U.K. cigar pricing - it’s not price gouging, so we'll show our workings.
Let’s start out with the fact that we, as like all importers and retailers are in the tobacco business to make a profit. A fair profit in return for the work we put into selling cigars. No one goes in to retail or distribution as a non-profit, that’s just not realistic.
Our prices since we launched in February last year are some of the lowest in the country. We wanted to make an impact on the U.K. cigar scene with our exclusive boutique New World brands and absorbed a huge amount of tax and duty, in order to bring you the most affordable cigars. Sadly we can no longer afford to absorb this amount of tax and duty if we wish to continue bringing the best New World cigars.
New shipments will be priced to reflect the reality of British tax and duty. They will be surprising price rises but we have taken a hit on our own margin to keep them as realistic as possible.
In order to be transparent with our price rises, we will show you how prices are calculated - something no one wants to show you.
Many of you know that tobacco duty is £305.32 per KG but that’s not just it. We will show you a calculation for shipments from the USA.
What difference does the shipping country of origin make?
Many countries which ship tobacco (not Cuba or USA) are on a list which are customs excise duty exempt, that’s 25%. Also at the end of last year, the Trump government imposed a 25% import tax on U.K. goods which resulted in a retaliatory 25% import tax on USA imported goods.
For example, a new delivery of 9.94kg of cigars costs us:
Customs duty 25% £755.58
USA retaliatory tax 25% £755.58
Customs vat 20% £1533.67
Customs excise £3034.88
Total £6079.71
We are VAT registered so can remove the VAT paid leaving £4546.04
That’s £457.35 per kg, more than the £305.32 per kg smokers talk about. That’s £0.458 per gram of cigar.
Your average robusto weighs about 13 grams, so just the tax and duty on that cigar would be £5.96
So a robusto costs us $2.70 and a box is 20 cigars = $54 and costs us on average $5 to ship per box = $59.
At the last purchase the exchange rate was £1: $1.32
$59 = £44.70
Tax and duty per cigar is £5.96 x 20 = £119.20
U.K. shipping is about £5 per box (the cost of transport from airport to storage)
Your box is now £163.90 per box. Now that’s the cost without a single penny of profit added.
The average margin would be 40% and so 40% Gross Profit on this box = £65.56 (note this isn't the profit we actually make, as out of this comes all our other costs including storage fees, website costs, sales fees, card provider charges, the list goes on...)
The box price is now £229.46 and of course we have the final cost to add which is our friend, VAT at 20%. This brings us finally to a retail price of £275.36 or £13.79 each.
And that’s how a “cheap” box of cigars becomes a U.K. priced box of cigars. It's a sad reality, but doesn't make for pretty reading we know. Do get in touch if you have any questions for us