An interesting article on the China and Global Cigar market

[El Presidente]

Forbes Asia

21/1/2015

http://www.forbes.com/sites/shuchingjeanchen/2015/01/21/luxury-cigars-from-cuba-to-china/

Luxury Cigars, From Cuba To China

Smoking has declined globally, but one niche segment of the cigarette market is thriving. Sales of premium cigars are growing at between 4% and 5% a year, with a typical smoker getting younger by the day.

Premium cigar smokers are puffing away in exclusive cigar lounges and on the pool sides of five-star hotels, just as cigarette smokers are being banished from indoors to street corners and dark alleys due to growing awareness of the health risks posed by smoking.

Further growth in premium cigars, priced between $20 and $200 each or more, is expected in particular to be fuelled by two Communist-ruled countries: Cuba and China.

By chance or by design, the Obama administration recently decided to establish a rapport with Cuba, in the process allowing its legendary cigars to be sold for the first time to consumers in the United States, the world’s biggest market for premium cigars. In China, luxury cigars have the distinction of maintaining a high growth stream despite President Xi Jinping’s targeting of ostentatious spending as part of his anti-corruption drive.

“We welcome the developments announced last month regarding starting down the road to normalizing the relations between the Cuba and the U.S., our biggest market and also the biggest market for premium cigars worldwide,” said Hans-Kristian Hoejsgaard, chief executive officer of Oettinger Davidoff AG,which owns the Davidoff brand of tobacco products. “This development clearly heralds a new era for the cigar market mainly in the US with the eventual lifting of the embargo. This will provide a real “boost” to the premium cigar market.”

Hoejsgaard said his company expects China – including Hong Kong and Macau – to displace Switzerland as the world’s fifth largest consumer of premium cigars this year. Till now, the world’s biggest premium cigar markets have been the United States, Germany, France, Spain, Switzerland and China, in that order.

Hoejsgaard attributed premium cigars’ perennial allure to ‘a complete lifestyle trend.’ This includes the perception that cigar smoking is both relaxing and ‘cool,’ which appeals to an increasingly young demographic of smokers in fast-growing emerging markets. The average age of cigar smokers has fallen from 40 to 35, with a raft of new smokers in their teens and 20s. There is also an upturn in female smokers, who account for slightly over 10% of the cigar-smoking population.

All this is despite tightening regulations on smoking, cigars included, particularly in the developed markets, a trend led by Australia with its move to ban brand-specific packaging that displays trademarks or colors. Cuban cigarsaccount for about half of China’s cigar imports, in spite of an annual quota on their import. China imposes high import duties on cigars in general, even though it does not levy high cigar taxes. It is in Canada that the tax on cigars is the highest. Hoejsgaard said consumption of premium cigars in emerging markets such as China, Russia and the Middle East is growing fast, and virtually all markets outside of Europe are growing.

But the fastest rates of growth are found in China and Asia, where the Davidoff brand is full steam ahead, racking up double-digit growth. The company declined to give exact figures.

Worldwide about 100 million people smoke cigars, including very cheap machine-made products, compared with about two billion who smoke cigarettes. Among the cigar smokers, around 10 million are puffing luxury hand-rolled cigars. Of those, perhaps 500,000 are in China and another 100,000 in Hong Kong and Macau.

By dollar value, the worldwide market of luxury, hand-rolled cigars could be worth about $1.5 billion a year, compared with the overall high-end cigar industry’s $21 billion.

Membership-based cigar lounges and poolside cigar bars at five-star hotels such as the Shangri-La in Hong Kong and the Fullerton Bay Hotel in Singapore, are catering to an expanding coterie of cigar-smoking tycoons, bankers, actors and the like.Davidoff’s maintains a cigar lounge in the Peninsula Hotel and the InterContinental Hotel. In such places one might hope to bump into celebrated cigar aficionados such as Bill Clinton or Arnold Schwarzenegger, or Hong Kong film stars Michael Wong and Jackie Chan.

The industry’s preferred euphemism is to ‘enjoy’ cigars, not to ‘smoke’ them, to emphasize the fact that cigar-smoking should not involve inhaling the smoke and that on average, a smoker consumes only three cigars a week. An elaborate form of ritual is designed to evoke comparisons with wine-tasting or a tea ceremony. It can take as long as one hour to consume a cigar, including efforts to cut it, light it with a match, and constantly puff and rotate it. Still, the risks may be no less than those involved in cigarette smoking, in part because of the larger size of cigars and the longer smoking time involved.

[ebhead]

Love this...

"... It is in Canada that the tax on cigars is the highest."

E

[Jeremy Festa]

Nice read

Sent from my iPhone

[Nedule]

Love this...

"... It is in Canada that the tax on cigars is the highest."

E

When people say smokers getting sick are a burden on our health system, I remind them that they have paid their dues in taxes & deserve the best medical treatment money can buy. It's the non-smokers that are in fact more of a burden ... & members of FOH.

[santela]

27, Chinese American living in Shanghai, can confirm.

Unfortunately most people will still give you looks for smoking a cigar in public (while a cigarette is just fine), since they consider cigars to be "pretentious" more than anything else. I only smoke on my balcony.

[santela]

When people say smokers getting sick are a burden on our health system, I remind them that they have paid their dues in taxes & deserve the best medical treatment money can buy. It's the non-smokers that are in fact more of a burden ... & members of FOH.

LOL, that's actually a very convincing argument.