As I continue to dig deep into the cigar industry’s reaction to the FDA’s ratification of Option 1; it is inspiring to see the passion manufacturers are bringing to the table to tackle this issue head on.

The last two articles featured boutique cigar companies Fratello Cigars & Black Label Trading Co. which you can read here and here.

However, in this post I will share a different perspective from one of the largest and oldest players in the industry and what sort of efforts they are making behind the scenes.

I connected with Rene Castaneda, President of Villiger Cigars North America; who took over the reigns of the North American operation of the centenarian cigar company earlier this year. A few months after Castaneda’s hire, Villiger Cigars celebrated the relaunch of their North American headquarters in Miami.

Despite the regulations facing the premium cigar industry, Villiger is pressing full-steam ahead with their long term vision to expand aggressively into the U.S. market.

Their most pressing concern is the predicated date of February 15th, 2007. If you are not familiar with the FDA’s regulation, basically it states any cigar marketed after February 2007, will require FDA approval before sales commence or continue. (read the FDA’s full statement here)

Here is Rene Casteneda’s statement on the subject of FDA regulation:

Rene Castaneda

Rene Castaneda

“For us at Villiger North America, the new FDA regulations is a very serious situation. Even though we are an old company (established 1888), we are a new to the US market.

We are committed to the US market and we are giving all our support to the CRA and IPCPR in order to look for “solutions” to the predicated date of February 15, 2007 and some of the other extreme regulations.

We are cigar people, we are part of the cigar community and we are supporting the initiatives that would allow all of us to keep enjoying cigars and the craft of the master blenders and master rollers of cigars.”

As shared in yesterday’s post featuring Black Label Trading Co., Rocky Patel states, “some of our analysis says $300,000-$400,000 per cigar/per SKU/per blend.” (source)

No cigar company large or small wants to incur this sort of exorbitant fee to approve a single cigar for sale. It’s cost prohibitive for most and absurd for those who potentially could afford it.

You may wonder why a multi-million dollar company would be concerned with the increased regulation, when in fact it is designed to push the smaller players out; ultimately clearing the way for the larger companies to fill in the demand.

If you look at the entire supply chain, which starts with the farming of tobacco; the cost of the raw materials is currently set by the demand for tobacco from all manufacturers.

Economically, if you reduce the number of companies making cigars, then you ultimately reduce the number of acres growing tobacco. Once you have less tobacco on the market, then you naturally have a higher price for raw materials.

This higher cost trickles down to the consumer, who then buys less cigars. This then contracts the overall market and makes it difficult for even the larger companies to increase sales by volume.

It’s a lose-lose scenario not only for the cigar companies, the farmers, but also the consumer.

For this reason alone, whether you are on the consumer side of the cigar business and especially on the commercial side, the petition needs to be signed and shared with anyone with even a remote interest in cigars.

If we don’t act now, two years from now the effects of today’s regulation will alter the cigar landscape as we know it. And if all estimates or even a percentage of them are true, then we will face a smaller market with less choice and higher prices.

As of today, the sweet spot for cigars sold in America is around $5 – $10 per cigar. Imagine if that changes to $15 – $20 for a solid daily smoke and much higher for ultra-premium blends; it is not a reality I want to see.

So I humbly ask you to sign the petition to save the beautiful cigar culture of our country. (sign the petition here)

-W

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