By: Colin Ganley

A Montecristo #2 costs nearly four times as much in London as it does online from the Canary Islands. Online cigar retailers bring huge variety from your laptop to your humidor, often flying under the radar of local tax authorities. Cuban brands are available in most markets - although still not in the USA - yet non-Cubans are hard to find in many shops including the otherwise hot cigar markets of Spain and Hong Kong. Such changes have made Poker tables, leather lounges, gourmet coffee and extravagant cigar dinners common features in local cigar shops, as cigar buyers and sellers adjust to a changing market.

On holiday in a foreign country cigar buyers inevitably find prices much different from their neighborhood cigar shop. Tax increases have created a hierarchy of more and less desirable cigar buying locales. That same holidaymaker is likely to find cigars that they have never seen on a visit to a foreign cigar shop. Government regulation and smoking bans may have cigar lovers feeling choked out, but greater competition and information can mean more choices and better cigar experiences if they know where and how to look.

Price Differences

With Montecristo #2 prices varying from £16.95 (24.97€) in London, to 12€ in Italy, and 6.96€ online from the Spanish Canary Islands ($33.56, $16.10, and $9.36) price differences are driving major buying pattern shifts around the globe. What is a cigar consumer to do? One can buy internationally and hide from tax collectors illegally, shop abroad and pay local taxes, or just purchase locally. Unless you live in a place with low tobacco taxes and a vibrant cigar culture, you are likely to seek cigars from outside your borders. Even within the European Union, cigar prices vary because of taxes. A Ramon Allones Specially Selected in France costs 9.50€ while in Germany you will pay only 6.50€, a 46% difference. Within the United States an Oliva Serie O Robusto costs $6.55 in Minnesota, $4.50 in Florida and $4.20 online. That same cigar in Germany will set you back $8.06 (6€). Most of the difference in price is due to taxation. An English cigar smoker recently put it this way, “I buy single sticks in the UK to smoke in a shop or if I am in a hurry but I buy all my boxes abroad.”

Taxation has made some countries very popular among smokers and forced up prices in others. You will pay the most for cigars in the UK, Australia and Hong Kong (sometimes twice as much). Some of this is due to the strength of currencies but it is mostly due to taxation, especially in the UK and Australia. Low price havens are located primarily in the EU. Switzerland, Germany and Spain, benefit from this the most. Shops that operate in the Spanish Canary Islands and sell Habanos without EU import duty are the lowest priced in the world.

These price variations have driven many consumers to the internet for their larger purchases. Spain, Hong Kong and Switzerland all have thriving internet businesses which serve the global market, not least the United States. Country differences resemble the differences between states within the USA.

Within the US prices fluctuate widely because of state taxation regimes. One of the more extreme states is Minnesota, which taxes wholesale purchases at 70%. This has driven successful internet businesses offline as low or zero tax states such as Florida take over. Interstate purchasing is the refuge of cigar lovers in high tax states but as authorities increasingly hold consumers responsible for their out of state purchases, this practice is threatened. Most respondents in online cigar chatrooms claim to buy from low tax states to avoid local taxes. Despite rising cigar taxes American consumers have a huge variety of cigars at their fingertips. More cigar varieties are sold in the US than in any other country. Those Americans who are willing to chance confiscation, fines and imprisonment find those iconic Cubans readily available from online retailers in Europe and Hong Kong.

Where to Get Them

A great many Cuban cigar retailers in Hong Kong, Spain, and Switzerland sell Cuban cigars to the Americans who lust after them. It is illegal for Americans to buy Cuban cigars from anyone, anywhere, anytime. Despite Title 31 Part 515 of the U.S. Code of Federal Regulations, Cuban cigars are as popular with Americans as they ever have been according to retailers who prefer not to be named.

Brick and mortar merchants as well as large online retailers often have a method for ‘discretely’ shipping Habanos to Americans. Jermyn Street retailers in London openly discuss the importance of ‘American Tourists’ to their bottom line. Interestingly though, the cigar envy does not all flow from the USA. Dominican, Nicaraguan, Honduran, Bahamian, and other Central American cigars are almost all available in the USA. Only a handful of those same brands are available outside North America.

The result is that top brands in the USA are expanding globally. Sam Phillips, VP of Marketing at Rocky Patel, one of the fastest expanding in international distribution is entering the Chinese, Hong Kong, and South Korean markets within the next three months. Oliva is also expanding in Asia. Norman Stein of Bogart’s in Sydney Australia states that non-Cuban brands, exemplified by Oliva, have remained popular in Australia because of the consistent and improving quality of the brand.

