Cuba’s cigar industry – Smoked out


Economist:

ONE of the reforms approved at this month’s Congress of Cuba’s ruling Communist Party was a change in the treatment of the country’s 3,000 or so state-owned enterprises. Their management will enjoy more autonomy, but they will be subjected to thorough audits. That follows a trickle of corruption scandals. The latest involves Habanos, the state cigar monopoly.

For over a decade Manuel García, Habanos’s commercial vice-president, was the public face of the Cuban cigar industry, living a jet-set life that most Cubans can only dream of. But this year Mr García was not there to greet visitors at the Havana cigar festival. Since August 2010 he has been in jail, accused of masterminding graft on a grand scale.

The cigar industry was nationalised shortly after the 1959 revolution. But it was only in the late 1980s that Cuba took control of distribution, informing foreign retailers that it would supply only one distributor per region, in return for a 50% stake in the business.

That did not prevent the small-scale peddling of black-market cigars on the streets of Havana. But in the past decade the system has faced a bigger threat from dozens of online cigar retailers operating mainly from Switzerland and the Caribbean. Many operated legitimately, but some offered improbably low prices.

Cuban investigators believe they were able to do so because Mr García and ten of his staff, who also face trial, sold genuine cigars at a fraction of their normal price to black-market distributors in the Caribbean in return for bribes. Up to 45m cigars may have been sold this way. Since handmade habanos fetch up to £40 ($65) each in shops in the St James’s district of London, the loss was considerable.

The fraud also hurt Imperial Tobacco, a British company which inherited a 50% stake in Habanos when it bought Altadis, a Franco-Spanish firm, in 2008. Imperial has made no comment on the affair. But like the government, it will hope that the new management team at Habanos preserves the lucrative monopoly in Cuba’s most famous product.

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World’s biggest cigar festival opens in Havana


Telegraph: Billed as the biggest international event of its kind, the festival, now in its thirteenth year, is a showcase for the Communist island’s best known and most iconic export. It also provides a rare splash of decadence in an otherwise impoverished no-frills society.

Sales of Cuban cigars dropped sharply in 2008 and 2009 as the global financial crisis and a series of smoking bans around the world began to bite, sapping demand for a product once conspicuously consumed by Left-wing revolutionaries like of Fidel Castro and Ernesto Che Guevara, as well as the world’s rich and famous.

But 2010 marked a return to form with sales rebounding thanks to a growing appetite for the pungent luxury item from consumers in China and the Middle East.

“We are moderately satisfied,” Javier Terres, vice-president of Habanos SA, the exclusive seller of all brands of handmade Cuban cigars around the world, said with understatement at the festival’s opening. Cigar sales generated the equivalent of £230 million last year, he added, a vital source of hard currency for a government that still regards capitalism as a dirty word.

The festival caters both to connoisseurs and the merely curious, offering black-tie galas, visits to tobacco plantations, blind cigar tasting events and seminars on the art of making and savouring the perfect cigar. People who have gone in the past say the air is always pleasantly thick with the smell of famous brands such as Cohiba, Romeo y Julieta, Montecristo and Robaina.

But with a ticket providing access to the full weekly programme costing the equivalent of £884, it is not an event for ordinary Cubans who scrape by on average annual salaries of around £150.

However, cigars are popular among Cubans, and cheap unbranded cigars can be bought by locals for the equivalent of about 3p each.

Despite the fact that the sale of Cuban cigars in the United States remains banned due to a 48-year-old trade embargo, big-name Hollywood stars have graced the festival with their presence in the past.

But this year’s festival is notably star-free. Fidel Castro, who gave up smoking cigars himself in 1986 for health reasons, is not expected to make an appearance. Unfortunately for the organisers, his brother Raul, the current President, is a non-smoker too and will also be staying away.

The festival will wrap up on Friday with a traditional auction of handmade cigar humidors with the proceeds going to Cuba’s famously free universal health system.

Although Cuba’s cigar industry is cautiously optimistic about the future, officials are worried by developments in their biggest market: Spain. In the grip of a financial crisis, Spanish cigar smokers are cutting back on Cuban cigars to save money, while a recently introduced ban on smoking in enclosed public spaces has also hit sales.

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Cuba to host international cigar festival


Havana, Feb 20 (IANS) Cigar lovers will now get a chance to see how the famous Cuban cigars are being made as the organisers of the international cigar festival, which begins here Monday, plan tours for the visitors to the factories and tobacco growing areas in the country.

