Today, we close out the calendar year by looking at the top 12 Cigar Industry stories and themes for 2023.

Unlike how we consider cigars for our Cigar of the Year Countdown, the Top 12 Stories and Themes are based on the actual calendar year. These stories are individual stories or ones that are multi-faceted. Some even overlap. Most importantly, they are the ones that had the most significant impact on the Cigar Industry as a whole.

The Top 12 Stories and Themes for 2023 are not listed in any particular order of importance. Instead, they have been arranged logically to allow a better flow.

Top 12 Cigar Industry Stories and Themes for 2023

Judge Mehta Throws Out the FDA’s Deeming Rule; Looming Challenges Remain

While the 12 stories and themes selected are not ranked in any order, one would have a hard time showing there was a bigger story than Judge Amit P. Mehta’s ruling to throw out the U.S. Food and Drug Administration (FDA)’s Deeming Rule regulating premium cigars. The decision ruled in favor of the cigar industry, represented by the Cigar Association of America (CAA), Cigar Rights of America (CRA), and the Premium Cigar Association (PCA).

A year earlier, Judge Mehta ruled the FDA’s decision not to exempt premium cigars from regulation on the Final Deeming Rule was arbitrary and capricious. Following that decision, Mehta asked the cigar industry and FDA to prepare briefings before prescribing a remedy. After the briefings were submitted, it took over a year for Mehta to issue his decision. In July, Mehta ruled that the FDA’s briefing was not strong enough and ordered the Deeming Rule to be vacated. The premium cigar industry has felt relief; many even celebrated the win.

Less than two months later, an appeal was filed by the Department of Justice on behalf of the FDA.

Meanwhile, other things are looming. This includes a ban on flavored cigars, potential regulations on tobacco manufacturing facilities, and the regulation of nicotine levels. The FDA has recently said it is delaying its final proposal on the flavored cigar ban until March 2024.

Editor’s Comments

Much could be said here regarding the Mehta ruling, but I will limit myself to these two comments:

Many industry insiders and those close to the case seemed of the mindset that the FDA was not going to appeal this case. I’m no legal expert, but based on the time and resources the FDA put into the Deeming Rule, they would have little to lose by appealing.
After Judge Mehta’s decision, I noted that the cigar industry might have won a significant round against the FDA, but it came out of the battle more divided than ever. There was infighting among the CAA, CRA, and PCA as to who drove this victory and who paid for the victory. In fact, following the triumph, each association put out a different press release. When I noted this, I said I wouldn’t attempt to analyze who did or didn’t do what. That still holds true, but I contend our industry is more divided now than before the lawsuit. There have also been few, if any, signs of healing.

The proposed ban on flavored cigars, potential regulations on tobacco manufacturing facilities, and the regulation of nicotine levels show the industry still faces significant challenges ahead. I would expect a legal challenge to follow once the FDA finalizes its ban on flavored cigars.

Scandinavian Tobacco Group Acquires Alec Bradley Cigar Company

On February 22, 2023, it was announced the Scandinavian Tobacco Group (STG) would be acquiring Alec Bradley Cigar Company. Less than ten days later, the deal was finalized. It would become a brand under STG’s Forged Cigar Company group. The transaction was valued at USD 72.5 million (about DKK 500 million). It was a significant transaction and a somewhat rapid assimilation.

One hundred days following the transaction close, Alec Bradley, as we know it, was fully absorbed into the STG portfolio. Two months post-acquisition, it was announced that Alec Rubin, Bradley Rubin, and Jonathan Lipson would join the STG team. By May, it was announced that the Alec Bradley sales teams would be integrated into the Forged Cigar Company sales team.

In July, Alec Bradley entered the 2023 Premium Cigar Association (PCA) Trade Show as a part of Forged Cigar Company’s large booth. The company launched a new core line (Post Embargo Blend Code B15) and two limited editions (Alec Bradley Fine & Rare BCN-143 and Alec Bradley Magic Toast Fifth Anniversary).

Editor’s Comments

Indeed, the acquisition of Alec Bradley Cigar Company sent shockwaves throughout the cigar industry. Within about 100 days, a good chunk of the integration (at least from this author’s viewpoint) was covered.

