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
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"Regarding the prices, you know our product maybe better than anyone else," he explains. "You have had the opportunity to witness all the processes in the cigar manufacturing. They are almost 100 percent handmade. It's very expensive, beginning with the collection of the tobacco to everything else. This is a process of many steps, which is very expensive. Plus, you have to add the raising in the prices of raw materials such as oil, fertilizers for planting, cedar for the boxes, paper . . . everything is more expensive."
I think the partnership with Altadis, the European tobacco conglomerate, also helped the Cubans reevaluate what they were doing and refocus on quality and not quantity. It was only in 2000 that Altadis paid close to $500 million for a half share of Habanos. Regardless of the money, Altadis catapulted the Cubans into the twenty-first century with a modern marketing and distribution strategy. "The association with Altadis made us stronger," Garcia admits. "But it is a question of the product and the distribution. It was the know-how of Altadis, and it was also their financial power."
What will happen to Habanos now that the British tobacco giant Imperial Tobacco bought Altadis this year for $18.2 billion remains to be seen. Habanos is a tiny part of Imperial's business, which is primarily cigarette production and distribution. But my sources say that very little will change, and it's obvious that Imperial views the U.S. market as a potential revenue windfall for Cuban cigars.
"I don't think that we will have huge changes in the future now," Garcia says. "The future is a question of consolidating things as the leader of the premium cigar market and maintaining the quality of the product. We need better and better products because people smoke less but better."
Comments 1 comment(s)
Luke Beaudry — April 29, 2011 1:22pm ET
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