Stogie Commentary: Avoiding the Pitfalls of the Mid-90’s Boom

Last Friday, we noted the Associated Press article on the resurgence of the cigar industry. Since that article has now run in hundreds of publications, we thought it was time to recap the lessons learned from the nineties so that history doesn’t repeat itself.

At the height of the boom in 1997, Americans were smoking 417.8 million premium cigars – a fivefold increase from 1993. That dramatic shock meant that cigar manufacturers rushed cigars to market causing a decline in quality at the same time prices soared.

It doesn’t take an economist to figure out that consumers are going to be turned off by a combination of declining product quality coupled with increased prices. So by 1999 cigar consumption dropped almost by half. Thankfully, this meant that many of the fly-by-night operations responsible for the worst cigars of the cigar boom closed their doors.

These shoddy operations catered to the trendy smokers of the mid-nineties, who saw smoking more as an act of conspicuous consumption than an appreciation of the time and talent that go into producing a handmade cigar. Theses are the smokers that, as the story goes, would ask what you were smoking, but before giving you the opportunity to answer, they would say “Hecho a Mano, I’ve had that brand.” (Hecho a mano is Spanish for “made by hand.”)

After the boom, the cigar smokers who remained were the people who – whether they smoked only a few times a year or every day – smoked for the right reason… because they enjoyed it. And for these remaining smokers the real boom is happening long after the peak production years of the nineties, as producers now focus on quality.

Currently, producers are so concerned with quality that Cigar producer Charlie Torano told Stogie Guys Special Correspondent George Edmonson that there is big competition between producers to stock pile the best tobacco. When asked about the mid-nineties, Torano said “I think we’ve learned our lesson.”

And it seems that cigar retailers are learning same thing. Upon discovering that a local cigar shop didn’t carry a well-known national brand, I asked the owner why and his response was distinctly post-cigar boom. He said he thought the quality had fallen and that for the same price there were other similar tasting cigars that were better.

With both producers and retailers showing such concern for the quality of cigars, we agree that the industry probably has learned its lesson. But, if as the AP article suggests there is a new boom – or at least a renaissance – for cigars, here’s another suggestion to make sure that this new boom doesn’t become a bust. (In 2005, almost 320 million premium handmade cigars were imported.)

Cigar producers should focus on educating their customers about what a quality cigar really is. While the 90’s cigar boom may have been fueled by glitzy Cigar Aficionado ads, smoking celebrities, and conspicuous consumption, the new boom should be driven by an increasingly educated cigar smoking public that appreciates quality.

If the cigar industry is truly serious about its commitment to quality, then creating a discerning public that appreciates quality handmade cigars and shuns poor quality is the best way to ensure sustained growth.

–Patrick S