Cuban cigar sales rise amid luxury spending spree

Campaign News | Monday, 27 February 2012

By Rosa Tania Valdes for the Reuters News Agency

Cuban cigar sales jumped 9 percent to $401 million in 2011 as spending on luxury items increased in countries with stronger economies, Cuban cigar executives said on Monday.

They said smokers in China, the Middle East, Russia and Brazil helped overcome declining sales in economically troubled Spain and Greece. Still, Spain held on to its position as the top consumer of what are generally considered the world's best cigars.

"We are selling our products in 150 countries, which allows us to compensate to a certain degree for sales declines in some countries with increases in others," said Javier Terres, vice president of Habanos S.A., the worldwide distributor of Cuban cigars.

Stronger cigar sales followed "the world rising trend of luxury goods," Habanos said in a press release.

Terres spoke at the opening of the annual cigar festival of Habanos, a joint venture between Cuba and British tobacco giant Imperial Tobacco Group Plc.

Western Europe is Habanos' biggest market, accounting for 53 percent of sales last year, followed in descending order by the Americas minus the United States, the Asia Pacific region, the Middle East and Africa and eastern Europe.

Due to the 50-year-long U.S. trade embargo against Cuba, Cuban cigars cannot be sold legally in the United States - the world's largest cigar market.

By country, Spain leads all others in Cuban cigar consumption, followed by France, China, Germany and Switzerland.

Terres predicted that 2012 would be a "complicated year" because of economic uncertainties and the rise of anti-smoking laws, which have swept the globe in recent years.

Habanos' goal, he said, would be "maintaining" sales in a difficult environment.

Laws restricting smoking have made it harder for cigar lovers to find places to smoke. Habanos has responded by offering more smaller cigars that can be smoked quickly in outside locations.

Following that strategy, marketing director Ana Lopez said a new "Petit Churchill" cigar under the well-known Romeo and Julieta brand would be released this year.

She said Habanos, which produces other famous brands such as Cohiba, Partagas and Monte Cristo, has about 80 percent of the world's hand-rolled premium cigar market outside the United States.

Terres said 220 million to 250 million cigars are smoked annually in the United States. The inability to enter that market cost Habanos an estimated $79 million in sales last year, Lopez said.

She said Habanos also is stepping up measures aimed at thwarting counterfeit Cuban cigars by, for example, making labels and packaging more difficult to duplicate.

In 2010, about 200,000 fake Cuban cigars were confiscated, she said. (Writing by Jeff Franks; Editing by Christopher Wilson)

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