Are you the type of person who like to hoard things? Do you have any serious spare cash just lying around? Can you endure smoking that rare cigar you’ve just acquired? Are you also into gambling perhaps? If the answer to all these questions is an astounding “yes”, then you might want to looking into the realm of cigar investing. However, you’re unsure of where to start. Fortunately for you, we’ve a simple guide that will help you do so.
How Does Someone Invest in Premium Cigars?
Investing in premium cigars involves purchasing high-quality, rare, or collectible cigars with the intention of selling them later at a higher price, or simply holding them and hoping their value goes up in order to show them off. Still, cigar investment, much like wine investment, requires patience, as the value of premium cigars can increase significantly over a longer period. It's also a market driven by both quality and sentiment, so changes in consumer tastes can impact values. Also, sometimes you win, and sometimes you can lose.
Here are some key steps and considerations for investing in premium cigars:
- Research and Knowledge: Understand the cigar market, including which brands and types are most sought after. This involves learning about the history, production, and aging process of cigars.
- Selecting Cigars: Invest in high-quality cigars known for their aging potential. Limited edition, vintage, and rare cigars often appreciate in value over time.
- Proper Storage: Cigars must be stored in controlled conditions to maintain their quality. This usually means using a humidor, which maintains the correct humidity and temperature.
- Monitoring the Market: Keep an eye on the cigar market to understand trends and know the best time to sell.
- Networking: Engage with other cigar enthusiasts and collectors. Being part of cigar clubs or online forums can provide valuable insights and opportunities.
- Authenticity and Provenance: Ensure that the cigars are authentic and have a traceable history. This is crucial for their value.
- Diversification: Just like any other investment, diversifying your cigar portfolio can help manage risk.
- Understanding Risks: The value of cigars can fluctuate, and they are sensitive to storage conditions. As we mentioned earlier, it is crucial to recognize and accept these risks.
- Legal Considerations: Be aware of the legal aspects, including taxes and regulations related to tobacco products in your country or state.
- Enjoyment Factor: Many people invest in cigars not just for potential financial return but also for personal enjoyment. Some collectors invest as a hobby and appreciate the craftsmanship and history of cigars.
Why Should You Invest in Premium Cigars?
Investing in premium cigars can be an intriguing choice for new and experienced stogie enthusiasts alike. With that being said, below are some amazing reasons why it can be a good decision, as long as it’s done correctly, of course.
Reason #1: Value Appreciation
Rare or limited edition cigars often appreciate in value over time, making them a potentially profitable investment. Now, this can be contributed to several factors:
- Scarcity: Limited edition cigars are produced in restricted quantities, making them scarce and often more desirable to collectors and enthusiasts. This scarcity can drive up their value over time.
- Ageing Potential: Like fine wines, some cigars are known to improve with age. The aging process can enhance the flavor and smoothness of the cigar, making aged cigars particularly sought after.
- Brand Reputation: Cigars from prestigious brands or those made by renowned cigar makers often appreciate more because of the brand's reputation for quality and craftsmanship.
- Special Events or Discounted Stogies: Some cigars are attributed to upcoming or past special events as well as those that have been discontinued, as these too, can become collectible items.
- Condition and Storage: Properly stored cigars in optimal conditions (humidity and temperature) maintain or even increase their value over time. Conversely, cigars not stored properly can lose value.
- Market Trends: The appreciation of cigar values can also be influenced by trends in the cigar market. For instance, if there's a growing interest in cigar collecting or a particular brand becomes highly popular, the values of related cigars can increase.
- Celebrity or Notable Endorsements: Cigars that are favored or endorsed by celebrities or notable figures can also see an increase in their value due to the added prestige.
Reason #2: Collectability
Premium cigars can be highly collectible, especially those from renowned brands or historic batches. Premium cigars are known for their exceptional quality and craftsmanship. In fact, they are often hand-rolled using the finest tobacco leaves, which contributes to their uniqueness and collectability. Many cigar manufacturers even release limited edition cigars, which are highly sought after by collectors. These may include rare tobacco blends or unique aging processes.
