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Interview: Francisco Padron, Cubatabaco

Marvin R. Shanken
From the Print Edition:
Groucho Marx, Spring 93

(continued from page 1)

CA: You approve the brand advertising, and the local agent decides on which brands should be advertised depending on the importance of the brand in that marketplace?
Padron: Yes. We create the image. We are now creating the image for various brand names; they must use that image and the concept of being under the Habanos umbrella.

CA: Cuba has approximately 30 brand names of which about 20 are popular. Do you think the future should favor fewer or more brands?
Padron: Fewer. We are not going to kill any of the brands. We are going to let the market select the best ones. We are going to let the market kill them.

CA: At a meeting recently with your agents from around the world, you made it very clear that volume is nothing and that quality is everything. But having said that, today you export approximately 60 million cigars. You know if you produced 100 million cigars the market would absorb them. The demand greatly exceeds supply. And knowing that cigars are agricultural and that there is only so much land, only so many workers and only so much money for inventory and aging and that the economy in Cuba is in such great difficulty right now, is there any significant way that you can increase cigar production without adversely affecting quality so that more people can enjoy Cuban cigars?
Padron: Of course. This is our hope. We want to increase our production without losing quality.

CA: What kind of growth? If you are at 60 million cigars exported today, do you have some sort of plan? A five-year plan? Where do you see exports going?
Padron: Without the U.S. market, we think that we can easily sell between 80 or 90 million--maybe even 100 million cigars. We would like to be between 90 and 100 million.

CA: Is it a production question? A labor question? A capital investment question? The government is going to have to agree to take money away from some other industry and give it to you.
Padron: Our government already agreed to increase the tobacco leaf production, and there is a direct instruction from Fidel that the first priority is quality.

CA: Are there certain brands that you consider priority brands in terms of the future for your portfolio?
Padron: We are focusing on this in a different way. We already have a parameter for this. At the top section, there are Cohiba and Montecristo. In the middle, there are Partagas, Romeo y Julieta, Hoyo de Monterrey and the others. At the lower level, we have Los Statos Deluxe, Quintero and all those [machine-made] brands.

CA: Cohiba is described in tobacco terms as "the selection of the selection" and is the leading marque in your portfolio. We now see the Cohiba family growing from six to eleven sizes. What was the reason for the increase in the number of Cohiba sizes?
Padron: I would rather not answer this question. (Editor's Note: It was clear from talking to members of the trade while in Cuba that the new Cohiba sizes were introduced to replace the lost production of the chateau series produced earlier under the Davidoff brand name.)

CA: How big is Cohiba today?
Padron: It depends on the crop. It had been about 3.4 million cigars. It will be more in 1993. That was another reason for the launch of the new line. Production was just too small.

CA: Do you see Cohiba having additional sizes as time goes on?
Padron: No, I don't think so.

CA: There obviously is a significant demand for Cuban cigars in the United States. No doubt you hope that one day the embargo is lifted. But doesn't that create problems between your agents and tobacconists from England, Switzerland, Mexico and Canada in that a lot of them compete for the same customer in America? When America opens up, won't many of these businesses lose their sales when Americans won't need to shop in foreign markets to buy Cuban cigars?
Padron: They [the agents] don't have a problem with it. They don't even mention it.

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