earnings per share increased by six percent to SEK5.41 for the fourth quarter and by nine percent to SEK20.63 for the full year. Adjusted earnings per share increased by 28 percent to SEK5.41 for the fourth quarter and by 26 percent to SEK20.63 for the full year.

    In commenting on the results, CEO Lars Dahlgren (pictured) said 2018 had been a successful year for Swedish Match with very healthy growth in sales and operating profit from product segments. “While our base businesses in our two largest product segments performed well, our growth initiatives continued to demonstrate very promising developments, with exceptional momentum for ZYN in the US,” he said.

    “More and more, we see evidence of a trend where the global consumption of nicotine products is shifting away from traditional combustible cigarettes, and the best alternatives to cigarettes lie in smokeless products.

    “While we continue to believe that the global regulatory stance towards smokeless products is disproportionate given the role that such products can play in harm reduction, we are encouraged to see positive regulatory developments in the smokeless arena and our strategy and focus position us well to compete in pursuit of our vision.”

  • New directions for Altria

    New directions for Altria

    Altria’s cigarette shipment volume during the 12 months to the end of December, at 109,791 million, was down by 5.8 percent on that of the 12 months to the end of December 2017, 116,606 million. Altria is the parent company of Philip Morris USA and Nat Sherman, as well as U.S. Smokeless Tobacco Company (USSTC), John Middleton, Nu Mark, Ste. Michelle Wine Estates and Philip Morris Capital Corporation.

    Marlboro shipments were down by 5.2 percent to 94,770 million, while shipments of other premium brands were down by 7.0 percent to 5,552 million.

    Discount brand shipments were down by 11.2 percent to 9,469 million.

    Altria’s share of the US retail cigarette market during the year to the end of December, at 50.1 percent, was down by 0.6 of a percentage point. Marlboro’s share was down by 0.3 of a percentage point to 43.1 percent, while that of the company’s other premium brands was down by 0.1 of a percentage point to 2.6 percent. The company’s discount-brands’ share was down by 0.2 of a percentage point to 4.4 percent.

    In reporting its results yesterday, Altria said that the reported domestic cigarette shipment volume decline of 5.8 percent had been primarily driven by the industry’s rate of decline, retail share losses and trade inventory movements, partially offset by one extra shipping day. ‘When adjusted for trade inventory movements and one extra shipping day, … domestic cigarette shipment volume decreased by an estimated 5.5 percent,’ it said. ‘Total domestic cigarette industry volumes declined by an estimated 4.5 percent.’

    Middleton’s cigar shipments during the year to the end of December, at 1,601 million, were up by 3.8 percent on those of the year to the end of December 2017, 1,542 million.

    Shipments of Black & Mild cigars were up by 4.1 percent to 1,590 million, while shipments of other brands were down by 26.7 percent to 11 million.

    USSTC’s smokeless product shipments (cans and packs) during the year to the end of December, at 832.6 million, were down by 1.0 percent on those of 2017, 841.3 million.

    Copenhagen shipments were roughly unchanged at 531.7 million, while Skoal shipments were down by 4.5 percent to 231.1 million.

    Other-brand shipments were up by 2.9 percent to 69.8 million.

    USSTC’s share of the retail market in smokeless tobacco was unchanged at 54.0 percent. Copenhagen’s share was increased by 0.4 of a percentage point to 34.4 percent, while Skoal’s share was down by 0.5 of a percentage point to 16.2 percent. The share of the company’s other brands was increased by 0.1 of a percentage point to 3.4 percent.

    Altria reported that it had signed and closed a $12.8 billion investment in JUUL, the US leader in the e-vapor market, representing a 35 percent economic interest.

    And it reported that it had entered into an agreement to acquire newly issued shares in Cronos Group Inc, a leading global cannabinoid company, headquartered in Toronto, Canada. ‘These shares represent a 45 percent equity stake for an investment of approximately $1.8 billion (approximately CAD $2.4 billion),’ it said.

    In presenting the results, Altria’s chairman and CEO Howard Willard said the company had closed out 2018 with excellent full-year adjusted diluted earnings-per-share growth and had continued to reward shareholders by “returning” $5.4 billion in cash through dividends.

