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Posted August 04, 2009 by publisher in Cuban Cigars

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Larry Luxner | Cuba News

As President Barack Obama moves to ease restrictions on trade with Cuba, cigar lovers are savoring the prospect of legally lighting up a smoke that has long required a black-market connection and a willingness to flout the law. Bloomberg reported in mid-June. “There’s a mystique about a Cuban,” said John Anderson, owner of W. Curtis Draper Tobacconist Inc., a cigar shop in Washington. “Cuban tobacco has become the forbidden fruit.”

The possible end to the 47-year U.S. embargo on Cuba trade has intensified a legal and lobbying fight between cigar manufacturers Swedish Match AB of Stockholm and Imperial Tobacco Group Plc of Bristol, England. Each wants exclusive rights to sell Cuban-made brands in the U.S., the world’s largest market for premium cigars. Swedish Match sells cigars in the U.S. made in Honduras and the Dominican Republic under Cuban brand names. It bought the brands from families that fled Cuba after Fidel Castro seized their cigar companies in the 1960s.

Imperial distributes Cuban-made cigars under many of the same names to the rest of the world through an agreement with the Cuban state monopoly, Cubatabaco. “Before serious commerce resumes, this will have to be resolved,” Robert Muse, a Washington lawyer who advises clients on Cuba-related issues, told Bloomberg. Opening the U.S. market to Cuban cigars may jeopardize jobs of 147 workers at the U.S. headquarters of Swedish Match’s General Cigar unit in Richmond, Va., according to Gerry Roerty, the unit’s general counsel. “The market is going to be turned upside down,” Roerty said in an interview. After waiting for almost five decades, Americans “will buy a Donald Duck cigar if it’s a Cuban.”

James Suckling, who has written articles on Cuba for Cigar Aficionado, estimates that Americans consume about 20 million Cuban cigars a year, enjoying them while traveling to Mexico or the Caribbean or stowing them in luggage on the way home. The forbidden fruit carries a premium: A box of 25 Cohiba Robustos costs $304 on the Hong Kong-based Cigars of Habanos Web site, where shoppers are offered the option of shipping to the U.S. without regard to the government’s ban, whereas a Dominican-made version sold online by Holt’s Cigar Co. of Philadelphia sells for $175.

Swedish Match and Imperial Tobacco both sell Dominican-made cigars in the U.S. and together account for almost half of the sales in a U.S. market for premium cigars that Swedish Match puts at $850 million annually. Cuba lost the U.S. rights to Cohibas when General Cigar registered the brand in the 1970s. General Cigar has so far fended off a 1997 lawsuit brought by Cubatabaco to reclaim that name. A new ruling in the case may come within months. General Cigar has spent more than $5 million lobbying Congress since 2001. It got lawmakers to strike a provision in a 2001 measure that it says would have allowed Cuba to barter cigars for food or medicine. Imperial began lobbying this year for the first time since at least 2000, spending an initial $30,000, according to Senate records.

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