Over 1,000 visitors from 80 countries are expected to attend the 13th Havana Cigar Festival, Xinhua reported.

Activities such as visits to tobacco plantations and cigar factories, tasting of cigars with different beverages and trade fairs and seminars will be organised, said Ana Lopez, director marketing of Habanos Inc., a cigar company.

A lecture on the origin and evolution of the aluminum tubes associated with some of the famous Cuban cigar brands will be held, she said.

The event this time is devoted to honouring ‘the iconic brands of hand-twisted snuff of the island (like) ‘Montecristo’, ‘Partagas’ and ‘H. Upmann”, she added.

Visitors can sample the new vitolas developed by seasoned industry experts that are to be released by the company on the occasion.

A gala dinner is also being organised at the end of the festival to honour the Montecristo brand, during which the ‘Cigar Man of the Year’ will be chosen. Auction of humidors, boxes of cigars to keep them fresh, will also be held.

According to the World Trade Organization, more than 14 billion cigars are sold in the world annually, with the US consuming half of it.

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Cigar Aficionado names top cigars of 2010


The Daily Star:

BEIRUT: The Cigar Aficionado countdown of the Top 25 Cigars of 2010 concluded this week naming the Cohiba Behike BHK 52, a Havana-made smoke, as the best cigar of the year.

The competition began with 700 cigars from around the world.  Throughout the year, the magazine rates cigars, awarding points on a scale of 0-90.  Based on previous rankings, Cigar Aficionado narrowed the competition down to a top 60 smokes and then conducted multiple rounds of blind taste tests to pick the top cigars of the year. The thoroughly vetted top 25 were released over the course of the past week.

Cuban cigars dominate the top 25, among them the number one pick, the Cohiba Behike BHK 52. Cohiba has long been a respected name among Cuban cigars but the BHK 52 is a classic cigar that blends rich, delicious smoke in a stylish red-brown wrapper.  It is the best to come out of Havana in a long time, and won among a field of Cubans that the magazine claims to be the strongest group since the mid 1990s.

The number two pick, the Viaje Oro Reserva VOR No. 5, is a relative new-comer on the cigar scene.  Produced in Honduras, this cigar’s flavors live up to the company’s name: “viaje,” or journey in Spanish. As it is smoked, the flavors transition from leather, to sweet spices and a hint of cocoa powder at the finish.

The powerful Fuente Fuente OpusX XXX Belicoso from the Dominican Republic takes the third spot.  Among the most successful cigars in history, Cigar Aficionado described it as, “a dynamite smoke, a complex powerhouse with full-bodied flavors of leather and earth.”

In fourth place comes the Padron Family Reserve No. 45.  The Padron Family has performed well in past years of the magazine’s top 25 and releases a reserve cigar every year to commemorate the company’s history.  This is a natural version of the 2009 reserve cigar, with a lighter wrapper and hearty flavor of cocoa, coffee, and spice.

Rounding out the top five is the Camacho Corojo Churchill.  Made from Corojo seeds, a particularly difficult plant to grow, this cigar has a big, full-bodied flavor.  A leathery and earthy smoke with “notes of earth and dark fruit” according to the magazine’s testers, is the best bargain on the list of the top 25 at only $7.

The top-ranking cigars often come with a hefty price-tag, with some of the picks reaching almost 30 euros a pop.

Luckily, Cigar Aficionado has released its list of 2010’s Best Bargain Cigars Friday.

The list includes over 50 cigars that are priced at $6 or less and have received a score of at least 83 from the magazine staff. Many high-profile cigar-makers made the bargain list, such as Arturo Fuente, C.A.O., La Gloria Cuban, Oliva, Padron, and Rocky Patel.

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Cuba’s subsidized cigarettes going up in smoke


HAVANA (Reuters) – Cuba is phasing out its longstanding monthly allotments of subsidized cigarettes as President Raul Castro works to jump-start the island’s sputtering economy.

Beginning next month, some 2.5 million Cubans over the age of 54 no longer will get their four packs of cigarettes as part of the country’s ration program, the government announced on Wednesday.

“The Council of Ministers has resolved to eliminate cigarettes from the rationed family basket as of September as part of the measures gradually being adopted to limit state subsidies,” an official statement said.

The cigarettes “are not a primary necessity,” it said.

Castro has said that communist-ruled Cuba’s ration system eventually will be eliminated as he moves to modernize the economy.

