Cuba's cigar industry survived a trio of hurricanes but saw sales slip 3 percent to $390 million last year as the world economic crisis reduced demand for luxury goods, the island's tobacco monopoly said Monday.
Habanos SA vice president Manuel Garcia said an 11 percent drop in international travelers slowed cigar sales at duty free shops, which account for a quarter of its business, while stricter smoking laws in Germany, France, the U.K. and United Arab Emirates also decreased demand.
Some 25 percent of the 400 million cigars sold worldwide last year were Cuban, with Spain, France, Germany and then Cuba itself buying the most, said Javier Terres, a vice president for development at Habanos. Excluding the U.S., which consumes about 250 million cigars a year, Cubans hold 70 percent of the global cigar market, he added.
One iconic Cuban cigar, the Churchill-sized Cohiba Esplendido, costs around $35 apiece in London and about $20 at shops in Havana.
President Barack Obama's election has sparked talk of the U.S. easing its 47-year-old trade embargo against Cuba, potentially opening the world's biggest market to Habanos. But Garcia told reporters that Habanos executives have "more important" things to do than speculate about the embargo.
Habanos was founded in 1994 as a joint venture between Cuba's communist government and Madrid-based Altadis SA, part of a Cuban push to draw private, foreign investment after the collapse of the Soviet Union cost the island billions of dollars in annual subsidies and trade. Altadis was acquired by Britain's Imperial Tobacco Group PLC (nyse: ITY - news - people ) last year for $16 billion.
Habanos produces 27 premium cigar brands in 220 different sizes, some as small as a cigarette and others nearly as big as a Chihuahua. It gained 13 new stores in 2008, opening 22 and closing nine to bring its network of authorized dealers to 144, Terres said.
Monday, February 23, 2009