logo
















logo

logo

logo

logo

logo

logo
August/Sept.
2001

When the
Cuban
Embargo
Ends

The Iron Curtain may have fallen suddenly in Europe, but the likelihood of such an overnight event occurring in U.S./Cuba relations is doubtful. The smart money is on a gradual evolution of relations. The groundwork is well underway.

Text and photos by Richard Carleton Hacker

In spite of the Bush administration's seemingly solid stance in favor of continuing the Cuban embargo, things are beginning to loosen up. This is especially telling in light of the International Trade Commission's report to the House Ways and Means Committee that the economic sanctions have had little effect. In reality, the embargo has made life more difficult for the Cuban people, while their government continues to survive, stoically and stubbornly. Nonetheless, change will come, if not today, then tomorrow. It may not happen all at once, but rather, more gradually, over a period of time. Thus, chances are pretty good that we won't be seeing the headlines, "Cuban Embargo Ends." More likely, they will read, "Sanctions On Cuba Eased."

All the signals are there. In a speech during his visit to California earlier this year, President Bush stated his belief that some of the best U.S. trade opportunities are with those nations whose policies are at odds with our own. In other words, like China, they want our products and technology, but not our lifestyle. Thus, it seems that the stage is being set. The U.S. government is releasing human interest stories on Cuba to the news media with more frequency. The former U.S. Embassy in Havana is being refurbished. International relations in the form of cultural exchanges with the Castro regime are softening. Consequently, it is only a matter of time before some elements of the Cuban embargo will be relaxed, rather than lifted. And that may very well open the door to permitting Cuban tobacco to be legally sold on U.S. shores after an absence of 39 years.

What then? How will this affect the cigar industry and the millions of cigar smokers in the United States who have never tasted a real (or legal) Havana? If anything, the embargo has only heightened the "outlaw" image of Cuban cigars, making them more desirable, if for no other reason than the fact that they are forbidden. Why else do so many non-Cuban cigars have some derivation of the words "Cuba" or "Havana" in their names? Are Cuban cigars really that good?

The honest answer is (as with all cigars), some are great, others are not. In reality, there are Dominican, Honduran, and Nicaraguan cigars that have the same depth of flavor and, in most cases, are rolled better, smoke with greater consistency, and are usually far less expensive than Cuban cigars. In addition, there is a notorious lack of quality control in Havana, where a socialistic government puts the emphasis on getting as many cigars produced and sold as possible. No, the real lure of Cuban cigars in America is the fact that we can't get them. This in itself has spawned a lucrative black market, to say nothing of a huge counterfeiting industry, with factories set up in the Dominican Republic, Brazil, and Mexico (to name just a few known areas) that do nothing but produce phony Cuban-banded cigars of questionable quality.

Although Cuban cigar factories, such as La Corona (pictured) practice quality control, there are still a number of sub-standard cigars that manage to get exported.
No one can accurately predict just when Cuban cigars will finally be allowed back into the U.S., and for many, it is a non-issue. From a retailer's standpoint it is a simple matter of stocking what sells, and if Cuban cigars fit that category, then they will be stocked. Obviously, when the embargo on Havana sticks is lifted, there will be a feeding frenzy among consumers, somewhat akin to the Great Cigar Boom of 1993-97. Everyone is going to have to smoke a "real" Havana. This should send sales soaring for the first six to eight months. But then what? Soon, the average smoker will start to analyze the cost of a Havana-made Hoyo de Monterrey against one made in Honduras (of course, as in Europe, where the Honduran Hoyo de Monterrey is called Excaliber, either the Cuban or Honduran brand sold in the U.S. will have to change its name, to avoid confusion). Will the Cuban product be worth it on a consistent basis? Will the quality be there?

Another development will be the reintroduction of Cuban tobacco in non-Cuban cigars. It is highly likely that we will be seeing Dominican cigars, for example, made with Havana filler or wrappers. But as in pre-Castro years, what Cuba sells to outside vendors may not be the same quality leaf that the country uses for its own flagship brands.

