Views From a Smoke-Filled Room

With Fidel stepping down, will there be an influx of Cuban cigars on the U.S. market?

LOS ANGELES – Like a mirage in the desert, some American smokers are seeing Cuban cigars within their grasp.

The news that Fidel Castro has stepped down as the Cuban leader and the rhetoric of both potential Democratic Party presidential hopefuls – Barack Obama and Hillary Clinton – that the U.S. embargo should be either revisited or lifted altogether, has some readying their humidors for brands from Havana.

Not so fast.

Even if the embargo were dropped tomorrow – and it won’t – the process of getting Cuban cigars onto U.S. shelves will take time.

First, there’s the question of supply. Cuba does not provide any definitive figures on production, but it is believed to export about 160 million cigars annually. And it is reported to sell everything it makes, so there aren’t millions of cigars sitting about, ready to be sold in the U.S.

Second, the distributors of Habanos around the world are already wary of losing supply to the U.S. once the embargo ends and the American market opens. They will fight fiercely to maintain their allocations.

Then there is the problem of trademarks. The only company which has ownership of some Cuban brand trademarks in both the U.S. and Cuban markets is Altadis. S.A., now part of Imperial Tobacco. It has the rights for Gispert, H. Upmann, Juan Lopez, Montecristo, Por Larranaga, Romeo y Julieta, Saint Luis Rey and Trinidad. It would be possible for Imperial to create distribution in the U.S. fairly quickly for these brands once the embargo is lifted.

However, the rights to the other 19 export brands of Havana cigars are owned by other distributors. Famous names like Bolivar, Cohiba, Fonseca, Hoyo de Monterrey, Partagas, Punch, Ramon Allones and others are owned by companies such as General Cigar and they will not give permission for sales in the U.S. of the Cuban versions. Instead, a series of negotiations will have to be held to determine who will sell these brands and under what conditions.

This battle royal over brand rights will be a sideline to any end of the U.S. embargo of Cuba and may keep some brands of Havana cigars on the sidelines for some time.

A potential end to the U.S. embargo will be all the talk at this week’s 10th Festival del Habano in Havana, with 1,600 delegates expected to attend, including some who slip in from the U.S. without permission.

But until many, many questions are settled, seeing real Havana cigars on American store shelves is quite a long ways off.

(Rich Perelman is editor-in-chief of CigarCyclopedia.com, offering comprehensive daily coverage of cigars, accessories, issues, people and prices at www.CigarCyclopedia.com).

Rich Perelman

2/25/08

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