Capitalist crunch hits Cuban cigar sales

From The Times
October 8, 2009

Capitalist crunch hits Cuban cigar sales
Hannah Strange, Latin America Correspondent
Graciela Gonzalez

Once, no banker's party would have been complete without a box of
Cohibas or Montecristos being passed around the dinner table — a symbol
of wealth and privilege. Now, as the global economic crunch forces even
Wall Street high-flyers to tighten their belts, the crisis in capitalism
has hit communist Cuba's most famous export, forcing the island to slash
tobacco production.

The amount of land devoted to growing the crop is being cut by more than
30 per cent this year, according to the Government in Havana, as the
recession and spread of smoking bans eats into sales.

Global demand for Cuban cigars dropped by 3 per cent in 2008 and has
been reported a further 15 per cent down this year, hobbling an industry
that has helped to sustain the island in the face of a half-century US
trade embargo and economic mismanagement.

Cuba's high-end brands, including Cohiba, Montecristo and Romeo y
Julieta, dominate the premium market, with 70 per cent of world sales.
While that jealously guarded market share excludes the United States,
experts such as James Suckling, who writes on Cuba for Cigar Aficionado
magazine, estimate that Americans smoke about 20 million Cuban cigars a
year, smuggled in tourists' suitcases or shipped in by international
intermediaries.

Such indulgence comes at a price — the Hong Kong-based Cigars of
Habanos, which ships to the US, charges £311 for a box of 25 Cohiba
Esplendidos. British prices are even higher, despite the lack of trade
restrictions: the same product at the merchants AE Lloyd and Son costs a
lofty £592.

James Mee, a Canada-based cigar expert and writer who spent years
studying the industry in Cuba, said: "People who continue to smoke
cigars are now smoking less expensive cigars and find they cannot
indulge in a premium cigar like they used to."

Johnny Berman, the managing director of Sautter in Central London, said:
"Cigar sales are holding up. In December, January and February they were
down about 20 per cent but we're now trading at pre-recession levels. We
have a lot of American customers who have been taking advantage of the
weak pound.

"People are not about to give up cigar smoking in a recession. What
difference does a box of cigars make?"

At La Rosa Cubana, a Manhattan cigar club, customers buy cigars made
from tobacco grown from Cuban seeds in the Dominican Republic — a common
loophole used by US companies to evade the embargo.

"Cuba is communist but depends heavily on luxury goods: tourism and
tobacco," Mauricio Cárdenas, the head of the Latin American Initiative
at the Brookings Institution in Washington and a former Colombian
economic development minister, told The Times. "If the world economy
suffers, Cuba suffers disproportionately. The fortunes of the world's
wealthy set the fortune of Cuba."

The cuts will sting the 200,000 private farmers and families who make
their living growing and curing tobacco, along with tens of thousands of
Cubans who work in factories hand rolling it into Habanos or Puros for
export. They are already operating at well under capacity. Cultivation
is to be cut this year from 70,000 to 49,000 acres, with the crop
expected to drop from 26,800 to 22,500 tonnes.

Capitalist crunch hits Cuban cigar sales - Times Online (8 October 2009)
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6865227.ece