Investing in cigars



2015-06-26 11:04:59

Investing in cigars is popular with collectors looking to acquire unique items in limited supply.

Cigars have long been considered a prestigious indication of wealth and status, and with emerging economies entering the markets, cigar prices will likely increase.

High quality brands tend to be produced in smaller amounts. Buyers not only purchase to invest but to consume, making the finite number of cigars produced even rarer.

Size of the markets

The global cigar market has experienced continued growth despite adverse global economic conditions. As of 2010, it was estimate that approximately 18 billion cigars are consumed each year, with 10% growth in the sale of premium cigars in each of the previous years.

96% of global demand is focused in the USA, Germany, France, Spain and the UK. However, BRIC economies – Brazil, Russia, India and China – have growing middle and upper class populations, who have started investing in high value items.

According to Tobacco Asia magazine, the Chinese cigar industry is expanding by more than 30% a year as of 2010 - three times the average growth for the country’s entire tobacco sector.

Chinese buyers spend 2.2 billion Yuan ($335m) a year on cigars, with annual sales exceeding 370 million.

Most valuable investments

When investing, the most valuable cigars are usually the most reputable and high-quality brands, such as Arturo Fuente, Cohiba Behike and Montecristo. Rare and limited edition issues of cigars also make a good investment.

For example, Cohiba Behike’s annually-issued BHK cigars, last released in 2010, were sold in very limited supply, in boxes of 10. Their rarity and high-quality made them much sough-after.

Described as the “definitive collectible cigar of 2010”, it emerged that some collectors had reportedly based 10-year investment plans around the release of BHKs, acquiring a portion each year. With a price of £269 per box, they will likely make an excellent long-term investment.

The investment potential in cigars has been recognised by auction houses. Christies was the first to hold a sale devoted exclusively to cigars, including rare pre-embargoed boxes from the turn of the century and vintage cigars from the 1970s, 80s and 90s.

The age of a cigar can significantly add to its value as an investment. The outstanding lot in the aforementioned Christie’s sale was a cabinet of one-hundred 1970s Romeo y Julieta Casa Reales cigars, which realised a remarkable £8,800.

Like many other collectibles, a notable history or story relating to a cigar can make it more valuable. Winston Churchill's half-smoked cigar, abandoned by the Prime Minister in order to attend a cabinet meeting, was sold by Key's Auctions for £4,500 – over 12 times the £350 estimate.

Where to buy

The primary places to buy rare, investment-grade cigars are specialist dealers and auction houses.

Main article: list of cigar dealers

Researching investments

Any potential investor should make sure they thoroughly research the type of cigars that would be worth investing in prior to acquisition. A variety of cigar societies and clubs can aid in this.

Important factors to consider are the notability of the brand, the quality of the wrapper and filler tobacco leaves, the shape of the cigar (figurado cigars are usually more valuable than parejo), and the rarity – if the cigar is a limited edition or old, it is more likely to appreciate over time.

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