Counterfeiters, Smugglers Like A Cuban Cigar Rising Popularity Of Smoking Cigars, Higher Prices Spark Illegal Dealing
Cigars, smoking hot with celebs and the hip, have begun attracting smugglers and counterfeiters.
The soaring popularity and, more important, price of fine cigars has sparked a surge of illicit interest - mainly in Cuban cigars, famed worldwide for flavor but illegal to sell in the United States.
Since June, the United States Customs Service has made three of the biggest illegal cigar busts in its history - two in Arizona of more than 2,000 cigars and a record 3,016 seized Aug. 4 off a powerboat en route from the Bahamas to Broward County. Overall, seizures nationwide have nearly tripled since 1995. Industry experts also report a boom in fake Havanas.
Michael Sheehan, Customs spokesman in Miami, said the large hauls and growing numbers point to a trend.
Potential profits that are beginning to rival another illegal import - marijuana.
A single Cohiba, among Cuba’s most prized labels, today can fetch from $30 to $40, says Richard Macpherson, general manager of Havana House in Toronto, the exclusive importer of Cuban cigars in Canada, where they can be sold legally.
Although they’re not sold by weight, that translates into as much as $60 to $80 an ounce for Havana’s very finest. The U.S. Drug Enforcement Administration pegs the current street price of pot at between $75 and $125 an ounce.
The demand for cigars has rocketed in the last few years, lit by glitterati like actors Demi Moore and Arnold Schwarzenegger posed puffing on the cover of ultra-upscale Cigar Aficionado magazine.
Norman Sharp, president of the Cigar Association of America, an industry trade group, says sales increases have topped 9 percent two straight years. With expensive premium cigars, the numbers are even bigger - up more than 30 percent in 1995 and 51 percent so far this year.
Prices have risen accordingly. Marvin Shanken’s Cigar Insider, a newsletter published by Cigar Aficionado, estimated in June that the cost of many premium imports has leapt 50 percent or even doubled since 1990. The $3 to $7 range is common but many top $15.
The cost of Cuban cigars, considered by connoisseurs the world’s finest, has simply exploded, tripling or quadrupling to $45 or more each for prime labels, when they can be purchased at all.
“I attribute it to the forbidden fruit,” says Martin Golden, president of Smokers World in Aventura, which doesn’t sell them. “It’s something you can’t have, so naturally you have to have it.”
Sharp also said a decline in production and political factors may play a part. Despite a trade embargo in place since the 1960s, cigars once regularly slipped into the states, experts say. But after Cuba downed two civilian planes off South Florida in February, the United States tightened the clamps.
Sharp estimates that from 5 million to 7 million cigars labeled as Cuban will be sold illegally this year, costing domestic sellers from $50 million to $75 million in a premium market that rings up $400 million in annual sales.
And of those, a growing number are likely fakes - from a quarter to a third.
The fakes come from many places.
“The biggest source of Cuban fakes is Cuba itself,’ Sharp says. Sometimes, a factory worker steals cigar rings, applies them to cheaper imports, and then hawking them to a tourist. Some shady manufacturers outside Cuba also apply false labels to inferior products.