Cigar companies on the verge of existence due to strict smoking policies
Drinking his afternoon coffee, Jorge Padron usually lights a cigar that has his name on the side. The company founded by his late father Jose Padron back in 1960s has seen a constant growth for four decades in a row.
But now everything has changed. Cigar industry that provided thousands of workplaces for unskilled workers and supplied aficionados with fine products is coming across difficult times just due to the economic downturn. The implementation of bans on smoking throughout the nation and larger-than-life tax increase played a major role in the declined of cigar sales.
The largest plant to close to his moment has been the Hav-a-Tampa factory in Tampa that is going to stop production within two months and already began laying off workers. American Cigar Association chairman Norman Sharp, admitted that many companies are as well cutting on salaries and firing workers.
Cigars have been perceived as an integral part in lives of American people. Cigars are presented when kids are born or during the wedding ceremony. They have been smoked celebrating victories in NBA and NFL and on many other occasions.
However, currently average smoking rates are dropping as almost 20,000 American cities and localities prohibited smoking in public places. Moreover, more than 100 proposals to increase tobacco taxes have been introduced across the country.
Sharp said that although they have not made a comprehensive market research, reports demonstrate that sales had dropped by 10-12% last year, as people began cutting the expenses on cigars.
According to industry experts, the principal reason of the decline is enormous tax hikes.
The tobacco taxes have seen a massive increase on April 1, when the federal tax increase made large cigars cost 35 cents more. In addition, 12 states have approved tax hikes on tobacco while 25 are in the process of consideration.
Mitch Dolman, one of the editors of Cigarcyclopedia.com, confirmed that small cigars have been hurt the most, because they had been intended to be much cheaper than large counterparts but with a $1-per-pack tax hike the sales have fallen significantly. Premium cigars, which cost $20-30 have not been affected that much, since they are bought mainly by wealthy people.
Jorge Padron said that they have to pay approximately $40.000 for each shipment of 100.000 cigars, from the initial $5.000.
He added that they still use manual labor to roll several cigar brands and with the decline in sales he was forced to cut salaries for his workers. He said that if lawmakers hadn’t stopped considering cigars as a source of easy money it would become a devastation for the whole industry.
“They simply don’t understand that at the end they would not achieve their target – generating more taxes, if our sales continue to drop and we will be forced to fire people,” Pardon mentioned. .
American Cigar Association chairman stated that layoffs will be a disaster not just to the company owners but especially for those simple people, who had been working at the plants for decades. He said the overwhelming majority of the workers barely graduated school and would have hard times finding another decent job.
Mitch Dolman said that public health groups, which advocated for comprehensive smoking bans simply do not understand the difference between cigarettes and cigars, since a cigarette can be smoked in 2 minutes outside a bar, but it is not possible in case of cigars.
” Cigar smoking requires a quite and peaceful place, where people relax and think about the beauties of the world that surrounds them, .”