    “PM USA stabilized Marlboro and strengthened our combustible business,” he said.

    “We also took proactive steps that we believe uniquely position us for long-term success.

    “Altria enters 2019 with an evolved business platform that includes our strong core tobacco businesses and new strategic investments with tremendous potential for growth.”

  • China craves Cohibas

    China craves Cohibas

    Habanos will this year seek to expand and diversify its presence in China, according to the company’s development vice president Jose Maria Lopez, speaking during an interview with the Xinhua News Agency.

    Lopez said there was great potential for increasing sales in China, which, in the medium term, could become Habanos’ most important market.

    The story said that, according to ‘official figures’, China became the third largest market for the company in 2017, after Spain and France, with an increase in sales of 33 percent on those of 2016.

    Due to a growing demand for premium cigars in China, Habanos reached an agreement with the China National Tobacco Corporation in the summer of 2017 to increase sales and work together to promote a knowledge of, and taste for, Cuban cigars in China.

    Lopez said that Chinese consumers preferred Habanos’ most exclusive products, including its Cohiba brand, “which is our most important trademark and greatest exponent of luxury within the Cuban cigar market”.

    “Between 40 and 50 percent of the Chinese demand is concentrated in the Cohiba brand, which is very high,” said Lopez. “One of our intentions when we talk about developing the tobacco culture in that country is to educate the Chinese consumer that not all cigars are Cohiba.”

    Working with the State Tobacco Monopoly Administration, through which domestic imports are made to the Chinese mainland, growth rates of between 20 and 30 percent per year were expected, said Lopez.

    In addition, the company has shops in China’s Hong Kong and Macao special administrative regions, and it is working to attract customers through the China Duty Free Group in the two regions.

  • Smoking at record low in US

    Smoking at record low in US

    Cigarette smoking has reached the lowest level ‘ever recorded’ among US adults, according to new data published by the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), and the National Institutes of Health’s National Cancer Institute (NCI).
    That left about 47 million (one in five) US adults using ‘tobacco’ products last year, products that were said to include a variety of smoked, smokeless, and electronic tobacco products.
    ‘An estimated 14 percent of US adults (34 million) were current (“every day” or “some day”) cigarette smokers in 2017 – down from 15.5 in 2016 – a 67 percent decline since 1965,’ a CDC press note said. [It wasn’t clear why some figures were given to one place of decimals while others were not.]
    ‘A particularly notable decline occurred among young adults between 2016 and 2017: about 10 percent of young adults aged 18 to 24 years smoked cigarettes in 2017, down from 13 percent in 2016.’
    “This new all-time low in cigarette smoking among US adults is a tremendous public health accomplishment – and it demonstrates the importance of continued proven strategies to reduce smoking,” said CDC director Robert Redfield.
    “Despite this progress, work remains to reduce the harmful health effects of tobacco use.”
    Information contained in the 2017 National Health Interview Survey (NHIS), published in yesterday’s Morbidity and Mortality Weekly Report, described how the range of tobacco products used by US adults included ‘cigarettes, cigars, e-cigarettes, hookah/water pipes/pipes, and smokeless tobacco’. The survey has been used to assess cigarette smoking among US adults since 1965, but surveillance of other tobacco products began more recently
    ‘In 2017, cigarettes were the most commonly used product (14 percent) among US adults, followed by cigars, cigarillos, or filtered little cigars (3.8 percent); e-cigarettes (2.8 percent); smokeless tobacco (2.1 percent); and pipes, water pipes, or hookahs (1 percent),’ the note said.
    ‘Of the 47 million adults who currently use any tobacco products, about nine million (19 percent) reported use of two or more tobacco products. The most common tobacco product combinations were cigarettes and e-cigarettes.
    The note then goes on to describe how tobacco-product usage varies within ‘subgroups’ and to quote NCI director Norman E. Sharpless, MD, as saying the persistent disparities in adult smoking prevalence described in the report emphasized the need for further research to accelerate reductions in tobacco use among all US citizens.
    Meanwhile, FDA commissioner Scott Gottlieb, MD, was quoted as saying that the continued drop in adult smoking rates to historic lows was encouraging and that the FDA was committed to accelerating declines in smoking and shifting the trajectory of tobacco-related disease and death through its comprehensive approach to tobacco and nicotine regulation. “We’ve taken new steps to ultimately render combustible cigarettes minimally or non-addictive and to advance a framework to encourage innovation of potentially less harmful products such as e-cigarettes for adults who still seek access to nicotine, as well as support the development of novel nicotine replacement drug therapies,” he said.
    “At the same time we’re also working to protect kids from the dangers of tobacco product use, including e-cigarettes.”

