Why Are Cuban and New World Cigars So Expensive?

Why Are Cuban and New World Cigars So Expensive?
Date: June 2024
Author: lukasmagdeleyns

This morning, standing proudly before my electric humidor, choosing what to smoke, I noticed the price tags on my cigars. The tax bands on these cigars range from 2015 until now. I couldn’t help but notice the immense price difference for the same cigar over the years, which made me wonder: is it still worth it?

The Luxury Appeal of Cigars

Of course, we can’t forget that our beloved cigars fall into the category of luxury items. I personally couldn’t imagine a week without a cigar. Smoking a cigar gives me inner peace, recharges my batteries, and gives me time to think. But still, I saw some nice H.Upmann Magnum 54 at the price of 13.7 euros, and I think the new price is 19 euros. That’s a price difference of 5.3 euros per cigar, which totals a difference of 132.5 euros per box of 25 cigars. This box dates from 2019, so that’s five years ago.

Besides offering you some “me time,” cigars are also a symbol of status. Many people in the business world smoke cigars at events because it makes them look wealthy, and a cigar brings some weight to the table in discussions. The almighty cigar gets its status from movies and series as well. I think it’s embedded in our brains that a cigar is a universal symbol of wealth and status. But why are Cuban and New World cigars getting so expensive?

Rising Production Costs

In my recent interview with Justo Eiroa, I learned that all the costs involved in making a cigar have doubled, tripled, or even quadrupled. This can explain the global price increase, but still, 132.5 euros per box seems a lot to cover the extra costs involved in making 25 cigars.

Let’s break down the different aspects involved in growing and processing tobacco. The first step is preparing the fields. Besides the rising fuel prices needed for the tractors, we see a huge increase in the cost of manure. In Nicaragua, the price of manure tripled in the past year. Manure is essential for growing tobacco because it provides much-needed nutrition to the soil.

An increase in labor costs is another aspect that could justify the yearly price increases we see. Taking care of the tobacco and harvesting it is an immense operation. Most farms rely on seasonal workers to strengthen their labor force, but this comes at a price. Due to higher demand for New World cigars, manufacturers need to plant more tobacco. More tobacco means more work, which equals more workforce and more money to spend.

Aside from the farming process, companies are investing heavily in training new rollers. Since COVID, a lot of skilled personnel left, and now we have a shortage of people who can roll a cigar. Educating new personnel is a costly operation but necessary to ensure a good quality cigar.

And last but not least is the huge price increase of transportation. If you send a container filled with cigars from Nicaragua or any other foreign country to Europe, it will cost on average 500% more than last year.

So, I personally think that all these factors, combined with the rarity of some cigars like Cubans or special Fuentes, justify in some cases the new prices.

Significant Price Hikes in Popular Cigars

Ah, remember the good old days when a Trinidad Topes was only 15.3 euros? The times when you could buy an Arturo Fuente Opus X for 30 and a bit? I could go on and on with examples of cigars that used to be affordable. But what happened with some brands and some types of cigars? Why did the price go up by 30 or more euros for one cigar?

I think this traces back to the first two major price increases in the sector. When Cohiba and Trinidad prices tripled. Out of the blue, a Trinidad Topes went from 15 euros and a bit to 62, and a Cohiba Robusto came up to 66. This wasn’t just on some cigars in their portfolio but on their entire portfolio. This was unprecedented in the sector.

But why did they do it remains the question! If we look at the global sales of cigars, we see that from 2016 to 2018, the sales of cigars globally increased by 9 percent. In 2019, the numbers went up slightly by 1 percent, but then COVID happened. In 2020, total sales were lower than in 2019, but the last half of 2020 showed a strong comeback. Then 2021 happened, an absolute record-breaking year with a growth of 25 percent. I’m talking about 496 million cigars sold in 2021 alone. So, on average, we see a global increase in demand of about 2-5 percent. Thanks to this, it gets harder for suppliers to meet the demand. The simple solution to decrease demand? Yes, increase the price!

Since 2021, Cuba chose its two most popular brands and lifted their prices. Fuente did the same with their most famous line, the Opus X series. I didn’t find any data regarding the sales numbers of the cigars that tripled in price (talking about quantity, not revenue), but I am convinced that they decreased significantly.

But what about new releases that come out with a high price tag?