Reason #3: Hedging Against Inflation
Tangible assets like cigars can act as a hedge against inflation. Some premium or rare cigars can appreciate in value over time, especially limited editions or those from renowned brands. This appreciation can sometimes outpace inflation. Also, the value of collectible cigars is heavily influenced by market demand. So, if there's a growing interest in cigar collecting, prices may rise. Keep in mind though, unlike more traditional investments like stocks or bonds, cigars can be less liquid. Selling them, especially for a fair price, might not be as straightforward.
Reason #4: Limited Production
Yes, many high-quality cigars are produced in limited quantities, which can drive up their value. This can be attributed to one or more the following, thus making them more exclusive and often more desirable to aficionados:
- Quality of Tobacco: High-quality tobacco is a limited resource. The best tobacco leaves are often grown in small, specific regions with ideal climate and soil conditions. This limited availability of premium tobacco naturally restricts the number of cigars that can be produced.
- Aging Process: Many high-end cigars undergo a lengthy aging process to enhance their flavors. This process takes time and space, limiting the number of cigars that can be aged at any one time.
- Artisan Craftsmanship: Many premium cigars are hand-rolled by skilled artisans. This craftsmanship is time-consuming and requires a high level of expertise. The reliance on human skill and labor naturally limits production capacity.
- Exclusivity and Branding: Limited production can create a sense of exclusivity and luxury around a brand. By controlling the supply, manufacturers can maintain high demand and premium pricing for their products.
- Special Editions: As we touched upon earlier, some cigar manufacturers produce limited-edition cigars to commemorate special occasions or experiment with new blends. These are typically made in small batches to test the market or maintain their unique appeal.
- Crop Variability: The quality of tobacco crops can vary from year to year due to environmental factors. Some years may yield exceptional crops that are used for limited production runs, while other years might not meet the high standards required for premium cigars.
- Regulatory and Economic Factors: Various regulatory, economic, and political factors in cigar-producing countries can also impact production. For example, changes in trade policies, economic sanctions, or local regulations can all affect how many cigars are produced and exported.
Reason #5: Cultural and Historical Significance
Cigars often have rich historical and cultural associations, which can make them especially appealing to collectors who are interested in these aspects. Plus, increase the cigar’s overall net worth.
Reason #6: Diversification
Investing in cigars can diversify an investment portfolio.
Reason #7: Enjoyment Factor
The enjoyment of collecting and potentially using the product adds a unique aspect to this investment. Smoking a cigar is often seen as a way to relax and take a break from the hustle of daily life. It can be a meditative, slow-paced activity that allows for reflection or casual conversation.
Reason #8: Aesthetic Value
The craftsmanship of cigars and their packaging can have aesthetic appeal. For instance, the packaging of premium cigars – often in beautifully crafted boxes or humidors – also adds to their aesthetic beauty. Some boxes are even works of art in their own right.
Reason #9: Global Market
The market for cigars is global, offering a wide range of investment opportunities.
Reason #10: Growing Popularity
The popularity of cigar smoking in certain circles is growing, potentially increasing demand.
Reason #11: Brand Reputation
Well-established brands often maintain or increase their value over time. That’s because certain brands have a prestigious reputation in the cigar world, such as Alec Bradley, Oliva, Cohiba, and many, many more. So, in turn, their products become collectible purely based on brand name and history.
Reason #12: Aging Potential
Cigars can improve with age, enhancing their value as we mentioned earlier.
Reason #13: Cultural Value
Cigars hold cultural significance in many societies, adding to their allure as collectibles. For examples:
- Artisanal Craftsmanship: The production of cigars is considered an art form in places like Cuba, the Dominican Republic, and Nicaragua. The skill and tradition involved in growing tobacco and rolling cigars are highly valued and often passed down through generations.
- Cultural Identity: In countries where tobacco cultivation and cigar manufacturing are important, cigars can be a significant part of cultural identity. For instance, in Cuba, cigars are not just a product but a symbol of national pride and cultural heritage.
- Literary and Cinematic Iconography: Cigars have been featured in literature and films, often used to symbolize a character's traits such as power, contemplation, or rebellion.
Reason #14: Gifting Appeal
High-quality cigars are often sought after for gifting, be it for birthdays, weddings, promotions at work, etc. which can sustain their market value.