  • Expanding sales in China

    Expanding sales in China

    Habanos S.A. plans next year to export a premium cigar made specially for the Chinese market, according to a Xinhua News Agency story quoting the company’s director of marketing, Ernesto Gonzalez.
    Gonzalez, who was speaking ahead of this week’s China International Import Expo (CIIE) in Shanghai, said that launching the Chinese-market cigar was a priority for Habanos.
    China is reported to have the fastest-growing market for Habanos, a 50-50 joint venture between the Cuban government and Imperial Brands.
    Gonzalez was quoted as saying that sales of premium Cuban cigars in China had risen in 2017 by 33 percent, year-on-year.
    The sales surge was said to have been largely due to an agreement signed in July 2017 between Habanos, which markets Cuban cigars around the world, and the China National Tobacco Corporation. The agreement aimed to increase sales in China by informing consumers there about Cuban cigars.
    Cuba’s premium hand-rolled cigars were introduced to the Chinese market a decade ago, but it is believed that there is still room for much growth.
    Gonzalez said that Habanos would use the opportunities provided by the CIIE to try to forge new partnerships and expand sales.
    “We still have a lot of potential in the Chinese market, and we must continue to strive so consumers know about our brands and cigar culture,” he said.

  • ZYN factory going up

    ZYN factory going up

    Swedish Match’s snus shipments in Scandinavia during the three months to the end of September, at 66.6 million cans, were increased by about eight percent on those of the three months to the end of September 2017, 61.7 million cans.
    During the same periods, shipments of moist snuff in the US were down by about six percent to 31.7 million cans, while shipments of snus and nicotine pouches outside Scandinavia were increased by 97 percent to 6.9 million cans.
    Swedish Match’s share of the Swedish snus market was down by 2.2 percentage points to 63.2 percent, while its share of Norway’s snus market was down by 1.1 percentage points to 51.0 percent.
    The company’s US cigar shipments during the three months to the end of September, at 427 million pieces, were increased by about five percent on those of the three months to the end of September 2017, 405 million pieces.
    During the same periods, the company’s chewing tobacco shipments, excluding contract-manufacturing volumes, fell by about seven percent to about 1,526,000 pounds.
    Swedish Match reported that, in local currencies, sales increased by 10 percent for the third quarter, while reported sales increased by 16 percent to SEK3,388 million.
    Also in local currencies, operating profit from product segments (excluding other operations and larger one-time items) increased by 13 percent, while reported operating profit from product segments increased by 19 percent to SEK1,317 million.
    Operating profit amounted to SEK1,305 million, while profit after tax amounted to SEK959 million.
    Earnings per share increased by 32 percent to SEK5.55.
    In presenting Swedish Match’s three-month and nine-month results, CEO Lars Dahlgren (pictured) said that the company had delivered another quarter of very strong financial results. Sales and operating profit in local currencies had increased for the two largest product segments, snus and moist snuff, and Other tobacco products, while the Lights product segment had had a relatively stable year-on-year performance.
    ‘Snus and moist snuff product segment sales grew by 12 percent and operating profit increased by 17 percent in local currencies, with strength coming from both our Scandinavian snus business and our snus and nicotine pouches outside Scandinavia,’ he said.
    ‘Both the Swedish and Norwegian snus market grew at a robust pace compared to the prior year. In particular, we noted an acceleration of category volume growth in Sweden. Intense competitive activity and product innovations within the premium segment have been positive for the development of the snus category. We also believe that the exceptionally warm summer contributed to higher snus consumption this year.
    ‘The changeover to plain packaging in Norway has gone smoothly, but it is still early to assess if there will be any longer-term category implications.
    We estimate that total Scandinavian snus market growth, measured on a volume basis, was close to seven percent during the quarter. On balance we are relatively pleased with the performance of our more recent product introductions in the Scandinavian snus market, but overall our portfolios have lagged category growth in both Sweden and Norway during the quarter. Despite the loss in market share, we estimate that the underlying (excluding V2 Tobacco and Gotlandssnus) volume growth for our Scandinavian snus business reached four percent, a strong growth rate relative to historical levels.
    ‘For international snus and nicotine pouches, we have now for two consecutive quarters reported positive operating results, stemming from strong volume growth for ZYN, improved pricing, and reduced marketing spending for US snus.
    ‘With the acquisitions of V2 Tobacco, and more recently Gotlandssnus, we have expanded our portfolio to include a range of unique snus products that not only provide growth opportunities in Scandinavia, but also present an ability to expand our international snus portfolio. In September, we introduced V2’s Thunder Xtreme, a range of strong snus products in the US.
    ‘Construction efforts directed towards our new ZYN production facility in Owensboro, Kentucky, continue according to plan.
    ‘Other tobacco products (cigars and chewing tobacco) had another good quarter, with sales and profit growth in cigars more than offsetting declines in sales and profits for our US chewing tobacco business in local currencies.
    Cigar shipment growth continued to be driven by our rolled leaf assortment despite the price increase taken earlier in the year.
    ‘Given the rapid growth within the rolled leaf segment, we are facing increasing challenges in securing certain tobacco supplies but we have implemented measures that we expect will improve the situation during the first half of 2019.
    ‘The acquisitions of V2 Tobacco and Oliver Twist (with their chew bags and tobacco bits) delivered positive contributions to both sales and operating profit…’

