Cuba is perhaps best known for cigars and for bucking the status quo, and that certainly is the atmosphere at the headquarters of Habanos. Here, executives of the premium cigar distributor plot to skirt global smoking bans.
Unlike Fidel Castro and Che Guevara they seem to have nothing against the rich. They credit the wealthy – along with successful guerilla tactics – for a 4.3 per cent increase in sales so far this year, after a 7.7 per cent decline in 2009, and say a big increase in millionaires world-wide is welcome news.
"Sales are up in practically all regions, with the big exception of Spain and Greece due to the crisis in those countries," Manuel Garcia, vice-president of sales for Habanos’ told the FT.
"Our fundamental objective is figuring out how we can get around the bans and move forward in an extremely adverse environment," he added.
Javier Terres, the company’s vice-president of development, said the company was working hard to promote comfortable outdoor smoking areas, which he credited with reversing a fall in sales in the UK after the smoking ban there, and private cigar clubs in countries including Germany and the United Arab Emirates.
"We are working closely with retailers so they understand not just our product, but the world of Habanos and how to create new spaces for it," Mr Terres said.
Still, Habanos SA, a joint venture with Imperial Cigars, expects the premium cigar market to stagnate and perhaps drop a few points in the coming years, he said.
"Our strategy is to target the high end of the market and tactics to carve out new space for our clients," he said. "It is all about value-added, collectibles, limited editions, exclusives."
Mr Terres said an example was the company’s latest limited edition of a specially cured Cohiba cigar that sells for €35 upwards and has received twice the orders as the number available.
He said a significant reduction in tobacco planting and cigar production last year did not mean his company was in trouble.
"Sales were down last year, but in an environment where only the strong survive our share of the premium cigar market increased a point to 71 per cent and we accounted for 85 per cent of value, excluding the United States, where sales are banned under the trade embargo," he said.
According to Merrill Lynch and Capgemini, the ranks of the world’s millionaires grew an astonishing 17 per cent last year, good news for luxury products such as the hand-rolled Cuban cigar.
"The more people with money the better it is for us, if they smoke that is," Garcia quipped.
Sales are strongest in the Asia-Pacific region, in particular China, where the number of wealthy is growing faster than in other regions.
Monday, July 05, 2010
Source: The Financial Times