Reason #15: Exclusive Access
Some cigars are exclusive to certain regions or clubs, adding to their rarity and value. This can be due to several reasons such as:
- Geographical Indications: Much like Champagne in France or Scotch whisky in Scotland, certain cigars are exclusive to specific regions due to geographical indications. This means the cigar's unique characteristics are largely determined by its geographical origin, and only cigars made in that region can bear the name. For example, Cuban cigars are renowned worldwide and can only be legally produced in Cuba.
- Limited Production and Specialty Blends: Some cigars are exclusive to certain regions or clubs because they are produced in limited quantities or are specialty blends. High-end cigar manufacturers often produce limited edition cigars using unique tobacco blends or aging processes, making them exclusive.
- Trade and Import Restrictions: Political and economic factors can also play a role. For instance, the United States. has had trade restrictions with Cuba, which makes authentic Cuban cigars hard to come by in the U.S. market. This exclusivity is often due to trade embargoes or regulations.
- Club Exclusivity and Branding: Some cigars are exclusive to particular clubs or retailers as a branding strategy. Exclusive products can offer a sense of prestige and uniqueness, appealing to a niche market. Clubs may have special arrangements with manufacturers to produce cigars that are only available to their members.
- Market Demand and Consumer Preference: Market dynamics in different regions can lead to certain cigars being exclusive to those areas. Consumer preferences vary widely across different cultures and regions, and manufacturers may produce certain types of cigars exclusively for specific markets.
Reason #16: Social Status Symbol
Cigars are often seen as a status symbol, which can sustain demand. For instance, cigars have often been associated with affluence and status. In many parts around the globe, smoking a high-quality cigar is seen as a sign of success and sophistication.
Reason #17: Market Resilience
The cigar market often shows resilience during economic downturns, as something we touched upon earlier here.
Reason 18: Expertise Development
Collecting cigars can lead to the development of expertise in a unique field through various avenues, such as the following:
- Knowledge of Tobacco Varieties and Growing Regions: Just as a wine enthusiast learns about different grape varieties and wine regions, a cigar collector gains expertise in the types of tobacco used in cigars, their flavor profiles, and the regions where they are grown. This includes understanding the differences between tobaccos from countries like Cuba, Nicaragua, and the Dominican Republic.
- Understanding of Cigar Production: Collectors often delve into the process of cigar making, from the cultivation of tobacco to the art of rolling cigars. This includes learning about the fermentation process, the aging of tobacco, and the craftsmanship involved in creating different cigar shapes and sizes.
- Development of Sensory Skills: Regularly sampling different cigars hones the collector's ability to distinguish subtle flavors and aromas. This sensory skill is similar to that developed by sommeliers or chefs, enabling collectors to appreciate and critique cigars on a deeper level.
- Historical and Cultural Knowledge: Collectors often become well-versed in this history, including the role of cigars in different cultures, famous figures associated with cigar smoking, and historical shifts in the cigar industry.
- Market Knowledge and Valuation Skills: Serious collectors learn to navigate the cigar market, including limited editions and rare finds. This involves understanding factors that influence the value of a cigar, such as its age, rarity, brand, and condition.
- Regulatory Knowledge: As with any collectible, there are legal and regulatory aspects to consider, especially with Cuban cigars due to historical trade embargoes. Navigating these regulations requires a specific set of knowledge.
Reason 19: Networking Opportunities
The cigar community can offer networking opportunities with other collectors and aficionados. Similar to wine tasting, cigar smoking can be an experience of connoisseurship, where individuals appreciate and discuss the flavors, aromas, and qualities of different cigars.
Reason #20: Sensory Experience
The experience of tasting and smelling fine cigars can enhance their perceived value. For instance, picture a scene with a close-up of a collection of fine cigars, displaying their rich brown hues and textured surfaces. In the background, there's a softly lit, elegant room with leather chairs, perhaps suggesting a luxurious lounge. Wisps of smoke gently rise from a lit cigar, adding a dynamic and atmospheric touch to the composition. This is the type of sense of relaxation and indulgence associated with the experience of enjoying a cigar that really adds to its value.