  • Warnings on hold

    Warnings on hold

    The US Food and Drug Administration has issued a new guidance about how it intends to comply with a recent court order by not enforcing the warning statement requirements for cigars and pipe tobacco products until 60 days after the final decision of the Plaintiffs’ appeal.
    In addition, the guidance, Compliance Policy for Certain Labeling and Warning Statement Requirements for Cigars and Pipe Tobacco, states that the agency does not intend to enforce the labeling requirements under sections 903(a)(2) and 920(a) of the Food, Drug, and Cosmetic Act for cigars and pipe tobacco while the injunction remains in effect. During this time, however, cigar and pipe tobacco firms may add the warnings and make these labeling changes.
    In a note issued through its Center for Tobacco Products, the FDA said it had revised also the following guidance documents to reflect the compliance policy outlined above:

    The note drew attention also to a new tobacco compliance webinar, Retailer Requirements: New Warning Statement Requirements for Certain Tobacco Products. The webinar is said to address the addictiveness warning statement requirement and which tobacco products it applies to, and to answer some frequently asked questions from tobacco retailers about the warning statement requirements.
    The FDA said it had created too several visual examples of the required addictiveness warning statement on different tobacco product packaging, and that it had developed a side-by-side product and warning statement chart.

  • Promotion at Villiger

    Promotion at Villiger

    Villiger Cigars said yesterday that Hector J. Pires (pictured, right) had been promoted to national sales manager for Villiger Cigars North America, with immediate effect.
    Pires was previously south eastern territory manager, a position now filled by new-hire Roger Peña.
    Pires, who was born and educated in Caracas, Venezuela, holds a degree in international trade. After rising through the ranks of his family’s restaurant group in Caracas, he moved to Miami to open a restaurant serving international cuisine, which he ran for 10 years.
    At this point, he decided to sell the restaurant and follow his passion for tobacco, which had been with him since his early 20s.
    “Hector has been a great asset to Villiger Cigars over the past year-and-a-half, and has proven that he can be an effective leader for our sales staff,” said Rene Castañeda (pictured, left), president of Villiger North America. “I look forward to working closely with him as we continue to spread the Villager message to our retailers and consumers.”