New Releases and Their High Price Tags

I think it’s normal for existing cigars to go up each year by 10-25 percent. We can thank global economic inflation for this. But new releases like the Romeo y Julieta Cupidos that came out at 65 euros and the Davidoff Maduro that came out at 54 euros for a toro size are just ridiculous. I smoked both of them and I really liked the Cupidos (sorry, I’m not the biggest Davidoff fan; I find them a bit dull), but 65 euros for a regular production cigar seems a bit over the top.

In my interview with Habanos Benelux, I asked multiple times for an explanation for these prices, but the answer I got was the same. It’s a marketing strategy. Some brands release high-end sections, and they want that section to be more expensive and rare. Well, I don’t think they will be rare because you can find a cracked box in every cigar store because the price is too ridiculous to buy them in bulk.

I think the main question in this chapter would be: how much are you willing to spend on a new release? Not knowing if it will be good. Personally, I agreed on budgets with myself. I spend a maximum of 25 euros for regular production cigars. For special, aged cigars like a La Estancia or La Casa Del Habano products, I’m willing to go up to 40 euros a piece. Cuban Limitadas are ridiculously high-priced, but still, I buy them. I agreed on 100 euros per cigar max.

I think it’s important to have some kind of boundary when it comes to spending money. I love this hobby, but I don’t make a great fortune (at least not yet), so I need to have budgets regarding my beloved hobby.

Should You Buy Cigars in Bulk Now?

I find this a very hard question to answer for you. I started collecting aggressively about four years ago, and yes, it’s nice to smoke at old prices, but would I still do it if I had to start a collection now?

I think yes! Starting a collection has two major advantages to offer you. First, you have the possibility to smoke cigars at the price from the year that you bought them. Keep in mind that on average, each cigar increases in price yearly by 10 to 25 percent. With this in mind, I would suggest the following: know which cigars you smoke regularly. For example, I occasionally enjoy a La Aroma Del Caribe Especial No.2. They used to be under 10 euros, but then someone told me that they were going to increase the price to 12.50. So, knowing that I smoke these cigars every now and then, I purchased 20 pieces.

But I think there’s another perspective to this matter regarding the rarity of some cigars, especially Cubans. I think if you start a collection now and want to be able to smoke Cubans in the future at a relatively low price, even with today’s prices, it would be smart to buy a box. Remember, Cubans increase in price yearly by 15-25 percent, so just as an investment, it would be a good call.

The second advantage of buying in bulk is the automatic aging you get. When you buy 20-25 of the same cigars, you probably won’t smoke all of them in one month. If you occasionally take one out of the box, the rest of the cigars get time to age. I find aged cigars almost always better. I own an Adorini Roma where I currently age about 2,500 Cuban cigars. The advantage of having a big collection like mine is that having boxes stored in the back get forgotten. This way, you have a nice surprise waiting for you after a long period.

The Trend of Investing in Cigars

A new trend that’s rising quickly is investing in cigars. People buy as many boxes as they can, store them for five years or so, and then sell them. The advantage is that besides the increase in price, you can ask a surplus for the age the cigar has. I think this trend of investing in luxury products has been around for some time but has gained popularity since COVID. It remains a quick way to make a few euros. But this has one big disadvantage for us, the cigar smoker.

If more people start buying cigars in large quantities, demand will rise. Today, many manufacturers can barely manage the high demand as it is. If the demand rises even more, I think the same thing will happen that happened with Cohiba. High demand plus rarity equals a recipe for high prices.

I would never buy cigars just for investment. This is due to one simple reason: if you crack the box and take one out to smoke, the value is gone. As a cigar smoker, I wouldn’t have the discipline to just look at a box for five years, never smoke it, and then sell it. It would be a missed opportunity.

Final Thoughts: The Future of Cigar Pricing

Prices are increasing, and I am afraid this trend will never end. Being a luxury product, there will always be an audience for cigars, no matter what they cost. For the middle-class people like myself, I have one suggestion: buy boxes! The reality is that the cigar you see today in the shop will be at the lowest price it is ever going to be. Looking forward 10-20-30 years, that same cigar will probably cost five times that price. If you have a good humidor and you can afford it, just do it!

Remember that cigars are meant to be smoked. It is nice to buy boxes and put them away for some time, but still. A lot of effort went into making you that cigar; it deserves to be smoked.

Article by: Lukas Magdeleyns

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