The glut of cigars piling up in U.S. warehouses as a result of the build-up of inventories prior to the imposition of the federal SCHIP tax on April 1 has finally dissipated.

The figures provided by the U.S. Alcohol & Tobacco Tax & Trade Bureau showed that where wholesale inventories of large cigars in 2009 jumped to more than 60% higher than for some months in 2008 – notably in April and August – it was only 14.9% higher at December 31.

Major premium-cigar wholesalers such as Altadis U.S.A. and General Cigar have noted that retail smokeshops are keeping a very careful eye on inventory levels and maintaining stocks of cigars at relatively low levels compared to the past. Coupled with a tough credit market for small business, tobacconists are watching their money carefully.

At December 31, inventories of large cigars in U.S. warehouses were at 397.4 million, the lowest since the end of February. In addition, inventories of little cigars are way down, off 47.6% from the end-of-the-year totals from 2008. Taken together, total year-end cigar inventories stood at 636.4 million, down 20.6% from the 801.9 million held at end of 2008.

There were a lot of cigars sold in 2009, but with the economy as it is, retailers are taking no chances with having inventory it takes too long to sell. That’s how smokeshops are trying to ensure their survival for the long term.
~ Rich Perelman

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