July 20, 2010 - Improved economies and new tactics to fight smoking bans have led to increased sales of Cuban cigars this year, after a decline of 7.7 percent in 2009, the exclusive international distributor of the world's favorite cigars said on Monday.
"Through the end of May sales rose in practically all regions and were up overall 4.3 percent and the tendency continued in June," Manuel Garcia, vice president of sales for Habanos S.A. told Reuters in an interview.
The two big exceptions were in Spain and Greece, where current economic crises have hit sales, he said.
Cigar sales are an important source of income for the cash-strapped communist-led island, garnering $218 million last year.
The company, a joint venture with British tobacco giant Imperial Tobacco Group Plc, expects demand for premium cigars to fall a few percentage points in the coming years. (mperial Tobacco Group to Enhance Joint Venture Altadis Had With Habanos Cigars..) (The Habanos, S.A. Corporation (Habanos S.A.) is a Cuban joint venture with the share capital owned 50%-50% by Cubatabaco, a Cuban Government company and Altadis, a Spanish company owned by IMPERIAL TOBACCO GROUP PLC, a British Tobacco Company.)
To boost revenues, it [Habanos Cigars] is targeting the highest end of the market and fighting what amounts to a guerrilla war against the global spread of smoking bans. "Smoking bans and the economic environment do not allow you to smoke more, so 'smoke better' is our motto," Garcia said.
"If you used to spend 15 euros ($18.75) a day or a week on three cigars, now you might spend 16 euros ($22.50) on two higher quality ones," he said. Last year the number of millionaires reportedly increased significantly as the world recovered from financial crisis, which was good news for luxury products like the famed hand-rolled Cuban cigar, the Habanos executive said. "The more people with money, the better it is for us, if they smoke that is," Garcia said.
Sales are strongest in the Asia-Pacific region, in particular China, where the number of wealthy is growing faster than in other regions.
"It is all about value added, collectibles, limited editions, exclusives," said Javier Terres, the company's development vice president, in the same interview.
Terres pointed to the company's latest limited edition of a specially cured Cohiba cigar, the Behike, that sells for at least 35 euros ($43.75) and has received twice the orders as the number available.
He said a significant reduction in tobacco planting and cigar production last year did not mean Habanos S.A. was on the ropes. (Cuba - slashes tobacco land, demand for cigars down..)
"Although Habanos sales dropped in 2009, its share of the premium cigar market improved," Terres said, "and now accounts for 71 percent of unit sales and 85 percent of value." The numbers exclude the United States market, where sales are banned under the longstanding U.S. trade embargo against the island.
Revolutionary Cuba has never been known for backing down from a fight, so it is no surprise that Habanos is striking back against smoking bans. "Our fundamental objective is figuring out how we can get around the bans and move forward in an extremely adverse environment," Garcia said. "Even if you have money you have to find a place where you can enjoy a cigar, as it is not like a cigarette that you consume in five minutes on the run," he said.
The company has wholesale distributors in 70 countries, 142 specialized outlets called Casas de Habanos that promote cigars and other Cuban merchandise such as rum and coffee, and thousands of retailers that specialize in their product.
Terres said they were all hard at work promoting what Habanos calls "Comfortable Outdoor Smoking Areas" and private cigar clubs in countries such as Germany and the United Arab Emirates. The creation of outdoor smoking areas had already reversed a downward trend in Britain, Terres said.
"The turn-around demonstrates the culture of the Habano continues to exist, but in a completely new environment," he said.
Reference: Cuban cigar dealer fights bans, hard times Cuban cigar sales rebounding from 2009 decline by Marc Frank (Editing by Jeff Franks and Alan Elsner), Reuters, 7/5/2010.
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