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« Heard in the Humidor
For the week of November 26-30
Highlights of the week in cigars and smoking from CigarCyclopedia.com. Los Angeles – "Confirmation of recovery in the US" was one of the captions to the performance of the Cigar Division of Altadis, S.A., which reported its third quarter performance to the financial community on November 16. The performance of Altadis U.S.A., normally a dependable cash cow for the company, was down significantly in the first quarter of the year, but has turned around and regained momentum going into the fourth quarter. Company-wide cigar sales (converted into Euro) were down more than 14 percent during the first quarter of 2007 as against the first quarter of 2006 figures and Altadis sales were down again as against 2006 in the second quarter, but by only 5.5 percent. But the situation turned around in the third quarter, as Altadis posted sales of 215.7 million Euro (about $316.2 U.S.), up one percent over 2006. But the unfavorable exchange rate against the shrinking dollar masks the three-quarters report showing that Altadis U.S.A.’s sales for the year in dollars so far were actually ahead of 2006 by a small margin of 0.3 percent. Altadis sold, worldwide, about 2.35 billion cigars in the first nine months of the year and actually surpassed the 2006 financial performance at constant dollar rates. The profit margins fell a little, from 32.1 percent to 31.6 percent, still quite healthy. In the U.S., Altadis U.S.A.’s premium division – which includes machine-made cigars with natural leaf wrappers such as Dutch Masters – increased its sales volume for the first nine months of the year from 634 million cigars in 2006 to 677 million this year. Performance in the machine-made and little cigar segment wasn’t as good, dropping from 1.076 billion last year to 931 million this year, a drop of 13.4 percent. In dollar terms, sales of premium cigars were up 7.8 percent for the first nine months, from $295 million to $318 million. But machine-made and little cigar sales for the nine months fell 13.3 percent from $164 million to $142 million. >> Chris McCalla, legislative director of the International Premium Cigar and Pipe Retailers Association (IPCPR) sent a note to the trade on November 16 as the Congress broke for Thanksgiving: "The House recessed Thursday night and the Senate will leave Friday until December 4, with no further progress on federal State Children's Health Insurance Program (SCHIP). Legislators continue to wrangle over how much of an expansion should be included in the program's renewal. The currently proposed legislation calls for increased federal tobacco excise taxes, including a new excise rate on cigars of 53.19% of the manufacturer's price, with no one cigar being taxed more than $3. "The bill, H.R. 3963, has passed both the House and Senate, but not by margins that make the bill veto-proof. President Bush remains adamant on his veto stance." McCalla wrote that the most likely outcome was temporary extensions of the SCHIP program until perhaps September of 2008. >> Short fillers: In the annual auction of vintage cigars at Christie’s of London, an astonishing 34 boxes or humidors sold for $1,000 or more, including seven for $4,000 or more. The highest-priced lot, a humidor of 96 giant Cuban-made Hoyo de Monterrey Diademas perfectos sold for $16,400 (converted from British pounds). But the real stunner was the sale of a cabinet of 25 La Flor de Cano Short Churchills (4 7/8 inches by 50 ring gauge) for $11,275, an average of $451 per cigar! Wow! Want more? Join us for daily coverage of cigars, accessories, people and issues at www.CigarCyclopedia.com Heard in the Humidor is a publication of Perelman, Pioneer & Company. Copyright 2007; All rights reserved. Rich Perelman 11/26/07
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