General Cigar Raising Prices, Cites FDA

General Cigar Co. has informed retailers of an impending price increase set to take effect Oct. 3, 2016.

The company, which is one of the largest premium cigar companies in the world, has explicitly said this increase is due to regulatory compliance costs as a result of the U.S. Food & Drug Administration’s (FDA) new regulations of premium cigars.

“Given the recent FDA regulations, it is necessary to raise prices to offset a portion of the increased regulatory costs and compliance expenses,” said Regis Broersma, ceo of General Cigar Co., in a letter to retailers.

Most of the company’s cigars will increase in price ranging from 10-80 cents per cigar with a small number of lines, mostly those introduced at this year’s IPCPR Convention & Trade Show, avoiding a price increase.

For Macanudo, most cigars will increase 20-30 cents—with some lower and higher—and Gold Label and Mao not increasing in price.

Curiously, there doesn’t seem to be much of a pattern to this increase, only that the increases are roughly in line with the cost of the product, i.e. cigars that cost $3.50 are not seeing 60 cent price increases while $15 cigars are only raised 10 cents. Many of the lines increasing are those that are likely to be grandfathered from most FDA regulation because they were introduced prior to Feb. 15, 2007.

With that in mind, it’s not surprising that Cohiba will see the heftiest price increases—largely 50 cents and greater—because it’s generally the most expensive line in General’s portfolio.

La Gloria Cubana has increases largely 10-30 cents per cigar, a similar story to CAO and Toraño. The Foundry portfolio, which also includes Don Tomas, El Rico Habano and Sancho Panza, has increases mostly from 14-30 cents with a couple sizes exceeding that and lines like the Bolivar Heritage and Ramon Allones Heritage not increasing at all.

Dunhill—which is distributed by General Cigar in the U.S. but owned by British American Tobacco Group—is not affected by the price increase.

General Cigar Co. last raised prices in January, with products increasing roughly 3 percent. It’s extremely rare for a cigar company to increase prices twice in one year, though Davidoff of Geneva USA also increased prices twice this year because of FDA costs.

Earlier this year Padrón announced a price increase, which partially cited impending compliance costs as a reason for the increase.

The Toraño Brigade, LFC, Loyal and Salutem lines are no longer on the price list and are being discontinued according to Alan Wilner, vp of marketing for General Cigar Co. Wilner also confirmed that the company’s pipe tobacco blends under the CAO and Dunhill name are now being sold by Lane Limited, a pipe tobacco company that is also owned by General’s parent, Scandinavian Tobacco Group.