Monthly allotments of chickpeas, potatoes and a pound (0.45 kg) of sugar were removed from the system this year.

Many subsidized items were cut in the 1990s after the collapse of former benefactor the Soviet Union plunged the island into a deep recession.

But allotments of inexpensive cigarettes for Cubans born before 1956 were kept in place.

TRIMMING STATE PAYROLL

Local economists estimate the ration of rice, beans and other staples provides enough food for less than two weeks, leaving many Cubans to turn to state-run stores and markets.

Castro, since taking over from his ailing elder brother Fidel Castro in 2008, has pushed to restructure the centralized economy, which has been battered by hurricanes, the global financial crisis and chronic inefficiencies.

He has called for the elimination of all subsidies, and such things as state-sponsored honeymoons and vacations already have been cut. But Cubans would still enjoy free health care, education and social security.

Castro recently announced plans to lay off 1 million workers over five years, or a fifth of the labor force, and has called for more family farming, self-employment and small business creation to make up for cuts in the state’s payroll.

Cuba is an important tobacco and cigar producer and boasts one of the world’s highest per-capita rates of smokers.

Unlike many countries where cigarettes are heavily taxed, Cuba sells unfiltered black tobacco cigarettes for as little as 7 pesos a pack at state stores, or around 40 cents, while the allotted packs cost just 2 to 3 pesos.

Retirees can often be seen on Havana’s streets selling their subsidized cigarettes for 5 pesos a pack.

“This is a blow for the elderly like me,” 82-year-old Esperanza Rodriguez said. “It was like a little bit of money they gave us each month.”

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Cuba curbs tobacco harvest as cigar sales fall


BBC:

Cuba has been forced to cut its tobacco harvest in response to a fall in demand for its famous Cuban cigars.

This year’s harvest of tobacco leaves is down 14% on last year, according to one of the country’s state-run newspapers, Guerrillero.

“There was a reduction in planting due to limitations on resources caused by the economic crisis,” the report said.

Sales of Cuban cigars fell by 8% last year, while production has fallen even further.

Falling sales have pushed down production by even more. Last year, Cuba produced 73 million cigars for export.

That compares with the 217 million made in 2006.

But part of that reduction comes as Habanos, the company that produces and sells the cigars, runs down its stockpiles.

The hand-rolled cigars are a major export for the Caribbean island, although they are limited by a long-running US trade embargo.

Spain is the single biggest export market, where the recent introduction of a smoking ban has hit consumption.

Falling airline passenger numbers has also hit duty-free sales.

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Smoking bans and economics hit famed Cuban cigars


HAVANA, June 21 (Reuters) – Global economic woes and the worldwide spread of smoking bans are taking their toll on Cuba’s famous cigar industry, with the just-completed harvest of the country’s finest tobacco down 14 percent over 2009, local media said on Monday.

In westernmost Pinar del Rio, home of Cuba’s most famous tobacco, the harvest came in at 22.4 million leaves, down from 26 million in 2009, according to Guerrillero, the province’s Communist party weekly.

The area’s tobacco is used as wrapper leaf and part of the filling in Cuba’s prized cigar brands, including Cohiba, Montecristo, Trinidad and Partagas.

“There was a reduction in planting due to limitations in resources caused by the economic crisis,” the weekly said.

Cuba’s premium cigars dominate the world market with 70 percent of sales.

That jealously guarded market share excludes the United States, where Cuba’s cigars are banned under the 48-year-old U.S. trade embargo against the communist-led island.

Pinar del Rio

But the industry has fallen on hard times in recent years, with production of cigars for export down from 217 million in 2006, to 123 million in 2007 and just 73 million last year as the business drew on its stored inventory, the government reported this month.

Cash-strapped Cuba cut the amount of land devoted to growing its famous tobacco by more than 30 percent last year.

Sales from cigar exports fell to $218 million in 2009, down from $243 million in 2008.

In contrast, domestic demand for lower-quality cigars, which cost as little as a few cents and are made from tobacco grown elsewhere in the country, showed no sign of slowing.

About 300 million were produced last year, compared with 278 million in 2008, the government said.

The exclusive distributor of Cuban cigars, Habanos S.A., a joint venture between Cuba and British tobacco giant Imperial Tobacco Group Plc, was not immediately available for comment.

Some 200,000 private farmers and family members depend on growing and curing the precious leaf under contract with the government. Tens of thousands of workers earn their living hand rolling the crop into the famous “Habanos” or “Puros” for export.

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