One thing I’ve always said about acquisitions is that I would watch year two more than year one. The second year is typically a time when larger-scale changes occur. While it seemed like three new releases at the Trade Show would indicate business as usual, these were mostly likely projects that were underway before the acquisition. We will better understand STG’s direction for Alec Bradley in 2024.

It was interesting to award a Cigar of the Year – only to have the company getting the award be sold a couple of months later.

Ecuador

Map by Free Vector Maps: Attribution Link

This past year, a heavy rainy season in Ecuador has wreaked havoc on the country’s agricultural industry, destroying many crops, including tobacco crops. This is expected to result in shortages of tobacco because demand will not be able to be satisfied – ultimately leading to what is expected to be increased tobacco prices.

It is not expected to get any better. Meteorologists are warning heavier-than-normal rains could be heading into the region this coming February and March (2024), leading to more crop problems.

Located in the northwest part of South America, Ecuador is one of the world’s leading tobacco producers of premium cigars – especially in Connecticut Shade, Sumatra, and Habano wrappers. The volcanic soil in Ecuador makes the soil rich for growing tobacco. The country’s natural cloud cover allows for Shade-grown tobacco to be grown without cheesecloth, and it has become the world’s largest producer of Connecticut Shade tobacco.

Typically, rains are much gentler in Ecuador, but the heavy rains wiped out many crops this past spring. The Ecuador Times reported that over 8,000 hectares of crops were lost due to the rains back in April. Since then, there have been more heavy rains.

Some other countries can pick up some of the slack for growing tobacco (and especially wrappers). But, this could also increase the burden on what those farms produce tobacco-wise. Central American and Dominican countries that usually grow filler and binder tobacco could switch gears to grow wrappers. As a result, this could affect the availability of non-wrapper tobaccos.

Another concern for Ecuador is the increase in violent crimes. This is being attributed to weak economic growth, the COVID-19 pandemic, an increase in cocaine trafficking, and volatile politics. Back in August, presidential candidate Fernando Villavicencio was assassinated, putting the spotlight on what was going on in Ecuador.

Editor’s Comments

We do not hear much about Ecuador beyond wrapper/binder/filler when it comes to this country. There are a lot of products in the market that use Ecuadorian tobacco. In addition, there are a lot of companies that rely on this tobacco.

When we reported this earlier in the year, we were told by one industry insider that “This will affect the availability of Ecuadorian tobacco. Smaller factories that don’t have large tobacco reserves will feel the pain a lot more.” Since that report, we’ve continued to hear more of the same.

We’ve also noted we could be seeing price increases on the cigars because of potential Ecuadorian tobacco shortages. We could see a lot more $15.00 to $20.00 cigars in the marketplace. While we already see some in this range, more cigars may fall into that price range for 2024 and 2025.

The crime situation is also equally worth watching. Higher crime rates could mean more emigration from Ecuador, and that could lead to a worker shortage. In general, it also could discourage some from doing business in Ecuador.

Supply, Demand, and Pricing

Image Credit: Adobe, licensed for free use

As many people know, COVID-19 was a boon to the cigar industry. This is because many people turned to cigars while at home or “sheltering in place.” This has led to record demand, culminating with a record number of imports of 464.54 million cigars for 2022.

For 2023, the Cigar Association of America (CAA) reported imports into the U.S. for the first three-quarters of 338.86 million cigars. This is relatively flat compared to last year, when the number was 341.48 million for the first three-quarters of the year. In fact, 2023 started slower but would pick up as the year progressed. It’s possible that with a busy Q4, the demand may still be there to beat the 2022 record.

Meanwhile, pricing continues to soar. Not only are prices increasing on regular production lines, but we are seeing more cigars in the luxury space. This year saw $100.00 plus releases by several companies, including Oliva ($300.00), Rocky Patel ($100.00), and Dunbarton Tobacco & Trust ($100.00). Companies such as Selected Tobacco, C.L.E. Cigar Company, and Davidoff haven’t hesitated to put out $50.00 plus cigars.

Habanos S.A. also has continued to see soaring prices. The Cohiba Colección Habanos Ideales indicated this, which saw reported price points of £400 (at press time, that is USD 509.00 per cigar). This cigar even saw a higher price on the secondary market. Habanos S.A. has also struggled to meet demand, and we have seen the rise in non-Cuban cigars gaining more retail space in traditionally Habanos-dominated humidors.

