The Montecristo War
From the Print Edition:
cigar case, Summer 93
(continued from page 1)
Vuaille echoes the views of many tobacco merchants affected by the feud. "No one wins in this situation," he declares. "It is a little like the situation in Yugoslavia; if the parties don't want to sign an agreement, what can you do?"
The ownership of Cuban cigar brands has long been contested. When most of the original brand owners fled the island after the Revolution in 1959, they took their trademarks with them and set up shop in various other countries including Jamaica, Honduras, the Dominican Republic, the United States and the Canary Islands. Some sold their trademarks later to major U.S. cigar companies such as Consolidated Cigar and General Cigar. This is why Americans buy cigars under the same label as Cuban brands, such as Partagas and Punch, but the cigars come from other countries. In fact, later this year Consolidated Cigar plans to introduce across America a Montecristo produced in the Dominican Republic. American cigar lovers have no other legal choice while the U.S. embargo against Cuba continues.
The Cubans, however, claim they still own the brands and have continued to produce most of the key ones since the Revolution. They believe that the brands belong to the country where they are produced--Cuba. "There is only one Partagas," declares Rafael Guerra, assistant director of the El Laguito Factory on the outskirts of Havana. "And Partagas is made in Havana. It is as simple as that."
Angel Pereia, a Havana-based historian who is working on a book about the history of Cuban cigar brands, adds that it was Cubatabaco which built Montecristo into what it is today. "The problem was that Montecristo was always second party to H. Upmann, ever since the former owners, the Menendez family, first owned H. Upmann," says Pereia. "It wasn't until after 1962 that the brand got any sort of push. Take the French market for example. From the brand's creation in the mid-'30s until 1958, Montecristo represented less than 1 percent of the French market. [Now, it is 50 percent of the market.] So, the development of Montecristo in France was all done after the Revolution. The court decision doesn't make sense."
Consolidated Cigar and Internacional Cifuentes concurrently began a string of court cases in Europe in the mid-'70s that questioned the ownership of Montecristo and other cigar brands. Consolidated Cigar had already bought the world rights to Montecristo, H. Upmann and Por Larrañaga, while Internacional Cifuentes, a Madrid-based company owned by the Cifuentes family, continued to own the trademarks of Partagas, Ramon Allones and other brands after the Cuban Revolution. Both companies had decided that it was time to take the Cubans to court because they had been selling millions of cigars a year in Europe under the disputed brands without their approval.
According to Dick DiMeola, Executive Vice-President and Chief Operating Officer of Consolidated Cigar, the court cases took years to come to fruition. The key European markets, Spain and France, seemed to be taking the longest with the various appeals through their court systems. When Tabacalera contacted Internacional Cifuentes a few years ago about buying its trademarks, Internacional Cifuentes then contacted Consolidated about coming into the deal, and they formed a partnership in the Bahamas. "It was the opportunity to finally realize something positive out of this after 15 years of litigation," notes DiMeola. "It was very appealing to us. The price was good, and when you think back and think about how many cigars you would have to manufacture and sell to make that sort of money, it was a pretty big figure. It was a sensible thing to do, although very emotional at the same time."
DiMeola says that they never asked Tabacalera why it wanted to buy the brands or if Cubatabaco was involved in any way. "Of course, it crossed our minds," he admits. "But they can do whatever they want with the trademarks. I always thought that the Cubans would be happier with the trademarks in the Spanish hands than in our hands, to be candid about it. We never attempted to influence them in any way about this."
Nonetheless, another lawsuit was introduced in France in early March. Hoping for similar results with the Montecristo case, Internacional Cifuentes is suing over Partagas. "It makes you wonder where it's all going to end," Vuaille says. "I don't know for how long this will go on, but it is going to be expensive."
While lighting up another Mini-Montecristo from SEITA's leftover stock, he adds, returning to the Tabacalera and Cubatabaco problems, "The Cubans are going to lose as the producers of Montecristo, and we and Tabacalera will lose as distributors. So, in the end all three of us are going to be losers."
Not everyone, however, was anxious about the situation. Cigar merchants outside of France reported an increased interest in Montecristo, and the thought of Spain losing the brand only added to their delight. "We have had some good rebound off of the Montecristo business in France," says Geoffrey Mairias of Desmond Sautter Ltd. in London. Montecristo and other Cuban cigar brands have never been contested in Britain due to its unique trademark laws. "We have customers who once only bought in France now buying from us. They were used to saving quite a bit of money buying Montecristo in France. Now they are just happy to get the cigars."
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