Cuba’s famed cigar industry recovering from crisis

HAVANA - Production of Cuban cigars and tobacco leaf are on the rise after falling on hard times in the country famed for its “puros” cuba-cigarsdue to smoking bans and the international financial crisis, according to local reports.

The dexterous fingers of Cuba’s cigar makers rolled out 81.5 million of the much sought-after smokes last year, compared with 75.4 million in 2009, according to a report released by the National Statistics Office on its Web page (here).

Cuba’s finest tobacco leaf is grown and cured in western-most Pinar del Rio province where the just-concluded harvest produced 25.4 million leaves, according to local radio reports, compared with the previous year’s 22.4 million leaves.

While the figures are up, they are still well below 2008 when Cuba produced just over 100 million cigars for export and Pinar del Rio’s tobacco harvest totaled 26 million leaves.

The partial recovery is due largely to growing demand in Asia — particularly China — where the new rich are keen for the largest and most expensive cigars, said Gonzalo Fernandez, deputy director of marketing at Habanos S.A., the worldwide distributor of Cuban cigars.

China has climbed into third place, behind Spain and France, among the largest markets for Cuban cigars.

Cigars are one of Cuba’s top exports.

Its taste for top brands adds to Habanos’ bottom line because “around 75 percent of (revenue) come from the five most expensive of our 27 brands such as the Cohiba and Trinidad,” Fernandez told Reuters.

The company, a joint venture with giant British tobacco company Imperial Tobacco Group Plc, reported sales of $368 million in 2010, up 2 percent from the previous year.

“So far this year the positive trend has continued,” Fernandez said.

The global financial crisis put a dent in sales of luxury goods such as Cuban cigars, while smoking bans that have spread around the world are the bane of the cigar industry.

Habanos is trying to counter the effects by offering more lines of small cigars that can be smoked quickly during a work break and cigars tailored for women smokers.

Cuba’s premium cigars dominate the world market with 70 percent of sales.

That jealously guarded market share excludes the United States, where Cuba’s cigars are banned under a decades-old trade embargo against the Communist island.

The huge domestic demand for lower-quality cigars, which cost as little as a few cents and are made from tobacco grown elsewhere in the country, showed no sign of slowing despite local smoking bans, which like many other laws, are more tolerated than respected.

About 300 million were produced last year, similar to 2009 and compared with 278 million in 2008.

Some 200,000 private farmers and family members depend on growing and curing tobacco under contract with the government.

Tens of thousands of workers earn a living rolling the crop into the famous cigars.

By Marc Frank

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