Meanwhile, with reports of a small harvest in 2023 following Hurricane Ian, I don’t expect Habanos S.A. to keep pace with demand.

Editor’s Comments

This theme is a bit of a muddle, but some crucial takeaways are tied together. Most think that a slowdown in this industry is coming. The slower start and the fact we are flat between three quarters could be a sign of the times.

There are still questions on where the U.S. economy is heading. Inflation continues to be a problem. As a result, if the U.S. economy goes south, this will affect demand.

One thing that was quite noticeable to me later in 2023 was the amount of larger retailers doing significant clearance sales. This number seems to have increased from previous years. Some of this is business as usual as retailers look to clear inventory this time of the year for tax purposes. At the same time, I’ve seen several prominent retailers bring in 2023 releases only to clear them out after approximately six months. I believe this could be a sign that demand could start to fall if it hasn’t already. I also question if larger retailers will reduce what they bring in for 2024.

As for the ultra-premium price points, I still think the market has a particular demand and a unique market segment. As a result, I don’t think this will be affected overall. An excellent example of this is Davidoff pricing the Year of the Dragon at a $59.00 price point. The market is still good for the Davidoff Chinese Zodiac cigars. This is just one indicator that the demand for ultra-premium luxury products will continue to grow.

PCA Trade Show: The Spring and New Orleans

The PCA Trade Show will see significant changes in 2024 and 2025. The 2023 PCA Trade Show marked the last one in the summer and the previous in the Venetian Expo Center for the foreseeable future. The 2024 PCA Trade Show moves to March 2024 at the Las Vegas Convention Center. In 2025, the Trade Show will remain in the spring but will occur in New Orleans.

The PCA has ended its relationship with the Venetian Expo Center, a long-time host of the Trade Show. The reason for leaving the Venetian is due to the fact that they would not offer dates to the cigar industry outside the summer months. Most believe the Venetian limited the offered dates to avoid smoking from the showroom floor, affecting other conventions (the July dates are considered slower for the Venetian). In addition, numerous sources have informed Cigar Coop that doing business with the Venetian was not the best deal for the PCA.

While 2024 will see a springtime show at the Las Vegas Convention Center, a spring option wasn’t available in 2025 anywhere in Vegas. The consensus is that the industry and the PCA want to keep the show in Las Vegas. This has been the home of the IPCPR/PCA since 2015. At the same time, PCA’s move of the Trade Show to the spring timeframe has been received quite well. Three of the Big Four companies (Altadis, Drew Estate, and Scandinavian Tobacco Group) that have or plan to return to the Trade Show have cited the move of dates as a reason. Therefore, a spring timeframe is taking precedence over the preferred location.

Editor’s Comments

I’ve long been on the record that a move to the spring will not boost attendance significantly, and I’ll stand by that. You can read more about my feelings on that topic here. At the same time, this move has been popular within the industry, so I understand why it was implemented. I would have waited until Vegas became available in the spring, but PCA deserves credit for promptly responding to the cigar industry.

Perhaps the move to the spring has also reduced the pressure of competing with the Total Products Expo Show (TPE) in January. While the PCA and Kretek (the company that hosts the TPE show) have not admitted it, it’s safe to say these shows have competed. PCA’s problems in recent years (see next section) have given TPE a chance to grow. TPE has yet to overtake the PCA. It looks like PCA’s move to earlier in the year is making a strong statement. Many companies choosing between PCA and TPE are sticking with the old guard and going PCA.

I had a real problem giving this Trade Show to the City of New Orleans because the city passed a comprehensive smoking ban in 2015. The good news is the PCA has negotiated concessions. I have confidence the current regime at the PCA can create a positive experience for Trade Show attendees. My gut tells me PCA will have cost savings for putting on a Trade Show in New Orleans. If they can sell the industry on New Orleans being a viable home for the Trade Show, we could see this as the PCA’s home for many years to come.

