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

MillionaireAsia India - - Front Page - By Ashish Bhasin

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 prots 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 reect 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 aciona­dos. 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.

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