Most brands (see chart) are distributed unequally. Habanos have not been available in the USA since the 1962 ban, but brands produced elsewhere that share a Cuban name (e.g. Punch and Romeo y Julieta) are only available in the USA and sometimes Canada. This is simply due to trademark ownership. Smokers in the UK, Germany, Austria, Switzerland, Netherlands, USA, and Australia have the most variety of brands in their local tobacconists.

Most other Habanos dominated countries are catching up in terms of variety as the non-Cuban brands become better known. Hong Kong, long a ‘Mecca’ for Habanos, Davidoffs and Dunhills is opening its doors to more Dominican and Nicaraguan brands this year. Meanwhile, Habanos and a few other brands still dominate the Spanish market.

The Graycliff cigar company, based in the Bahamas, is a premium brand with established distribution in the USA and Canada but not the rest of the world. Enrico Garzaroli, Graycliff’s charismatic spokesman, charms conspicuous cigar consumers with stories of tycoons, royalty, and regularly ships some of his most exclusive cigars around the world. Among others, the President of Ford Motor Company and its board buy boxes by the hundreds as do many Swiss bankers who yacht them back to their various abodes. Because of the company’s exclusive products and limited marketing, most consumers outside North America and the Caribbean buy directly through Graycliff in the Bahamas and have them sent abroad. 

Brick and Mortar Upgrades

International cigar shopping and government pressure on smoking has forced tobacconists to lure customers in new ways. Because of smoking bans, increased taxation and internet competition, cigar shops are putting in extra hours, remaking themselves into smoke havens where shunned smoke lovers can come in for a puff. The fixed costs of fancy shops, designed to feel like man’s last bastion, make local outlets more expensive than online retailers, but such places are investing in upgrades to make local shops worth the trip.

“We have to offer an environment…a destination…better service” says Jeff Haugen of Tobacco Grove (Minnesota, USA). Haugen’s retail shop now offers a poker table, leather sofas facing a big screen television, and coffee as well as a highly knowledgeable staff (he is there most days) and walk in humidor. Minnesotan cigar shops pay a 70% tax on wholesale cigar purchases but even in Florida where there is no cigar tax, shop owners are luring customers in with amenities. Corona Cigars in Orlando offers a piano bar called the Avo Lounge, with a full array of drinks. Its entire 5,000 square feet of retail space is humidified and regularly visited by Avo Uvezian and other cigar industry figures who attract cigar enthusiasts for meet-and-greets.

Retailers everywhere are combating tax and regulation by improving their ambiance for customers. The James J. Fox and Robert Lewis store in London has sold cigars since 1787 and today entices customers with a refurbished humidor, lounge, and museum of cigar artifacts. Cigars which once belonged to the Winston Churchill now reside in this museum as do some of the oldest Havanas known to be in existence. Bogart’s of Sydney Australia puts on cigar dinners. With the forthcoming Australian smoking ban, the dinners will continue with a pre-dinner smoke on the patio, then a gourmet meal followed by the ritualistic post-dinner puff (out of doors, of course).

Throughout Europe cigar events are put on by cigar shops and hotels. Vienna is a hub of such activity with the Hilton hosting “Big Boys Night” on Wednesdays in its bar which feature whisky, cognac and cigars. Not to be outdone, the Intercontinental and Ambassador hotels also offer fine cigars. The classic Viennese venues for cigars are the coffee shops which serve fresh coffee and allow customers to BYOC – bring your own cigar.

Internet Upgrades

As cigar stores have upgraded their facilities to compete with internet retailers, the websites have responded. Local retailers educate their customers through sales representatives, so savvy online retailers educate their customers with informative interactive websites. TopCubans.com, based in Geneva provides detailed smoking notes, pictures, size and other information in a sleek format. They also help consumers select a cigar with a tool that asks them about their preferences for strength, size and price. The site is available in English and Japanese. Many cigar sites are multi-lingual and offer information about the history of cigars and the brands that those retailers carry.

Cigar connoisseurs today have myriad options for purchasing the cigars they desire. Both local and internet retailers are anxious to teach you about the art and history of cigar smoking. If an intriguing brand is not available in your local shop, you’re likely to find a host of online retailers who are happy to assist. But beware of your government, which will hold you liable for local taxes no matter where you buy your favorite sticks.

The cigar market has changed dramatically and, despite higher taxes and smoking bans, largely for the better. Competition has driven prices down. Information about brands, smoking, and production are more widely available than ever before. There is probably a cigar event taking place in your region soon enough, so find an event or venue, soak up more cigar knowledge and toast the industry’s growth with a few puffs from your favorite cigar.