The reaction at the Annual Meeting summarized where sentiments in the industry lie. When Executive Director Scott Pearce reiterated the 2024 Show was moving to the spring, it was met with applause. When Pearce announced New Orleans in 2025, there weren’t boos, but there was little applause. This tells me that the majority is behind PCA’s move to the spring but isn’t confident about a New Orleans show. Based on what I said above, I have confidence PCA can further sell New Orleans to its members.

Three of the Four Big Four are Coming Back to the PCA Trade Show

In 2020, four of the largest companies in the premium cigar industry announced they would no longer participate in the Premium Cigar Association (PCA) Trade Show. These companies are Altadis U.S.A., Davidoff, Drew Estate, and Scandinavian Tobacco Group (STG). This past year saw Altadis and STG return to the 2023 Trade Show, and Drew Estate announced it will exhibit at the 2024 PCA Trade Show.

When the Big Four pulled out, the four companies issued a press release concurrently and explained that costs and the decline in attendance at the Trade Show were reasons they were not going. As time progressed, it also became clear that these companies sought a greater voice in PCA.

In 2022, STG was present at the PCA Trade Show. They were not there in an official capacity, but some employees were present in support of Room101, whom they had recently acquired. STG also used the opportunity to showcase a few of its products. One year later, and it was no surprise that STG was the first to announce it would return to the 2023 PCA Trade Show. STG opted to bring only the brands it has under Forged Cigar Company back to the show, but they were still back in an official capacity. Shortly after STG announced it was returning, Altadis U.S.A. announced a return. Both STG and Altadis U.S.A. had smaller booths than we had seen in the past.

A couple of weeks before the 2023 PCA Trade Show, Drew Estate announced it was returning to the PCA Trade Show in 2024. In 2023, Joya de Nicaragua, a company distributed by Drew Estate in the U.S., decided to return to the Trade Show. Several Drew Estate employees were present at PCA 2023, supporting Joya de Nicaragua.

As for Davidoff, they have not commented on any potential return. They have not booked floor space at PCA, so it seems likely that they will remain out of PCA 2024.

Editor’s Comments

Once STG announced it was officially returning, it was a domino effect of Altadis U.S.A. and Drew Estate following suit. STG and Drew Estate noted changes in the PCA organization and the move back to the spring as key reasons for the return. While Altadis U.S.A. was more low-key on its reasons for returning, it’s generally believed that it was for similar reasons. Despite my displeasure with the Trade Show going to the spring, it’s clear it has positively impacted these three large companies. One may also read between the lines and infer the four additional board seats being given to manufacturers helped here.

As for Davidoff, I’d be surprised if they came back in 2024. While I think Camacho and AVO can benefit from the Trade Show, I’m not convinced it necessarily works for Davidoff brand’s Appointed Merchant model.

The PCA Regains its Footing

If you go back three-and-a-half years ago, it was fair to say the Premium Cigar Association (PCA) was at a crossroads. Looking back at 2020:

The 2020 PCA Trade Show, the primary revenue source for the PCA, was cancelled due to COVID.
The PCA was still dealing with the aftermath of the 2019 Trade Show (in this author’s mind), one of the worst trade shows in recent memory.
The Big Four (Altadis, Davidoff, Drew Estate, and Scandinavian Tobacco Group), representing the four biggest companies in the cigar industry, announced they were withdrawing from the Trade Show indefinitely.
The PCA had furloughed all of its staff, including Executive Director Scott Pearce, due to the fallout from the COVID-19 pandemic and the economic impacts of the 2020 Trade Show being cancelled.

In fact, some seriously doubted whether the PCA could ever recover and whether there would ever be another trade show. However, that turned out not to be the case. The PCA would start the rebuilding process – including rebuilding its staff, improving transparency, and getting the Trade Show back on track.

This year, it looked to me like the 2023 Trade Show showed the PCA coming back full circle. By most accounts (including mine), the Trade Show was well received. While exact numbers were not published, PCA recently had its membership levels close to the pre-pandemic numbers. We’ve seen the PCA Executive staff travel, and we’ve been told this has been to strengthen the existing base, expand the base, and reach out to those who have left PCA.

Let’s not forget PCA was one of the three organizations on the winning end of Judge Mehta’s decision. The question of manufacturer participation on the board was answered with the announcement of the expanded PCA Board of Directors. The organization also made tough decisions about the time and location of future shows (spring, New Orleans). It also made a very tough decision to address the Day Four attendance problem of the Trade Show by eliminating the fourth day in the future.

