Breaking Down Cuban Cigar Sales
Posted: Feb 28, 2013 12:00am ET
It’s my fourth day in Havana, and the sun has disappeared, blown away by the wind and the rain. The front seems to be wreaking havoc with the electricity in the hotel, as it keeps going off and coming back on. I opted to take the stairs this morning when I left, instead of risking 18 flights in an elevator, and I felt vindicated when the stairway was plunged into darkness somewhere in the teens. (iPhone flashlight app to the rescue—don’t travel without it.) But this is Cuba, and things like this sometimes happen. Comes with the territory.
Gordon Mott arrived yesterday, and he met me at La Fontana, a paladar we truly enjoyed a few years ago. (We recommended it in our cover story on Havana.) Rob Fox of J.J. Fox in London and Dublin had organized a lunch with a group of his friends and customers, and he handed me a cigar that was nearly as old as I am, a Ramon Allones Private Stock No. 1 from the early 1970s. “It could be newspaper,” he said, not wanting to get my hopes up.
Old cigars don’t always improve—sometimes they turn to nothing, and are flavorless. This one was far from newspaper, but it was past its peak. Mine had a tight draw, and was largely showing dusty almond notes with just a touch of cedar. Very pleasant but mild. At the very end, with less than an inch left, I revisited the smoke, and it was far more intense with a long, nutty finish.
I began my Wednesday with another aged cigar from another retailer from the U.K. Ajay Patel handed me a 2002 Cohiba Robusto Reserva, which I smoked to start my Wednesday. Wow. What a brilliant smoke. I won’t go into the details (you’ll read much more about it in an upcoming Connoisseur's Corner in Cigar Aficionado) but I’ll be hard pressed to find a better smoke on this trip. Then it was off to a showing of art and Louis XIII Cognac, then the launch of a book at the Partagás Cigar Factory, and then our traditional opening dinner at El Aljibe, with plenty of cigars throughout the night.
This morning, after my walk down the stairs (and the quite unexpected meeting between my head and a very low ceiling on floor three) we headed to the Convention Center. The trade fair had begun, and I snapped a photo of Gordon at the Habanos booth, next to the world’s largest Cohiba, but we were there for the speeches, so we filed into one of the rooms and I lit up a Romeo y Julieta Churchill, which turned out to be far from my favorite smoke so far on this trip.
Jorge Luis Fernández Maíque, commercial vice president of Habanos S.A., spoke first, and he’s quite an energetic speaker. You may have read in the press about Cuba’s $416 million in cigar sales for 2012, but I’m going to give you some details about that number.
First, sales were up, but not as much as you may have been hearing. There have been reports of 6 percent “organic growth,” which is a way of factoring in how things would have been given exchange rates. The actual rate of increase was from 2 percent to 3 percent.
In short, cigar sales are lousy in Southern Europe but doing well in emerging markets, particularly Asia/Pacific, the Middle East and Eastern Europe, led by Russia. Spain, Cuba’s top market for cigars, is getting hammered by economic crisis and that has had a negative impact on Cuban cigar sales, but emerging markets have helped keep sales up.
“We have seen the damages caused to the Spanish market,” said Maíque. “There has been an undeniable increase in the Middle East, Asia and Africa.”
France is the second largest market for Cuban cigars, China ranks third (a surprise for me), followed by Germany, Switzerland, Lebanon and Cuba.
Some things that have born fruit are the revival of Cuba’s tubed cigars. “Before our tubes were basically the same,” said Fernando Domínguez Valdés-Hevia, the joint managing president of Habanos S.A. “Now each one has its own specific personality. The change is quite relevant.” You know what he’s talking about: Cuba’s tubed cigars went from being battleship gray to being vibrant and exciting. Tubed cigars now account for some 20 percent of Cuban cigar sales.
Cohiba is the biggest moneymaker for Cuba’s cigar industry, but it only ranks fourth in unit sales. Romeo y Julieta is No.1, followed by Montecristo and a brand you may never have heard of, Jose L. Piedra. It’s a bargain smoke that sells quite briskly. I can’t say I’m a fan.
I am a huge Montecristo fan, and I’ve told you about the addition to the Edmundo line. Edmundo and the Montecristo Open brand, when combined, accounts for 40 percent of all Montecristo sales.
The inevitable look at the United States market, the largest in the world for cigars, was brought up near the conclusion of Dominguez’s presentation, along with a graphic showing a world map done in the form of a puzzle, with one very large piece missing. “The U.S. market is the most important market in the world for premium cigars,” said Dominguez. “It accounts for more than 60 percent of sales. It represents our biggest expansion opportunity.”
It’s inevitable that one day the cigars of Cuba will be sold alongside Dominican, Nicaraguan, Honduran, Mexican and other cigars in the United States, just as they are in certain markets abroad. And it will be good for the entire cigar industry. Just as most wine connoisseurs prefer to sample wines of varying styles from various countries, most aficionados will want to have a broad variety of cigars from which to choose. I know I do.
Comments 6 comment(s)
BRAD GOLDMAN, MD FACEP — Delaware, OH, UNITED STATES, — March 2, 2013 6:21pm ET
David Savona — March 7, 2013 4:50pm ET
Dilip Kumar — Mumbai, India, — March 8, 2013 10:48pm ET
Mark M — Canada, — March 10, 2013 7:39pm ET
Stacy Johnson — Calgary, Alberta, Canada, — March 12, 2013 12:18pm ET
Dr. Gregory Burks — Hattiesburg, MS, USA, — March 23, 2013 6:51pm ET
Please log in to post a comment—registration is FREE.