Cuban cigar sales drop 8 pct in ’09

Cuban cigar sales tumbled 8 percent to $360 million in 2009 and have fallen by more than a tenth in the past two years as the cuban cigarsdemand for luxury goods around the world has plunged.

Government-run tobacco company Habanos SA said Monday that sales were most sluggish last year in Spain, the top market for the island’s coveted stogies, but one also ravaged by recession and rising unemployment.

A drop in international travel also hurt sales at airport duty free shops in Cuba and elsewhere, which account for as much as 23 percent of the company’s total business, said Habanos Vice President Manuel Garcia.

“This is not what we were expecting, not what we hoped for anyway,” Garcia said during a news conference kicking off Cuba’s five-day annual cigar festival.

Garcia said economic turmoil has decimated demand for all kinds of finer things, from cognac to luxury convertibles to cigars. Habanos sales slumped 3 percent in 2008, when a financial crisis sent stock and commodities prices plummeting around the world.

“It’s been a series of negative factors,” Garcia said.

He would not say how many cigars Habanos sold in 2009. France, Germany and Cuba itself are also top Habanos markets. Washington’s trade embargo against Cuba turned 48 this month and it prohibits Cuban cigars from being sold in the U.S.

Like wine, the taste of top tobacco depends on the soil and climate in which it is grown. Sun-drenched plantations in the humid, western province of Pinar Del Rio, especially in its famed Vuelta Abajo fields, have made Cuban cigars famous for centuries. The vast majority of stogies produced on the island are hand-rolled and destined for premium sellers.

Habanos was founded in 1994 as a joint venture between Cuba and Madrid-based Altadis SA, part of the island’s push to draw private, foreign investment after the collapse of the Soviet Union cost it island billions of dollars in annual subsidies and trade. Altadis has been acquired by Britain’s Imperial Tobacco Group PLC.

Habanos produces 27 premium cigar brands in 220 different sizes, some as small as cigarettes and others nearly as big as a Chihuahua puppy. Garcia said Habanos has 146 stores worldwide, two more than the number of authorized dealers at the end of 2008.

The flagship Cohiba brand was created in 1966 for Fidel Castro — perhaps the world’s most famous cigar smoker — and top Cuban leaders to enjoy personally or give as gifts to visiting foreign dignitaries. Cohibas were authorized for sale on the open market in 1982, and Castro abruptly gave up smoking on doctors orders three years later.

HAVANA February 22, 2010

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