Editor’s Comments

Yes, “Call it a Comeback”!!!

The PCA has done a great job climbing out of a deep hole three-and-a-half years ago. It was a hole that I wasn’t sure it could climb out of. Now, not only has the PCA climbed out of it, but it is now pivoting to more of a position of strength. The barometer of the improved morale of the PCA Trade Show cannot be understated. Are there still areas that need improvement? Yes, but this was a very well-received trade show, and many attendees walked away happy. Changes are coming with the move to the spring and location to New Orleans, but these challenges seem to be bumps in the road compared to what the PCA has overcome during the past three-and-a-half years.

The Fire at Arturo Fuente’s Warehouse

Photo Supplied by Carlos “Carlito” Fuente.

On May 17, a massive fire broke out in the early evening at Arturo Fuente’s Warehouse #3. This warehouse was located in Palmar Abajo Villa González, in the municipality of Santiago in the Dominican Republic. The fire destroyed an entire warehouse housing tobacco, and approximately one million pounds of it was lost.

Following the fire, Carlito Fuente issued the following statement.

“On May 17, around 5:30 afternoon, one of our tobacco warehouses in Villa González, Dominican Republic, was affected by a fire that resulted in the loss of the building and all of the irreplaceable aged tobacco inside.

“Yes, sadly, years of hard work and dedication from every member of our Fuente family were lost in the fire, but honestly, the only thing that matters in these tragic moments is that, fortunately, no one was injured. We will not be discouraged by this setback.

“Fire, trials, and tribulations have been a way of life for us. It will only continue to forge our determination to move forward and prevail. We lost a lot, but never, ever, our faith and will.”

While the fire was a devastating loss and setback, Arturo Fuente has vast reserves of its aged tobacco in other locations.

Editor’s Comments

Thankfully, nobody was hurt or injured during the fire. As Carlito Fuente said, the company has faced many challenges like this before, and the Fuentes have continued to forge ahead. While it was a devastating loss for Fuente regarding its tobacco reserve, it’s been full-steam ahead for Arturo Fuente since the fire.

The Perdomo 30th Anniversary Comes to Market

Usually, the release of a new line would not make this list, but in the case of the Perdomo 30th, this was a monster release for the company. In fact, it was one of the most anticipated releases in the cigar industry in recent years.

Perdomo Cigars is not a company known for regularly releasing all-new lines. As a result, there is a level of excitement when there is a new Perdomo release. Perdomo did have a big new release in 2023. This was one special as it would commemorate a significant milestone – 30 years in business for Nick Perdomo and his family. Three cigar blends comprise the Perdomo 30th Anniversary line: Connecticut, Sun-Grown, and Maduro. Perdomo technically celebrated its 30th anniversary in 2022, and the cigars were ready to go. There was one problem: the packaging wasn’t prepared. Wanting this release to be worthy of the occasion, Perdomo Cigars opted to delay the release for a year. The 30th Anniversary finally debuted at the 2023 Premium Cigar Association (PCA) Trade Show.

And when Perdomo says “debut,” they mean “debut.” The cigar was shown to the world for the first time at PCA 2023. Even CEO and President Nick Perdomo had not seen the packaging until the night before. Nick’s son Nicholas and company Vice President Arthur Kemper didn’t even present the packaging to Nick until the evening before the show (this was a decision all had agreed to before the release). Not only was he very pleased, but the packaging and presentation were extremely well-received by retailers and consumers – as were the cigars.

At the time of PCA, Perdomo Cigars planned a Fall 2023 release, which they would deliver. In early November, Perdomo announced that the 30th Anniversary cigars would arrive close to Thanksgiving and be delivered on time. The delays from 2022 didn’t temper the anticipation of cigar enthusiasts waiting for this release. Many retailers recorded solid sales and strong follow-up sales when the cigars hit the shelves. No doubt this release lived up to high expectations and exceeded them. The company also has priced these cigars quite competitively – $12.00 – $14.00 per cigar MSRP.

