Thursday, June 24, 2010

Smoking bans and economics hit famed Cuban cigars

Smoking bans and economics hit famed Cuban cigars
By Marc Frank Marc Frank – Mon Jun 21, 1:21 pm ET

HAVANA (Reuters) – Global economic woes and the worldwide spread of
smoking bans are taking their toll on Cuba's famous cigar industry, with
the just-completed harvest of the country's finest tobacco down 14
percent over 2009, local media said on Monday.

In westernmost Pinar del Rio, home of Cuba's most famous tobacco, the
harvest came in at 22.4 million leaves, down from 26 million in 2009,
according to Guerrillero, the province's Communist party weekly.

The area's tobacco is used as wrapper leaf and part of the filling in
Cuba's prized cigar brands, including Cohiba, Montecristo, Trinidad and

"There was a reduction in planting due to limitations in resources
caused by the economic crisis," the weekly said.

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 the 48-year-old U.S. trade embargo
against the communist-led island.

But the industry has fallen on hard times in recent years, with
production of cigars for export down from 217 million in 2006, to 123
million in 2007 and just 73 million last year as the business drew on
its stored inventory, the government reported this month.

Cash-strapped Cuba cut the amount of land devoted to growing its famous
tobacco by more than 30 percent last year.

Sales from cigar exports fell to $218 million in 2009, down from $243
million in 2008.

In contrast, 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.

About 300 million were produced last year, compared with 278 million in
2008, the government said.

The exclusive distributor of Cuban cigars, Habanos S.A., a joint venture
between Cuba and British tobacco giant Imperial Tobacco Group Plc, was
not immediately available for comment.

Some 200,000 private farmers and family members depend on growing and
curing the precious leaf under contract with the government. Tens of
thousands of workers earn their living hand rolling the crop into the
famous "Habanos" or "Puros" for export.

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