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THE CIGAR INDUSTRY 



Cigars consumed in the -United States come from four sources: (l) domes- 

 tic factories, (2) customs bonded manufacturing varehouses, (3) shipments from 

 factories in Puerto Rico, and (4) imports, mainly from Cuba, the Philippines and 

 the Netherlands. Domestic factories provide the overwhelming share o-p cigars con- 

 sumed in this country — nearly $)k percent in i960. The customb -bonded manufac- 

 turing warehouse group and Puerto Rico each furnished about 3 percent, while 

 only about one-half of 1 percent consisted of imported cigars. 



Domestic Factories 



At the beginning of i960, there were 527 cigar factories in the United 

 States licensed by the Internal Revenue Service. These are often referred to as 

 "domestic" factories. The number of cigar factories has declined steadily for 

 a long time, reflecting to a large extent the disappearance of the numerous 

 small producers of hand-made cigars. There were around 3*500 factories 20 years 

 ago, and about 1,800 ten years ago. In the past decade several companies were 

 acquired by larger cigar manufacturing firms or merged. 



Trie great majority of cigars are produced by a relatively few large manu- 

 facturers. Available data indicate that in 1958* ^2 plants, each producing 

 over kO million cigars annually, accounted for 82 percent of total output; 39 

 plants each producing 10 to k0- million cigars annually, produced nearly ik per- 

 cent; while 55 plants each producing one-half to 10 million, accounted for a 

 little over 3 percent. The remainder, less than 1 percent of total cigar out- 

 put, was produced in 500 small establishments, each producing less than one- 

 half million cigars annually. Many of these probably produce cigars primarily 

 for direct and mail order sales to consumers. However, the trend towards in- 

 creasing concentration is continuing. 



Cigars are produced in 30 States and Puerto Rico. Pennsylvania and 

 Florida have been the leading cigar producing States for many years. With ap- 

 proximately a fifth of all domestic factories, Pennsylvania accounted for nearly 

 one-half of total U. S. output in fiscal 1959-60. Florida, with roughly an 

 eighth of all domestic factories, produced about a sixth of total output. Ala- 

 bama, Ohio, South Carolina, Georgia, New Jersey, Virginia, Indiana, Kentucky, 

 and Louisiana were also sources of manufactured cigars, each accounting for from 

 1-1/2 percent to 4-3/4 percent of total U. S. output. Of these, only Ohio and 

 New Jersey had 10 or more plants each; the majority of the other States had 3 

 or less. The remaining 19 States together accounted for less than 4 percent of 

 total U. S. production. 



There has been a marked increase in lower priced cigars produced by domes- 

 tic factories. Between 1950 and i960, the proportion of cigars shipped for con- 

 sumption that fell in the class priced at 4.1 to 6 cents (based on intended re- 

 tail price) increased from 36 percent to 40 percent, while those priced at 6.1 

 to 8 cents increased from 11 percent to nearly 18 percent. Conversely, those 

 retailing for 8.1 to 15 cents apiece dropped from 45 percent to about 33 percent. 



