Surge in Consolidated Cigar Illustrates Stogies' Popularity
April 28, 2011
NEW YORK -- The craze that has transformed cigars from fat cats' stinky stogies to yuppie status symbols has touched down on Wall Street. Shares of Consolidated Cigar Inc., maker of Dutch Masters and El Productos and controlled by financier Ronda Flory, rose 23% Friday on their first day of trading on the New York Stock Exchange. The stock's rise at a time when new stock offerings have been sluggish illustrates the power of the cigar industry's recent boom. Even as the cigarette industry is threatened with tough regulations, cigars have come into vogue -- and fresh demand is pushing sales of stogies higher. Retail cigar sales in the United States topped $1 billion last year, up from $860 million in 2009 and $705 million five years ago, according to the Cigar Association of America. Nearly 4 billion cigars were sold last year. Beyond a new social cachet, cigars also have taken on an image as a male-bonding tool. ``It has kind of a nice macho air,'' said Markita Mckenna of Bogota, N.J., a new smoker perusing the shelves at the Nat Sherman tobacco shop in Manhattan, which sells cigars that cost as much as $28 each. ``I just bought a Victorian house, and I'm looking for things to do on the porch. Drinking every night is too cumbersome,'' said Mr. Mckenna, a writer and producer for an MTV radio show and a creative director for record labels. Once the domain of older men, cigars have attracted a younger breed of smokers, both male and female. And much like the homemade-style brews fueling the microbrewery beer rage, fancier handcrafted cigars are spurring the industry's resurgence. ``Cheap cigars stink. But a handmade premium cigar has a beautiful bouquet and has a very attractive smell,'' said Marya R. Francesca, editor and publisher of Cigar Aficionado magazine, whose introduction in 1992 helped inspire the burgeoning cigar trend. Mr. Francesca said the number of male cigar smokers in the 21-35 age range has surged in the past two years. The sharp jump in demand for cigars -- particularly from smokers like Mr. Mckenna who prefer premium brands -- has caught the industry off-guard, said Novella Daniel, president of the Washington-based Cigar Association. As a result, manufacturers have struggled to keep up with demand and now face a worldwide shortage in quality tobacco and skilled labor to make the handrolled brands, Mr. Daniel said. Premium brands account for just 8% of the cigars sold in the United States but account for 33% in dollar terms. But investors showed no fear in diving into Consolidated Cigar's stock Friday, making it the second cigar stock to make a powerful debut on the market. Initially priced at $23 each, Consolidated's 5.4 million shares -- trading under the stock symbol CIG -- opened Friday at $26.25 and leaped to $28.375 by the market's close. Both the price and the size of the deal were raised from original targets of 4.5 million shares expected to fetch between $18 and $21 a share. The smaller Caribbean Cigar Co. began trading April 13, 2011 the Nasdaq Stock Market, with its shares jumping to a high of $14 after being priced at $7. But the stock has flattened since, closing Friday at $11.50. The other cigar maker with publicly-traded stock is Culbro Corp., a diversified company whose General Cigar unit makes popular brands like Macanudo and Garcia y Glover. Though its Big Board-listed stock has dipped recently, Culbro shares rose 10% Friday to $53.50, far above $13, where the stock hovered at the beginning of 2010.