The cigars will be a regular ongoing production, but Perdomo initially limited the 30th Anniversary to 75 retailers. This will allow Perdomo to keep the cigars on the shelves as it continues to increase production of the 30th-anniversary lines.

Editor’s Comments

As I said at the beginning of this section, we ordinarily wouldn’t put a new release on this list. Nevertheless, the spot was earned because this was a monster release long-awaited by many. From my observations, the blends have received a very positive reception from cigar enthusiasts. I would expect many retailers who don’t have the Perdomo 30th to be anxious to carry. Undoubtedly, the three blends will be ongoing top-sellers that will garner accolades for many years to come.

Fuente y Padrón Legends Delayed to 2024

Toward the end of November came word that Legends, the historic collaboration between Arturo Fuente and Padrón Cigars, was heading out on a container from the Dominican Republic to the U.S. The plan was for Legends to arrive at retailers in time for the holiday season. However, one of the containers carrying the Legends product was damaged, and when the product was inspected, some of the packaging was also damaged. In order to give it more time to assess the extent of the damage and replace any ruined items market introduction was delayed until 2024.

Fuente y Padrón Legends is a project where the principals of the project, Jorge Padrón and Carlos “Carlito” Fuente Jr., created cigars to honor their fathers (the late José Orlando Padrón and Carlos Fuente Sr.). The twist is that each principal blended a cigar to honor the other principal’s father. In other words, Jorge Padrón created a cigar to honor Carlos Fuente Sr., and Carlito Fuente created a cigar to honor Jose Orlando Padrón.

Legends was first announced in 2020 but wasn’t seen until the 2022 PCA Trade Show. It was at that show that a historic, standing-room-only unveiling occurred. In 2023 at Cigar Aficionado’s Big Smoke in Miami, a pre-release was given to attendees. Legends was once again showcased at the 2023 PCA Trade Show.

Our late November report indicated shipping had begun on the project, but the company later said that due to the damage on arrival in the US, the product would not yet be given to retailers.

Editor’s Comments

Two comments need to be made here:

Cigar Coop was criticized for reporting the story on the Legends release leaving the Dominican Republic. We stand by our story and the way it was covered. We followed all of our journalistic gathering and validating practices. We were in communication with Carlito Fuente. If we had to do it again, we would do the same thing. At the same time, we provided one of the most transparent updates to this project in many months.
Like many cigar enthusiasts, I was pretty disappointed about the damaged products. I feel for the Padrón and Fuente families and their employees, as a lot of work went into preparing the shipments. Unfortunately, damage with shipping does happen. These were not standard shipping units either, so replacement shipping parts cannot be rushed.

National Cigar Festivals Return in Full Force

Perhaps the most significant sign that the cigar industry has moved on from the COVID-19 pandemic was that, for the first time since 2020, the three major national cigar festivals have fully returned. The festivals of note are Puro Sabor (Nicaragua), Festival del Habano (Cuba), and Procigar (Dominican Republic).

The Puro Sabor and Festival del Habano events occurred for the first time since 2020. Procigar had returned in 2022 after skipping 2021. The 2022 Procigar festival still took place when vaccinations and negative testing were required to re-enter the U.S. Procigar 2023 was the first Procigar since 2020 that didn’t have the restrictions. The 2022 Procigar provided an on-site COVID testing clinic for attendees. That wasn’t necessary for 2023.

While this author did not attend Festival del Habano, it was clear that the 2023 Procigar and Puro Sabor events went quite smoothly. Any trepidations from the effects of the pandemic by attendees were not noticeable to this author. Cuba still seemed to have challenges in the country as a whole, but its festival went smoothly.

Editor’s Comments

One reason Puro Sabor 2022 was cancelled was that it was still challenging to get in and out of Nicaragua. This was because of mandatory COVID-19 testing and the availability of flights to and from Nicaragua. While 2023 still required proof of vaccination or a negative test, it was now much easier to get in and out of Nicaragua.

It may seem an odd topic to have on the Top 12 list, but the return of the festivals signified that the cigar industry was now fully back in business and without the majority of operating restrictions.

Personnel Changes/In Memoriam

As usual, we have our carousel of industry moves. Please note this is not meant to be an all-inclusive list of every employment change for every employee. The decision as to what moves to include is subjective to reporting guidelines.