By Jay Amberg Bloomberg Lifestyles.
Bloomberg.com. Wed, 15 Nov 2000,
12:38pm EST
Havana, Nov. 7 -- Faced with ongoing shortages of tobacco leaf and a slump
in global sales, Cuba's exports of premium cigars could tumble to 100 million
units this year, the lowest since 1997, compared with exports of about 150
million cigars last year, according to Cuban tobacco officials who oversee
manufacturing.
At the outset of 2000, Cuban cigar producers anticipated exports of about
160 million-170 million units, though recent shortages of tobacco leaf, unsold
inventories and a global drop in sales are all said to be responsible for the
production fall.
"This is a short-term problem that in the long run will probably be
better for the Cuban cigar industry,'' said a Cuban official in the Ministry of
Agriculture.
"In the late 1990s, there was a rush to manufacture and grow tobacco.
That's all changed now and during the boom (in sales), the quality of the Cuban
brand did suffer. We are now addressing those issues and the result is a better
cigar now than say three years ago,'' the official said.
As early as February, global cigars merchants returning from Cuba said
Habanos SA, Cuba's global marketer and distributor for its cigars, was facing
leaf shortages that were expected to cause production cuts of about 8 million-10
million cigars.
Along with shortages of tobacco, Cuban was also reported to be holding
stockpiles of 200 million unsold cigars, product that was rejected because of
inferior quality or poor storage.
"On paper, such a big drop in Cuban cigar exports might seem like a big
deal, but I think it means that the people who have a real say in the Cuban
cigar industry, those that really know the product, are finally being listened
to,'' said Ajay Patel, the owner of Broadweighs Cigar Store in London.
"When the rush was on to produce Cuban cigars, the quality nose dived
and in the last year the quality of the major brands seems to be much
improved,'' Patel said.
One way Habanos SA has improved quality has been to shift the manufacturing
of some of its most popular brands such as Montecristo, Partagas, Romeo y
Julieta, Cohiba and H. Upmann, back to the original Havana factories where most
of these cigars have been produced since their inception.
Through the late 1990s, because of rising demand, production of Cuba's top
brands was shifted to regional factories outside Havana where many novice cigar
rollers were pressed into service without the necessary skills to produce
well-made cigars.
In its haste to take advantage of the '90s boom, Cuban cigars that were
earlier allowed to age for six months to a year before being sold, were rushed
to the market, with most boxes being sold within a month of production.
"Cuban cigar smokers know about the Havana factories and we (Cubans)
realize the historical importance of identifying specific brands with a specific
factory,'' said a Cuban who manages one of Havana's many La Casa del Habano
cigar stores. "I think fewer cigars from the main factories means better
quality and that's what consumers have been complaining about.''
Cuban cigar experts say there's no doubt this year's shortage of large
wrapper leaf from Pinar del Rio province, home to Cuba's best cigar tobacco
farms, has been a major factor in the government's decision to reduce the
island's production of premium cigars this year.
The shortages have also fed a yearlong rumor mill that Cuba has turned to
importing cigar tobacco from Nicaragua to avoid the embarrassment of seeing its
cigar production slip even further.
Senior Cuban officials in the Ministry of Agriculture and Habanos SA have
adamantly denied rumors about Cuba's use of Nicaraguan tobacco.
Because Cuba's premium cigar industry is the island's third leading producer
of hard currency, behind tourism and sugar, it's assumed production cuts this
steep have the approval of President Fidel Castro.
When it comes to cutback in the cigar industry, Cuba isn't alone. Production
cuts and plant closures seem to be the norm in the premium cigar business this
year, especially among the world's leading producers.
Last week, General Cigar, the manufacturer of America's largest selling
premium cigar brand, Macanudo, confirmed it had shut down its Kingston, Jamaica,
cigar factory in October.
The Jamaican factory was where the Macanudo brand had been produced for 30
years.
While General Cigar will continue to manufacture the Macanudo brand in the
Dominican Republic, the Jamaican plant closure was seen as a sign of the times
in the premium cigar industry.
On Sept. 19, Altadis SA, the world's biggest cigar maker and the company
that owns 50 percent of Habanos SA, reported it was in the process of closing
cigar factories in Jamaica, Honduras and Nicaragua, according to the Spanish
newspaper La Gaceta de los Negocios.
Cutbacks and consolidation in the global market for premium cigars have been
necessitated by a significant drop in incremental sales since the cigar boom
went bust.
©2000 Bloomberg L.P. All rights reserved. | 