The island manages to hold onto its cigar-world primacy despite three generations of the U.s. embargo.

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On the final night of the tenth annual Festival del Habano, after the multicourse gala dinner for the thousand-plus guests, after the models in their slinky purple dresses showered cigars upon the elegantly appointed tables, after the Vegas-caliber singing and dancing onstage by a cast of spangled dozens, it was time for Simon Chase to step up and take the reins of the climactic auction. Before the marketing director of British Habanos S.A. distributor Hunters & Frankau could begin selling one-of-a-kind humidors for tens of thousands of euros, though, he needed to acknowledge the hospitality of Cuba, the evening's host:

"For those of us who come from countries with smoking bans, it's been an immense pleasure," he said to a room hazy with smoke, and the room applauded in return.

As worldwide bans have forced cigar enthusiasts increasingly into the literal and metaphorical cold, Cuba remains unchanged in its embrace of tobacco. The Cuban government has stayed traditionally tight-lipped about overall economic figures, but it's safe to say that cigars, along with nickel and tourism (and, to some extent, rum), are the isolated island's preeminent sources of hard currency; the state-run cigar company, Habanos S.A., had worldwide sales of $402 million last year, and continues to dominate 75 percent of the worldwide premium cigar market outside of the United States.

An overtly commercial entity in a socialist nation, Habanos S.A. itself is something of an oddity. Not a part of the Ministry of Agriculture, the partly state-owned corporation has attracted heavy investment from companies worldwide, including a part-ownership stake by Imperial Tobacco (inherited during the latter's takeover of Altadis S.A.), while managing to keep many of its internal processes opaque even from its investors. It’s not just a multinational, but also a multicentury -- one foot rooted in the practices and politics of the mid-20th century, the other firmly planted in the globalization of the 21st.

By the Numbers

Back to the auction: Chase offers up another humidor, a cedar colonial-style piece stuffed with dozens of perfectly rolled Hoyo de Monterrey puros, and calls for bids: "Thirty-two thousand...thirty-four thousand...forty-six thousand..." Business has obviously been good lately for the crowd (including many of Habanos S.A.'s worldwide distributors) as they drop the equivalent of a brand-new E-Class Mercedes on a cigar receptacle.

For those whose fortunes are tied to Cuban cigars, revenues have indeed been on the rise. Sources within the company peg the annual number of cigars made for export at somewhere in the neighborhood of 125 million. Its La Casa del Habano franchise stores now sell the company’s 27 premium brands (consisting of some 220 different cigars) from 133 locations around the globe, a 17 percent rise since 2006.

Legendary Habanos S.A. brands include Cohiba -- whose Classic line, its most notable production, was developed between 1966 and 1989 -- as well as Montecristo (which first appeared in 1935) and Romeo y Julieta, founded in 1875 and widely known as Winston Churchill's brand of choice. When you consider units sold, Montecristo rules the roost with 19 percent of the Cuban cigar market, followed by Romeo y Julieta with 18 percent and Cohiba in third place with 12 percent.

Starting in 2007, however, Cohiba became the company's biggest earner, accounting for a full quarter of its cigar revenue (thanks largely to the launch of its high-end Maduro 5 line), with Montecristo a close second at 23 percent, and Romeo y Julieta coming in third. The rest of their lines -- Partagas, Hoyo de Monterrey, et al -- make up the remaining quarter of the company's sales presence. Some 65 percent of sales come from Europe.

Although these brands were born in Cuba, almost all of the original makers who fled Castro's regime registered the names as international trademarks, meaning that companies such as Swedish Match can make and market a non-Cuban version of Bolivar, Hoyo de Monterrey and Partagas. This has grown into a matter of no small contention, although the purchase eight years ago of a 50 percent Habanos S.A. stake by Altadis S.A. (giving it a stake in both trademarks and the network of La Casa del Habano stores) may help ease the nearly inevitable litigation and confusion over the issue that'll erupt once Cuba opens up -- especially with the extra helping of cigar-industry consolidation that’s come with the recent purchase of Altadis by Imperial Tobacco.

But that's a matter for the lawyers; right now, Habanos S.A. is very much about growth. "The fastest-growing markets are, by region, the Asian market comprising China and India, widely known for its big potential; and of course we must not exclude the Latin American markets, which are growing really fast," says Manuel Garcia, commercial vice president of Habanos S.A. "We are leaders in the market, and we are not worried about the existence of other cigars."

In the interest of staying at the forefront, Habanos S.A. has been pouring particular time and resources into gaining a foothold into ever-smokier Asia. "I am happy to say sales have increased substantially over the last few years -- around 15 percent compound annual growth for the last four or five," says Dag Holmboe, CEO of The Pacific Cigar Company Ltd., which operates out of Hong Kong. "In Asia, Cuban cigars have a 70 to 80 percent share in the handmade cigar market." Cigars have taken hold as a premium lifestyle concept in newly cash-flush places such as China, with smokers starting to gravitate towards sticks such as the Cohiba Robusto, Partagas Serie D No. 4, and the Montecristo Edmundo -- the region's top sellers, according to Holmboe, and a good harbinger for the cigar shops and lounges that have sprung up from Japan to Malaysia and Macao.

Given that potential, and the cachet that comes with a Cuban cigar, it's unsurprising that companies would want to invest in Habanos S.A.'s fortunes. In the 1990s, European corporations ranging from Hunters & Frankau to Tabacalera S.A. (which eventually became Altadis S.A.) pumped millions of dollars into the Cuban cigar industry. ¡Viva liquidity!

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