This brings us to the cigar manufacturers themselves. In an industry where it takes a minimum of three years to make a premium cigar, from planting to final boxing, it is not too soon to start thinking about the eventual end of the Cuban embargo and how this will affect the industry. The greatest impact will be on the Dominican Republic, the world's largest producer of non-Cuban premium cigars. Last year, for example, the DR exported approximately 198 million Class H (premium) cigars to the U.S. alone. By contrast, Cuba exported slightly less than 150 million cigars worldwide (with an estimated 10% going to the U.S. via the black market). More telling is the fact that during the boom years, when demand was at a peak, the Dominican Republic was churning out as many as 440 million cigars a year, while Cuba was only exporting 100 million. Even at the height of pre-Castro production, Cuba was never able to make more than 350 million cigars annually. The fact is, there is simply not enough tobacco farmland on the 700 mile long island to produce as many cigars as demand would dictate. Thus, production has always been stymied. So what will happen when the U.S. market opens up? How will Cuba deal with this?

Fidel Castro, pictured at a black tie dinner the author attended, has managed to defy the embargo in spite of severe economic hardships. The question is, how much more can Cuba take?
"We cannot afford to abandon our European customers," a Cubatabaco official told me during a 1992 interview in Havana. "They have been loyal to us through the years."

Yet it will be difficult if not impossible to ignore the U.S. mega-market that is only 90 miles from Cuba's shores. To get the other side of the answer, I asked a number of cigar companies this same question during a recent visit to the Dominican Republic.

"Let's say that tomorrow, President Bush lifts the embargo," says Benji Menendez, senior vice president, Premium Cigars for Altadis. "We think that all Cuban cigars are handmade long filler. Yes, when you talk about cigars like the Montecristo No. 4 and Partagas 8-9-8, for example, that is true. But then you look at Spain, where the vast majority of cigars are short filler. So, you are going to have a certain amount of cigars....that are made with long filler. But also, there are a number of cigars that are being made outside of Cuba, with Cuban tobacco, that are being made with short filler. So what is really going to happen? Cuba doesn't have the [tobacco and] capability to come into the U.S. market with 150 million cigars. I also believe that the taste of the Dominican cigar is already well entrenched in the United States."

Carlos Fuente, Jr. of Arturo Fuente Ltd. also has an unbridled faith in the Dominican product. Even in Europe, where many of his family's cigars compete against Cuba's top brands, a few of Fuente's premiums, such as the OpusX, are actually priced higher than some Havanas. As for the embargo ending and affecting his sales, Fuente confidently replies, "I don't even worry about it."

CIDAV Corporation's Hendrik Kelner, maker of premium brands like Davidoff, Avo, and Griffin, also expresses confidence. Kelner sees the end of the embargo funneling more Cuban cigars away from Europe and into America, thus opening up the overseas market for other brands.

"At this moment," says Kelner, "Cuba is not ready for the American market. They don't realize that the American cigar smoker is different from the European cigar smoker. In Spain for example, the Spanish smoker only buys Cuban cigars and if one is no good, he'll still try another Havana. But if an American smoker tries a Cuban cigar and finds it doesn't have the quality, that it is rolled too tightly, or is made with badly fermented tobaccos, he may try it one more time, but after that, he won't buy a Cuban cigar again. [American cigar smokers] don't have the brand loyalty that Europeans have. And Cuban cigars don't have the consistent quality of a Dominican cigar. As for the higher prices of Havanas, that is not important to me; Davidoff already competes in that area."

When the embargo eventually ends, Daniel Nut have the brand loyalty that Europeans have. And Cuban cigars don't have the consist

"It's a matter of competition," he says "I would like to believe there is a market for Cuban tobacco and a market for Dominican tobacco. Once the embargo is over, new possibilities would be open."

Indeed, Cuba may not realize nor be ready for the challenges that would be faced from other cigar makers.

"I'm sure if Cuban tobacco becomes available, we will experiment," says Jose Sejas, general manager of Tabacalera De Garcia.

So the real question is not so much how other cigar makers will be affected by the eventual presence of Havana cigars, but rather, will Cuba be able to deal with a greatly expanded and competitive market? Barring any unforeseen international incidents, it is an answer we will inevitably know.

Richard Carleton Hacker is an internationally acclaimed author of The Ultimate Cigar Book, now in a newly published Third Edition. He is also Smoke & Spirits Editor for Robb Report, a contributing writer for Playboy, and a featured columnist for The Quarterly Review of Wines.


SMOKESHOP - August/September, 2001