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Cigar 101

Guide to Investing in Cigars

J. Bennett Alexander Alexander's picture

J. Bennett Alexander

Are you a hoarder? Do you have significant spare moolah lying around? Can you resist smoking a rare cigar you’ve just acquired? And, do you like to gamble? If the answer to all these questions is “yes,” then you might be cut out to invest in cigars.

HOW TO INVEST IN CIGARS

First, you need to understand that the market for investing in cigars, assuming you’re investing to later sell those cigars at a profit, is concentrated on Cuban cigars, a good number of them “pre-embargo,” meaning made prior to 1962. Those cigars are then sold mainly at cigar auctions. Sometimes you’ll see rare or vintage non-Cuban cigars available. Anything not considered rare is usually only at charity auctions. So, let’s look at sage tips on how to invest in cigars, mainly Cuban ones, mainly vintage or rare vitolas, that you intend to hold for several years and then sell them, probably at auction.

1. FIND THE RARE CIGAR

The experts agree that, today, some of the best cigars to invest in are Cuban limited-edition releases. These are cigars made specifically for geographic regions or individual nations. In 2018, at the Cigar Aficionado Big Smoke in Las Vegas, Rob Fox, of James J. Fox Tobacconists, the oldest cigar shop in London, explained.

“Spain has its own cigars. Britain has its own cigars,” Fox said. “These are cigars in traditional brands but the size is unusual. I’ve been buying a lot over the last two years. We’re lucky because [U.K. distributor] Hunters & Frankau has put a lot of care and attention into their regionals. Spain as well.”

The value of these regional edition cigars at auction is not only that the quantity is limited, but to get them, you have to travel to the country for which they’re made. That’s the only place they’re sold. These cigars tend to become more valuable over time. This increases the investment potential. Fox cited the example of the Punch Diademas, a 2009 limited release. A box of 10 retailed for about $221. Nine years later, that same box sells for about $885.

“The Cuban Regional Editions to me are very special,” Fox said. “A box of Saint Luis Rey Marquez was $100 on the shelf in Cuba in 2016. It sells for more than twice that [in 2018].”

Fox sees the most potential for turning a profit in the Reservas and Gran Reservas. These are cigars made with aged tobacco that come from specific vintages that were banner crops. Fox also likes special anniversary releases, like the Cohiba Majestuosos 1966, released in 2016 in honor of Cohiba’s 50th anniversary.

“The list price in England was $10,336, but now [in 2018] it’s up to $23,257. There’s been a big boom in demand for luxury goods that’s been fueling that price escalation,” Fox recounted in a seminar.

2. KNOW THE MARKET

Selling when there’s a demand for luxury goods is a good thing. Sometimes, though, the market is not ripe for your cigars. Maybe there’s an economic downturn, or there’s a glut of desirable cigars. It pays to know what’s going on, so study the market. And follow the auctions. Those pre-embargo Cuban cigars often sell for the most at cigar auctions. In 2018, in an online auction, the London cigar retailer C. Gars Ltd. sold a cabinet of 500 pre-embargo Punch Coronas made sometime during the 1950s. The price was $43,385. It’s not clear who owned the cigars or who bought them, but the same cigars had been auctioned in 2017 for $51,564. Maybe the seller needed to wait longer to turn a profit. Maybe the seller needed the cash.

3. VINTAGE CIGARS

Perhaps even hotter than the limited releases are cigars that aren’t even made any more. The highest demand is for cigars like the Cuban Davidoff, a cigar that has not been made for more than three decades. The supply is low and people like to smoke them. In 2018, a box of Davidoff Chateau Latour, 5.625 x 42, was priced at $5,000 for a box of 25. So, $200 per cigar. If you want to buy the box and hold it for a few years, you’re almost certain to get a good return on your investment. Assuming, of course, that you don’t smoke a few.

4. BUYING AT AUCTION

Andy Ryan is a director at James J. Fox Tobacconists. He suggests the following if you’re looking to buy cigars at an auction. Ryan looks first at the wrappers, making sure they have an “oily sheen,” are smooth and don’t have over-sized veins. Then he smells the foot of the cigar for “essential aromas.” Then, and this would seem obvious, Ryan advises that you don’t buy cigars you don’t like because they’re not going to get better in the humidor.

Ryan recently recommended these cigars, among others, for aging: Por Larrañaga Magnificos, a U.K. Regional Edition with 2007 and 2008 releases; cabinets of Ramon Allones Specially Selected cigars from 2014 and 2015; and Saint Luis Rey Double Coronas in cabinets of 50.

“Very hard to find, and generally very good quality,” Ryan told Cigar Aficionado magazine. “Will age well, possibly forever.” Ryan also included the Cohiba Siglo VI Gran Reserva, calling it the favorite all-time cigar of many collectors.

5. AGE, AS A VERB

So, you’ve found a limited release from, say, 2020 and you want to hold it – in a properly maintained humidor, of course – and sell it later. You need to let the cigars mature. The experts advise that with age comes a better return. Let’s say you were at the Habanos Festival in Cuba in 2015 when the Montecristo 80 Aniversario (not to be confused with the non-Cuban “80 Anniversary”) was released. The cigar is 6.5 x 88, the size of a Double Edmundo, but with a stronger blend. Only 30,000 boxes of 20 were produced and originally retailed in London for about $53 a cigar, or a little more than $1,000 for the box. Two years after its release, a box sold for more than $2,200 at a London auction. Over time, fewer of these cigars will be available. What would a collector pay today? Or in five more years? Age matters. Be patient.

6. STRONGER IS BETTER

Mitchell Orchant, the managing director of London cigar retailer and auctioneer C. Gars Ltd., recommends that you look for fuller blends. They’ll age better, he says. So, Cohiba, Partagás and Ramon Allones are on his list.

7. COLOR

There are so many details to take into account. Orchant also advises that, “Darker-wrapper leaf is generally more attractive and achieves higher prices than lighter-wrapper leaf. Although Cuban wrapper lends little to the flavor or strength of the cigars, many find it more aesthetically pleasing.” So, there’s that.

8. BUYING THE CIGARS

It’s the same caution as when you buy cigars you’re going to smoke yourself. Buy your cigars from a reputable seller. Needless to say, don’t buy the cigars from the guy on the street outside your hotel in Havana. If you’re going to Cuba to buy cigars, make sure you’re doing so from official cigar stores.

9. INSPECT THE CIGARS

Again, just as you shouldn’t buy a box of cigars you’re going to smoke without opening the box, you should definitely inspect cigars you’re intending to hold as an investment. The last thing you want to be surprised by is a box of cigars that have inconsistent colors or little holes in the wrapper from cigar beetles.

10. NON-CUBAN CIGARS

As mentioned, while there are regular cigar auctions online for non-Cuban cigars that might be hard to come by, they don’t often end up at the big auctions. Of course, if you have a full box of Padrón Millenniums just sitting around in your humidor, a buyer shouldn’t be hard to find.

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