Sometimes a Cigar Craze Is Just a Fad, National Data Indicate

After three straight years of growth as pumped up as one of cigar chomper Arnold Schwarzenegger’s biceps, cigar sales are beginning to settle back into a normal range as one of the trendiest, ultra-hip activities of the ‘90s appears to be burning itself out.

“The bloom is off the rose. The craze is over,” said Norman Sharp, head of the Cigar Assn. of America, which reported this week that net sales of cigars increased by just 0.4% in the United States last year.

Although 3.33 billion cigars were sold in 1998--a record this decade--sales growth has slowed significantly. In 1997, cigar sales rose 16.4% after surging 17.7% in 1996.

Gordon Mott, managing editor of the glossy magazine Cigar Aficionado, observed that the robust growth of just three years ago was something of a smoke screen.

“Smoking cigars is just not as hot anymore” said Mott, who noted that overall sales of “premium” cigars--the pricier, strictly handmade varietyhad also suffered in the last year.

How times have changed.

It was just 1993 when baby boomers and Gen-Xers, prompted by what some observers characterize as a backlash against an overly health-conscious society that had branded cigarette smokers as public enemy No. 1, rediscovered the cigar. They were joined by what every popular movement needs to move into the big time these days: movie stars. Schwarzenegger, Andy Garcia, the Baldwin brothers and female stars such as Demi Moore--just to name a few--all glommed on to the anti-establishment aura that came with inhaling smoke--however odoriferous--from a rolled up bit of cured brown tobacco leaves.

The cigar-chomping movement took off, attracting a wide and varied swath of society--college kids, boardroom execs, hip-hop youth, even sports stars such as Michael Jordan. They all hopped aboard, helping to propel one of the fastest-growing niche markets of the 1990s.

Still, cigar experts note that the mid-’90s boom, when compared with industry growth over the last three decades, was more of a boomlet. In 1964, said Sharp, the U.S. government announced for the first time that cigarettes were harmful to a person’s health. “So everyone tried out cigars instead,” he said. Cigar sales in 1964 reached 9 billion units, roughly three times the 1998 figure.

Indeed, the latest evidence of slowing growth affecting the industry came Wednesday. 800-JR Cigar, one of the world’s largest premium cigar retailers, reported that while sales rose nearly 20% in the most recent quarter ended Dec. 31, profit fell 60% because it was forced to slash prices to stimulate sales.

Part of the reason for the industry’s sluggish sales last year was because demand in 1997 so widely outstripped supply that cigar shops and dealers had to scramble to bolster inventory, swamping them with back orders. It took most of 1998 for the backlog to “pass through the distribution chain,” Sharp said.

“None of this is a surprise to me” said Mott, who claims the industry remains very strong and is just sloughing off a layer of trend-hopping inhalers. “We experienced what clearly had elements of a fad.”

“Beginning in 1996, I said, ‘Guys, this thing has gotta stop. At some point the industry has got to come down to a normal level of sales.’ ”

The magazine editor added that many cigar “bars,” which popped up in large numbers all over the country in the last two years, are closing. Most large cities, which at one time might have had 15 to 25 such establishments, now have just a handful.

But industry observers say there’s still quite a lot to be optimistic about. Many smokers bought their first cigar during the fad’s peak years. Some tried it once and never did it again. But many caught the cigar bug and have now been absorbed into the cigar market’s core consumer stronghold.

“We still have a very strong base of smokers, more than we had in the early ‘90s, that’s for sure,” Sharp said.

That’s what Saiid Karroum, a cigar salesman who works at Fair Oaks Cigars & Spirits in South Pasadena, is hanging his hat on.

Karroum said that cigar sales at his shop have dropped noticeably since 1997, which he called a “boom” year. He attributed the fad’s decline to California’s ever-tightening smoking laws.

“You can’t smoke anywhere. And Prop. 10 [the state initiative approved last year that raised tobacco taxes] added an extra 20% to our retail prices. That’s slowed things down too. But I just think if shops like this one hang on, the real cigar smokers will stay with us. We’ll be all right, I think.”

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Burned Out?

Sales of large cigars in the United States increased only 0.4% in 1998, after three years ofdouble-digit gains.

1998 $3.33 billion