The art of rolling out riches from luxury cigars
art of dipping world of cigars The a toe into the smoky clouds of money and make in the process
There is an old Spanish saying “those who have money smoke cigars but he has no smokes paper.” Would that not be exciting, if someone tells that you can smoke prots out of them? Having your cake and eat it too syndrome! Yes, Those pieces of luxury puffs nestled in a humidor can give you that extra buzz and bucks.
Can cigars actually be a good investment?
Over 20 billion cigars are smoked each year all over the world; in addition to being a luxury puff for
elite, cigars are progressively being seen as an alternative investment mentioned in the same breath as wine or art. According to research from Market Avenue, the industry is growing by around 30% a year and Chinese are the biggest spenders in the world approximately £126 million.
What makes a good cigar and what turns it into an investment?
Sun, seed, soil and skills make a good cigar and scarcity makes it an investment. Cigars like wines too improve with age and value. There are cigar lore on trading that recount humidors bought at the expense of an expensive estate, stuffed humidors bought and sold for thousands and hundred thousands of dollars. Cigars fetched extra ordinary prices at the auctions – a box each of Gurkha HMR was sold for US$ 125000 and ve such boxes were sold. Dom Perignon cigars bought in 1980’s for about £300 can now easily be sold at almost 20 times their initial price.
A very prominent cigar investor, Edward Sahakian, explains that there are two important considerations to make when choosing to invest in cigars. Scarcity and liquidity! In his case, when Davidoff ceased to produce its famed smokes in Havana, Edward made sure that he had enough stocks to supply his London customers for years to come; he still has a few boxes left which sell for a hefty multiple of their original price. The key to the success of his investment was scarcity. British Prime Minister Winston Churchill on one occasion had to stub out a cigar to rush to an emergency meeting during World War II. The half-nished piece was sold at an auction in 2010 for £4,500. The second point he makes is to do with liquidity. Rare cigars are not a commodity and cannot be sold quickly for top price. Thus, when it comes time to cash in a collection, the collector must either be patient and nd the right buyer or sell at a reduce price.
Cigars as collectibles, are separated into two categories: those for smoking (after aged) and those valuable for their uniqueness. Both categories have value but for different reasons what brings value to each of these categories of collectible cigars.
Cigars like wines, taste better than alternatives and improve with age. The only way to nd these great productions is to smoke them young and guess which ones will develop best over time. An experienced palate can sometimes make better
deductions than a guesswork in this practice. It is not unlike the world of wines where predictions are made and revised as the years go on.
Limited edition vitolas (unique measurement of a cigar) for example, a Julieta vitola 7x47 would mean a cigar of 7” and 47 ring gauge (diameter of 47/64th of an inch) - tend to grow in value over time. The nal year that a particular vitola of an established brand produced is a great time to purchase for investment. This especially true if smokers will miss the cigars in the future on account of unavailability. More common than discontinuations, you will nd cigar makers producing small batches of a particular cigar with special branding. Like Pete Johnson does for Tatuaje, with special collections of unique blends/ vitolas in innovative and clever packaging. Not only do the cigars sell quickly, they achieve prices much higher than retail on the secondary market.
In Europe, EO brands 601 released limited edition version of their Green Label cigars. It is sold in a custom-designed humidor jar with a special blend and vitola and thus command favorable premium on its exclusivity. Those with a taste for rare smoke usually, “start their collections with sought-after brands,” says Joe Taylor of Paul Fraser Collectibles. “Stay with the brands you recognise; those with established reputations for quality,” he says. “These brands, if stored properly and unused, have a good chance of rising in value due to their consumable nature,” he adds. The U.S. made Cuban cigar imports illegal in 1962. Pre-embargo cigars, however, can be bought and sold in the U.S. They’re rare, making them a sound investment in the market.
How can investors dip a toe into this smoky world and make their own money clouds?
Thanks to technology today, buying and selling cigars is fairly easy. It can be done through cigar merchants - online or in shops - or at auction on a commission basis. Remember the wise saying, ‘ if the deal is too good to be true, then it’s actually not true.’ The best advice for the contemporary collector is- buy when the market is down and focus on that which is highly regarded likely to be scarce in the future. But an equally bigger dilemma for a novice buyer is what to buy – Cubans or New world. While a lot of impetus in the past has been on Cubans, there has been a recent shift to the cigars coming from Dominican Republic and Nicaragua. Cuba has long frozen in time and so has its technology; while these New World countries have embraced top technology and skills to bring in the best fruits of labour and investment which reect in the cigars.
How to treasure your investment?
Putting money into cigars is only good as long as they are smokeable. Caveats that apply to other types of alternative investments here too: choose a reputable merchant, ensure the product is the genuine article and not counterfeit or knockoffs; most importantly store and insure the product properly. Every expert knows, the nest vintage cigar is worthless unless it has been properly stored. Cigars have a huge post-purchase preservation requirements as they are a highly perishable commodity with very limited shelf life, if not stored properly; they can dry out within two weeks to be just worthless rolls of leaves. Some retailers will store cigars for an investor, but mostly people store their privately. Constant conditions a 70:70 formula as they say in Cigar parlance - 70 degree F and 70% humidity with no direct sunlight are ideal for long preservation and aging of cigars to get great value out these hygroscopic leaves.
It’s a quirk of our times that while smoking is ever more frowned upon than previous generations, the market for collectible cigars is young and only getting better. So, while the anti-smoking lobby might have put a spanner to wash out your favorite ashes by restricting public smoking, these bans have actually helped fanning the re of desirability. Strange as the ways of world are, we yearn for things we haven’t acquired yet. It has stimulated the appetite further to posess ne cigars among the world’s acionados. This simply means the venerable niche investment market is secure for
foreseeable future and one indeed has the best of times right now to park funds literally where the butt is.