Cuba's New Cigar Chief
From Vegas, Mar/Apr 2006
The Spanish co-head of Habanos tries to strike the right balance between tradition and modernization
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JS: Yes. But you still hear some people say that it's sad that some of the old factories in Havana are not being used anymore-that the tradition has been broken. What do you think?
BJSC: I think it's very difficult to find the right balance between keeping the tradition and improving on productivity, quality and yield. You have to keep in mind that this country will one day compete with factories in the Dominican Republic, in Mexico and other countries and they will need to have the organization that will allow them to compete at the same level with other countries. If for the production of X amount of cigars, other countries require a certain number of workers, then in Cuba the factories will need approximately the same number of workers…. You have to adapt to the new system without losing the positive part of tradition and know-how.
JS: Do you think new brands or new shapes will be launched in the near future?
BJSC: We have 33 different brands. I think that is good enough.
JS: You also have these new sizes for specific markets, like the Ramon Allones Belicoso for England. Will this continue?
BJSC: We have decided that we want to promote what we call regional specialties. In saying "region," we are referring to a part of the world.
JS: So it's not a matter of a specific country, then?
BJSC: No. It has nothing to do with a specific country. It refers to a region where we may perhaps have strong distributors and they know the client and these clients may like a certain kind of cigar. We have limited the number of regional specialties for next year.
JS: They have to buy 1,000 boxes minimum, no?
BJSC: No, James. I don't think it works like that. What I mean is that if I create a regional specialty for the Asian-Pacific area, it will not be the same as if I create another one for England…. In one case we may produce 50,000 cigars and in the other it could reach 200,000.
JS: What is your opinion about fake cigars?
BJSC: We strongly fight forgery. The Cuban government gets involved and tries to reach agreements with other countries in order to fight against this. We have absolute control over the movement of tobacco in bales, so that it is used as it should be.
JS: Do you think the forgeries are done here in Cuba or somewhere else?
BJSC: I think the majority of the forgeries are from the D.R., Mexico, Brazil, Nicaragua, Honduras and many other places. Plus, I believe that the majority of them are manufactured with tobacco that isn't Cuban. I cannot say for sure that fakes do not leave Cuba.
JS: But doesn't that happen, too?
BJSC: But the quantities are not significant. It happens sometimes that you are surfing the Internet and you stumble onto someone that offers you Cuban fakes.
JS: Did you know that there is a Web site where you can buy the boxes, labels for Cuban cigars. You can buy it all! It's crazy.
BJSC: There's a lot of money behind this!
JS: Yes. You're right. It's tough to stop.
BJSC: My opinion is that the only way to solve this problem is by educating the consumer. You must have a consumer who knows and wants to buy the real thing.
JS: At the end of the day, you can't control it all.
BJSC: May I say that we have a very strong legal department in Habanos and they are working hard in this direction. The distributors also keep an eye open for irregularities and when they do catch something, they take measures to counterattack because at the end of the day, they are losing business with this. So then our distributors also give us their support in this sense. All of them in general share with each other their know-how and experience in dealing with this kind of problem. I can tell you this is a problem we are working on.
JS: The fact that this is happening is a sign of the success of your product.
BJSC: Why, yes. Of course.
JS: What's the latest with the Cohiba lawsuit in the United States?
BJSC: I believe it is still pending an appeal in the Supreme Court. It is still at a stage, until the end of the year, where the other side is presenting its allegations. After this, the Supreme Court will decide if our appeal is accepted or not. So this is where we stand right now. We are in the process. This is the information I have. I don't know anything else.
JS: The case looks difficult for you.
BJSC: I know that not all of the cases that get to the Supreme Court are accepted by it. I don't know anything else; the only thing I can say is that we are in the waiting process for the appeal.
JS: Everybody wants to know what will happen when the U.S. market opens for Cuban cigars. Do you think that you can increase production to meet American market demand?
BJSC: I believe that the land is there and an increase in production is perfectly possible. The capacity is there.
JS: What about the ownership of the brands? There are a number of brands that have problems.
BJSC: When the day comes when the American market opens, for me as a co-president of Habanos, it will be wonderful news. Even if difficulties would come up, such as problems with the brands or being able to react quickly to the new demand, it would be wonderful to have access to the biggest consumer market of premium cigars in the world. I hope someday the embargo is lifted and we can then have a presence in this important market.
JS: There are people from your traditional markets, such as the English market, who are worried that when the American market opens to Cuba, they will not receive enough supplies and they will also lose many of their customers.
BJSC: Let me start by repeating that, in my knowledge, the industrial and agricultural capacities are there [to increase production]. The second point I want to make is that those distributors should follow the stock policy we recommend, not because of the possibility that the American market would suddenly be available, but mainly because this is a natural product. You see that tomorrow Hurricane Wilma, instead of striking Cancún, can strike over here, and you know how much destruction it caused over there. There are years where instead of a harvest of 100 [acres] you will have a harvest of 50.
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