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Want to Double Your Money?

Want to Double Your Money?

By P Rogers March 17, 2017

If you’re interested in collecting, you’ve probably wondered at least once what cigars are best to collect, and what will go up in value. Collecting Cuban cigars can get into the weeds quickly, and you want to get the most out of your investment while saving yourself unnecessary time and trouble. There are two very important things to keep in mind when adding to your humidor: history and brands. We’re breaking it down and giving you a head start on making the most out of your investment. Want to double your money? Here’s how.

Pre-embargo Cuban cigars, produced prior to February 3, 1962 refer to the rarest category of collectable Cubans. It is on that date that President John F Kennedy signed Proclamation 3447, effectively banning all trade with the small island nation of Cuba.  Cigars produced prior to this are valuable for a few reasons. Scarcity is the most obvious one; cigar collectors tend to burn their prized possessions for their enjoyment, which means collectors have had 55 years to burn up their supply. These cigars also mark a historical moment in time. Prior to President Obama loosening restrictions in 2014, you were not allowed to own, purchase or possess any Cuban product produced after February 3, 1962.  Legally speaking, you needed proper documentation such as a sales receipt, tax stamp, etc. to verify a cigar or any Cuban item was purchased prior to the Proclamation. Those that have cigars pre-embargo cigars AND documentation are sitting pretty on their investment. 

From 1962 to 2000, the cigar industry entered an era of slow and constant growth, and is considered to have produced some of the best Cuban cigars. After the Embargo, the Russians entered Cuba and subsidized much of the nation’s socialist programs. This had a direct effect on the cigar industry as better infrastructure was put into place. The country experienced an influx of cash and was light on responsibilities; it was an easy time in Cuba. The cigar rose to the occasion as the symbol of national pride. You find wonderful cigars constructed through the late 1960’s. The prosperity wouldn’t last. Once President Regan brought an end to the Cold War (and Russia went broke), the cigar industry and the Cuban people suffered as the cash dried up. The cigar industry was fully controlled by the Cuban government, and as their most popular export and number one money maker, it suffered the least during this time of national financial depression.  Dunhill and Davidoff were major producers and made amazing cigars throughout this period. Many cigars rated at 100 points are from this era, i.e. the Dunhill-made Partagas releases. These cost roughly $200 to $300 per box when they were released in the 1970’s and now sell between $4000 and $6000 a box. Many boxes of Davidoff Cubans from this era cost $300 to $400 (a high price at the time) and now sell for $10,000 to $15,000.

In 2000, the global tobacco giant Altadis purchased half of Habanos S. A. The marketing group greatly influenced the offerings of Habanos with a major restructuring of the brands and lines. With the introduction of more Edicion Limitadas (Limited Edition) and other special releases, more traditional marketing practices of the US were implemented. Altadis also began releasing the “Regional Edition” program. In theory, the idea is to release blends and formats in limited quantities to suit the tastes of that region of the world. In reality, the RE program become a sought after collectors item, some of which have already soared in value. This joint venture has also created other notable creations such as the 40th Anniversary Cohiba Behike in 2006. These complete humidors with 50 individually numbered cigars have tripled in value. The few that trade hands have a current value of $180,000 to $220,000. I would be remiss if I did not mention the Reserva and Grand Reserve programs as well: one brand was chosen to represent the finest cigar that Cuba could produce in that given year. These cigars sell for outrageous prices and appreciate at an above average rate.  

Altadis was acquired by Imperial Tobacco in February of 2008. Imperial Tobacco Group, a multinational company out of the United Kingdom, is the fourth largest tobacco company and the world’s largest producer of fine tobacco products. They own Davidoff and both brands of Montecristo (Cuban and Dominican). They continued to expand both the Edicion Limitada and Regional Edition programs. There are rumors and speculation that Imperial Tobacco is hoarding the most popular cigar brands and formats to be ready for the lifting of embargo within the US. It appears as though Imperial Tobacco continued to slowly expand the amount of Regional Editions and Limited Edition programs. We now consistently see three “EL’s” released per year and these have become sought after items.  

With the supply-demand imbalance that is coming when Americans are able to buy Cuban cigars legally within the US, expect prices to soar. Within the collecting community cigars produced prior to the embargo being lifted will be much more valuable.  In fact, we have already seen a change in pricing. Cigars produced prior to 2015 are already trading at slightly above average returns relative to historical returns.  

Regular production cigars of popular brands such as Cohiba, Monetcristo and Bolivar tend to appreciate 6 to 10% per year, usually 3-4 years post production. Regional Edition cigars appreciate a bit better on average, but the data suggests that a few Regional Editions in particular are quite popular by collectors and soar in value. Not unlike picking stocks, some appreciate much quicker than others. The easiest way to guess here is by the numbers: the more obscure the region that the cigar is made for, the fewer boxes are produced, so it is more likely the box will appreciate.  The Edition Limitadas are an easy bet on higher values. Historically, these appreciate at 8%-12% per year. Again, popular brands and formats appreciate faster. Random special commemorative releases will also continue to be quite popular among collectors. The safest bet? Reserva and Grand Reserva. These tend to appreciate the moment they are released, doubling in value within 5 years and then settling into a healthy return profile in the high single digits.

If you want to take your collecting a little further, you may have looked into limited production humidors. While they are impressive, they’re also very difficult to judge in terms of appreciation. The 2005 Partagas Humidor, with only 200 made world wide, is currently being offered at $35,000. The Cohiba 35th Anniversary humidor sold at $22,000, and Cohiba 50th Anniversary Behike Humidor started at $220,000. 

Just a reminder for those of you looking to turn your passion for cigars into a money maker: cigars need proper storage, with an average temperature of 70 degrees Fahrenheit with 70% humidity. Improperly stored cigars can dry out, wrappers can crack, and the cigar can lose value and..the horror.. become unsmokable. Always examine your cigars, and be diligent in their storage after purchasing to protect your investment. 

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