Cigar boom starting to fade A product that has become a symbol of success in the 1990s is now getting attention from lawmakers and health activists.


When American pilot Scott O'Grady was rescued from Bosnia in 1995, President Clinton stepped out onto the Truman Balcony at the White House and celebrated by lighting a cigar. But in a Rose Garden session with reporters last month, the president sent different smoke signals, acknowledging that he wasn't conveying the right message to young people by indulging in an occasional cigar.

Clinton is not the only one who is having misgivings.

After reining in cigarettes and smokeless tobacco in decades past, regulators, lawmakers and health activists have begun to focus their attention on cigars, that product rediscovered by consumers nationwide as a symbol of sex and success in the 1990s.

Just as manufacturers resurrected the cigar in a sophisticated marketing campaign, the product has come under mounting scrutiny from Congress, the Federal Trade Commission, the inspector general's office of the Department of Health and Human Services and the National Cancer Institute.

States from coast to coast are launching anti-cigar campaigns. Activists across the nation are organizing conferences to combat cigars. U.S. cigar manufacturers are being forced to respond to unwelcome market forces - plunging stock prices, narrowing profit margins, rising insurance rates.

And the media's love affair with cigars is beginning to dissipate. A database search of 26 major U.S. newspapers over a 90-day period from late January through April identified 218 cigar-related articles. Of those, 82 articles - 38 percent - focused on the health risks of smoking cigars. That's a big increase over the coverage from 1994 to early May 1997 when 37 articles - less than 1 percent - dealt with cigars' hazards.

Other signs of a reversal are emerging: After U.S. sales of premium cigars jumped 35 percent to 370 million in 1997, they are expected to be flat this year.

"I think the big boom is over," said John C. Maxwell, a leading tobacco analyst with Davenport & Co. in Richmond, Va.

The industry feels besieged.

"Today we're witnessing the politics of punishment, a feeding frenzy in which the first victims are common sense and civility," Norman F. Sharp, president of the Cigar Association of America, said in an interview. "The fact that the industry has become a target was not unexpected. The fact is that these groups are special interest groups, just as we are a special interest group, and they're well-coordinated and well-funded. But in many respects they're their own worst enemy because most of them operate on the belief that there is no acceptable level of consumption of any tobacco product."

In recent months, the industry has come under attack on several fronts, including these:

* The federal government: In February, the FTC ordered major cigar manufacturers to begin filing special reports about their sales and advertising expenditures - the first time federal authorities have requested such information. The inspector general's office of the Department of Health and Human Services also launched an inquiry into how cigars escaped federal regulations and how teen-agers were being lured to smoke cigars and other tobacco products.

A month later, members of Congress criticized the cigar industry for luring young smokers by placing its products in movies and on television, prompting manufacturers to pledge to stop the practice. And in April, the federal government concluded in a major report that cigars can be just as deadly as cigarettes. Action on Smoking and Health, a national anti-smoking organization, immediately filed a petition with the FTC, requesting a cigar warning label. The FTC chairman backed the proposal.

* State governments: Last month, the Massachusetts Department of Public Health proposed regulations that would declare cigars a hazardous substance and require a warning label including tar, nicotine and carbon monoxide yields - making it the first state to seek labeling for those toxins. Legislation regulating cigars is moving through the Massachusetts Senate.

"We're seeing state concerns, and I think it's going to force federal action," said Gregory Connolly, director of the health department's tobacco control program. "Regardless, we're going to take action here. We're not going to see our children put at risk. It's foolish to sit back and do nothing."

In March, California's Department of Health Services began the nation's first advertising campaign - using television, radio and newspapers - to fight the rise in cigar use among teen-agers and young adults. In one TV ad, 70 cigarettes are stuffed in the mouth of a cigar smoker to illustrate the point that cigars contain as much as 70 times the nicotine of a cigarette. California's first survey tracking adolescent cigar smoking recently found that 11.4 percent of 16- and 17-year-old boys smoked cigars.

* Anti-smoking groups: This month, Stop Teenage Addiction to Tobacco, a national organization, sponsored [See Cigar, 4f] its first Youth Tobacco Forum, which raised several questions about cigars. Should retailers, for example, place them behind their counters? Should cigars be treated like other tobacco products by enforcing proof-of-age requirements? And should cigar makers disclose nicotine yields and ingredients in their products?

The Tobacco Products Liability Project is also holding a conference this month. Attorneys, public health officials, activists and academics will discuss legal and scientific issues involving tobacco, including cigars. And in June, the American Cancer Society is staging its first conference devoted to cigars. Scientific experts will examine the health hazards of cigars, write a consensus statement on the risks and recommend public policies.

Market forces have already made a statement. Cigar stocks, th darling of Wall Street in the not-so-distant past, are plunging even as the bull market charges on. Shares in General Cigar TC Holdings, a market leader in premium cigars, were trading as high as $30 in October. In April, it was trading around $14. Stock in Consolidated Cigar Holdings, another major maker of premium cigars, was selling as high as $41 six months ago. It fell to about $14 in April. Swisher International Group, a leading manufacturer of cheaper, machine-made cigars, saw its stock rise to $20 in October. Six months later, it was down to the $10 level.

"There's too much product in the pipeline," said analyst David J. Adelman of Morgan Stanley Dean Witter in New York. "A second issue is there's been some slowdown in retail sales."

Meanwhile, life insurance rates for cigar smokers are rising. Smokers usually pay two to three times as much as nonsmokers. Until now, that only meant cigarette smokers. "The basic premise was that people who smoke cigars don't inhale the smoke like cigarette smokers," said Peter Gottstein, an insurance consultant for First Midwest Financial Group Inc. The thinking, then, was that cigars were not as hazardous as cigarettes. That myth has been dispelled.

The industry, however, continues to defend the rights of smokers. "We market our product to mature, well-informed adults," said Sharp of the cigar association. "Most of them smoke cigars on an occasional basis. To the extent that new studies come out and add to the consumer's body of knowledge about a product that he freely chooses to enjoy, then we welcome it."

At the same time, the industry has taken action to limit the sal of its product. In February, the Cigar Association of America launched a campaign to discourage teen-age smoking, "Banding Together/Keeping Cigars Away From Kids."

The cigar association, the main trade group for U.S. manufacturers, sent out 100,000 kits asking retailers to obey the law by requesting proof of age when customers buy cigars. In a letter announcing the campaign, Sharp said, "We pledge to continue to uphold our guidelines in the marketing and promotion of our products to an informed, mature and adult-only audience."

Alec Klein is a staff writer for The Sun. News researchers De Lyon and Lisa Viscidi contributed to this article.

Pub Date: 5/10/98

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