Also in this issue:

• Good Life Guide
  Rosewood Mayakobá
• Top 25
  The 25 Best Cigars of 2008
• Good Life Guide
  Ice Fishing Comes in From the Cold
• Cigar Stars
  Te-Amo's Alberto and Alejandro Turrent
• Good Life Guide
  Navigon 7200T
• More from this Issue

Cigars and Cuba: 50 Years of History

Premium hand-rolled cigars, the pride of the island, have seen ups and downs since the revolution, but still remain the world's benchmark smokes

From the Print Edition:
Cuba, January/February 2009

"I remember speaking to the then head of our Spanish agent Tabacalera,Pedro Perez, and he told me that I wasn't sending him enough cigars," Padron says, adding that the Cubans didn't have enough tobacco to make more. "So I asked them to put in $25 million and my other agents a combined $20 million. I was financing myself. So for the first time, I put all the money in the agriculture they needed in order to increase production."

Despite all the change he initiated in Cuba's cigar industry, Padron felt compelled to resign as head of Cubatabaco in 1994 due to differences with various ministers in the government. His new ideas may have been too innovative for some officials. "I was not happy anymore and you have to be happy doing your job," says Padron, who subsequently worked for some time as a professor at the University of Havana.

But the structure for growth had been established, and Habanos S.A. and the Cuban government had big plans for cigars. By the mid-1990s, production had been ratcheted up significantly. Habanos officials were talking about exporting 200 million cigars a year by the millennium. Some even said 300 million cigars.

Although exports never reached 200 million, the unbridled expansion was a disaster. From about 1998 to 2001, the country produced close to 160 million cigars annually for export and many were of inferior quality. The main problem was construction—millions of cigars would not draw properly. Moreover, the blends for various brands were less defined. Some critics said the cigars all tasted the same and that factories used too young tobacco to make the cigars in haste.

"We learned a lot from that," admits Manuel Garcia, commercial director for Habanos, who said that the decline in quality was not due to bad tobacco but poor rolling. Essentially, the factories didn't have enough experienced rollers to make all those extra cigars.

Adds Padron, as an outsider looking in, "I told them that in order to push 200 million cigars, you have to push all the tobacco that you have in the warehouse, and start using wrapper from the same year. That is a mistake. You are going to put down the quality for the next year and the following five years. Besides, nobody was going to smoke 200 million cigars anyway."

Near the end of this production expansion, the Cuban government decided to sell 50 percent of Habanos to Altadis S.A., the world's largest cigar company. The price was $477 million. A large part of that was debt already owed to Altadis, which is also the owner of Altadis U.S.A. Ever since, Habanos has been jointly managed by a team of Spaniards from Altadis and Cubans. Last year, Altadis was acquired by British tobacco giant Imperial Tobacco PLC, although so far nothing has changed at Habanos. Cigars are a tiny part of Imperial's annual revenues of close to $24 billion.

That could change one day if the U.S. trade embargo is lifted. Through Altadis U.S.A., Imperial owns a number of key cigar brands in the United States, including Montecristo, H. Upmann and Romeo y Julieta. Owning the brands both inside and outside the States would simplify questions of brand ownership and make distribution of Cuban cigars much easier in the U.S. market.

"Let's see what happens," says Garcia. "Around 150 million Cuban cigars are consumed in the world and the American market consumes around 300 million, more than double. So Habanos is going to have a lot of possibilities in that market in case of a possible opening. It is my opinion that if we have the possibility to enter the American market, not all the smokers are going to quit smoking the other products from other origins to smoke Habanos. A group of these smokers is going to smoke Habanos, but not all of them. So I think that Cuba is creating a reserve of raw material, creating the infrastructure and [making sure] the land is available to increase our production."

Tobacco growers, such as the Robainas, are equally excited about the possibility of the U.S. market opening. Alejandro said that plenty of the best land for planting tobacco—vegas finas—is readily available. In addition, farmers in the Vuelta Abajo have the knowledge and dedication to grow and process the tobacco. When this might happen is the big question, especially for the aged Robaina. He spoke to Miami's Orlando Padrón by cellular phone the day this editor visited his farm and joked: "Orlando, are we ever going to do business together one day? Let's hope I live long enough to see the day!"

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