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Stogie craze over, analysts say

Updated:
ALBANY, N.Y. (AP) -- Two years ago, cigar sales were smoking.

Buoyed by glossy magazines touting stogies as an accessory of
the hip elite, sales skyrocketed. In 1996, sales of premium,
hand-rolled cigars jumped 67 percent. The next year, they leapt an
additional 30 percent.

Cigar night at the Mansion Hill Inn, which once boasted the
longest continuously running cigar night in the country, couldn't
compete with the dozens of restaurants and bars offering their own
promotions.

"Everybody was doing a cigar event," said owner Steve
Stofelano Jr.

But indications now are that the fad is flaming out -- and fast.

Across the Hudson River in Troy, J. Cabrella Inc., a 2-year-old
cigar shop, has filed for bankruptcy, citing more than $71,000 in
obligations to creditors.

Love of the Leaf, a shop five miles north in Loudonville,
snuffed its operation months ago. And clearance deals are the norm
at overstocked cigar shops across the region.

Even cigar nights at bars and restaurants aren't the draw they
once were. When Stofelano offered one this past Father's Day, he
said, he had to struggle to get 30 guests. And the ones who came
were the old regulars, not the young and trendy.

For them, cigars have come and gone. "Everybody, if you will,
has been there, done that," he said.

It's the same story 200 miles west in Rochester, where
restaurateur Ziad Wehbe isn't bothering to replenish cigar stocks
at Oasis Mediterranean Bistro.

"I don't think anyone cares about them any more," he said.

The "cigar great awakening" was bound to crash, said Gerald
Celente of Trends Research Institute in Rhinebeck, N.Y. The boom
was marketing-driven, rather than consumer-driven, and reality
couldn't sustain the imagery, especially among women.

"It's very unfeminine, and they stink," he said. "Despite all
the hype and the glossy advertising, women were never going to
become cigar smokers en masse."

And cigar smoking has a heavy "repulse factor" that makes
cigar smokers a nuisance at parties and restaurants, Celente said.

For 1999, analysts predict a 10 percent fall in sales of premium
cigars. Three cigar companies, JR Cigar Inc.; General Cigar
Holdings and Dimon Inc., showed quarterly revenues down
significantly from the same period in 1998. Holt's, another cigar
company, saw its stock rating downgraded by Prudential Bache.

"The fact is there's a limited market out there, and its
saturated," Brown Brothers Harriman analyst Roy Burry said.

The cigar business crested in 1964, when Americans were smoking
9 billion yearly. By 1992, government health warnings had caused
the industry to fall some 77 percent, to 2.1 billion cigars yearly.
Then, suddenly, things changed. There was a 14.6 percent jump in
sales in 1994, followed by a 31 percent rise in 1995.

"It was seen as one of life's affordable little luxuries, like
fine wines and single malt scotches," Sharp said.

The soaring economy didn't hurt. Imports poured in from some 18
countries, and new outlets continued to sprout. Prices climbed.
Then, as quickly as it arrived, the trend began snuffing out.

"It will never go back to what it was during the bonanza. All
these people were gung-ho. Now that's come back down," said Lee
Zyniecki, who has owned Edleez Tobacco for 19 years.

"The craze is over," said Norman Sharp, president of the Cigar
Association of America.

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