Silvio Palomino Cigars - First Run long filler premium Dominican Cigars
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Fine Cigars Worthy Of Our Cuban Heritage

How a $2 cigar becomes a $10 cigar

a slightly biased story told by one of the few manufacturers that sells direct to the public.


Let's face it, if you've been smoking cigars as long as we have, you have probably asked yourself what is the difference between expensive cigars and inexpensive ones. Sure, we've all seen the ads and read the hype about rare aged tobaccos, legendary blenders, long aging periods and the like.


Yes, we have found certain cigars to be much more enjoyable than others, but rarely has the price been a factor. Some of our favorite and most consistent smokes over the years have certainly not been the priciest and we've been sadly disappointed by some of the most costly.


For our purposes here, we are talking only about premium long filler hand rolled cigars made from quality aged tobacco, not short or medium fill products.


Most cigar factories look much alike, with rollers working at their benches day in and day out. These factories are in countries where low wages prevail and rollers are paid by the stick. It is doubtful that the rollers in one factory are really any better paid or experienced than those in another.


Most manufacturers of premium cigars use very much the same tobaccos in the filler, binder and wrappers. Most can't grow enough for their needs and procure what they need from large wholesale warehouses usually located in the cigar manufacturing districts. These wholesalers are supplied by countless small growers throughout their regions. Each grower's product has been sorted, graded and labeled as to its source. Most quality cigars indeed use quality tobacco and it is not uncommon to find the very same tobacco in many of the industry leader's cigars.


Each manufacturer has its own recipes (blends) which make each cigar unique. The only judge of whether a particular cigar has a nicer blend is you, the smoker. You either enjoy it or you don't. Not all cigars, no matter how good or pricey are going to be enjoyed by all smokers.


We doubt however that any manufacturer spends more than $1.00 to $1.75 to make any cigar regardless of blend, roller, tobacco and manufacturing overhead. These cigars must then be packaged, shipped to and taxed by their destination country. The current US tax rate on imported cigars is just under 60% of the wholesale cost of the cigar.


If our cigar costs $1.00 to make it becomes a $1.57 cigar after Federal taxes. Lets add another 30 cents for the cost of the fancy box and the shipping. Now we're at $1.87 for our cigar landed in the United States. Since business can't survive without profit, these cigars must be priced at $2.40 to $3.00 or more, and they're still in the manufacturer's warehouse. Now comes the costs associated with the distribution, promotion and sale of our cigar to you.

If you could buy your cigars from the manufacturer, $2.40 to $3.00 dollars gets you a good cigar. If you don't buy your cigars from the manufacturer, this is what happens next. The cigars must be sold either by distributors (large companies that carry most everybody's cigars) or to the retailers by the manufacturers themselves. Very few manufacturers will sell direct to the public. Distributors however, not only sell to retail stores, but direct to the public as well, either online or in their cigar super-stores. They will sell to you at close to the same price a retailer pays, but obviously that price is still higher than they paid the manufacturer.


Most large cigar manufacturers and/or distributors advertise heavily. Full page magazine ads, lavish trade shows, lots of samples, the “plantation” for you to visit and the general overhead of running their business is expensive. The sales reps get 10-15% commission too. All this most likely adds a buck or two a stick to the cigar. Our cigar now costs between $4.00 and $5.00 from the distributor, the price most retailers must pay for a premium cigar.


Retailers (the local cigar shop) keystone (selling price is twice the cost) their cigars. They must do this to support their business. While it may not seem fair for a retailer to pay $4 for a cigar and sell it to you for $8, he has to do that just to stay in business. Contrary to popular belief, the average guy in the retail cigar business has expenses that border on outrageous these days. If you like going to the local cigar lounge and enjoying the facilities, someone has to help pay the rent, electricity, payroll, insurance, etc. Many states also add their own tobacco tax as well.


Our cigar has gone from about $2-$3, after it arrives in this country, to $8 to $12, when all of the other promotion and marketing, distribution, taxes, and retail store markup are added. Despite all the hype, fancy ring(s), lavish boxes, suave ads, and BS stories, IT IS THE STILL THAT SAME CIGAR, rolled in a foreign country by the same rollers using tobacco purchased at the same warehouses.


Here comes the sales pitch. At Silvio Palomino Cigars, we have made the decision to forgo the distributors, advertising, Vegas trade shows, sales reps, and retail stores and use the power of the Internet and social networking to sell direct to you before all that additional cost is added to your cigar. You can, indeed, get the same quality Dominican cigars for about 1/3 the price.


Mitch & Silvio
Silvio Palomino Cigars
http://www.palomino-cigars.com
info@palomino-cigars.com