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Their Man in Havana

Manuel Garcia of Habanos S.A. combines his love of cigars with a vast knowledge of the marketing and sale of his country's national symbol.
From the Print Edition:
Arnon Milchan, September/October 2008

(continued from page 1)

I smoked a delicious Partagas Serie D No. 4 for $18—about the same price as London. I bought it in a cigar shop in West Hollywood. Granted, I think a lot of Cuban cigars that are smuggled and sold in the United States are fakes, but I believe that the real aficionado knows the difference, especially if he or she pays a premium for an illicit smoke.

If you think about it, we are talking about significant numbers of real Cuban cigars being smoked by Americans. If Americans accounted for only 10 percent of the world sales of Cuban cigars, then their business would add up to about 13 million to 15 million cigars. That number is realistic, and could be even higher.

What will happen to Cuban cigars when Americans can legally buy them? I asked Garcia. He answered on camera in a video for my blog in June.

"You know the market in the U.S. better than I do," he says. "It consumes about two times more premium cigars than the world market [for Cuban cigars], if you consider that we sell about 150 million premium cigars in the world each year. So if the U.S. market opens to us, it has huge potential. But I don't think that all the smokers are going to smoke Cubans. Some will change over, but others will keep with what they are smoking."

I then asked him how Cuba would cope with such a huge market just 90 miles away. Could his country increase production and still maintain quality to accommodate such demand?

"I think that Cuba both in the agriculture side and industrial side is preparing for that," he says reassuringly. "We have a reserve of tobacco and we now have the infrastructure to make the extra cigars. The land is available [in Pinar del Río], so we can increase plantings of tobacco. And we can increase production of cigars. We just need a little more time to organize it properly. We are getting ready for that. We don't know when, but we will be ready."

I mentioned to him that the last time Cuba tried to increase its production of cigars, it was a complete disaster. If you don't remember, quality went down significantly in 1999, 2000 and 2001 when the Cubans had a crazy goal to make and to export at least 200 million cigars, even 300 million. They ended up making hundreds of thousands of cigars that didn't draw. They abandoned the plan after three years, and refocused on making high-quality cigars.

"We learned a lot from that," admits Garcia, who adds in so many words 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. It won't happen again, he says.

I believe him. A lot has changed in the last decade. Just 10 years ago, Cubans basically considered cigars to be just another commodity to export, like sugar, coffee or nickel. Today, they have a sophisticated view of cigars not only as a unique product of the island, but also as an important symbol for Cuba that is exported around the world. "As Fidel said, the Cuban cigar is the universal Cuban ambassador in the world for us," he says.

Garcia, and his colleagues at Habanos, often talks about Cuban cigars as a luxury product. It shouldn't be surprising that Cuban cigars seem to increase in price each year about 3 to 7 percent depending on the size.

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Comments   1 comment(s)

Luke Beaudry April 29, 2011 1:22pm ET

Their man in theSLAMMER!

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