Cuba Cuts Back on Cigar Tobacco Acreage

Despite all the rosy projections for the cigar industry I have read and heard about for the last couple of years it looks like Cuba is going to cut back production by 30%.

Cash-short Cuba is slashing the amount of land devoted to growing its famous tobacco by more than 30 percent as the global recession and worldwide spread of smoking bans bite into sales of the country’s prized cigars.

Demand for Cuba’s cigars fell 3 percent in 2008 and earlier was reported down 15 percent in 2009 because of the recession and the smoking bans adopted in a growing number of places as a public health measure.

Cuba’s National Statistics Office, in a report posted on its web page (www.one.cu), said land to be planted with tobacco for next year’s crop had dropped to 49,000 acres (19,800 hectares), down from 70,000 acres (28,200 hectares), which was in turn less than 2008.

[SOURCE]

The theory from some of the cheerleaders in the cigar industry (Ahem, Cigar Aficionado) was that higher taxes and smoking bans would not affect premium cigar sales too much because, well, we will still buy expensive cigars despite all the roadblocks erected in front of us… just because we like premium cigars so much and our wallets are always full of money.

It is probably true that the Cubans are cutting back production of their lower level cigars; so Montecristo, Bolivar and Cohiba will not be affected as much – I’m guessing. It’s also true that the recession is having a significant impact on cigar sales. Actually, now that I think about it, according to Greg Mankiw’s blog:

The consumption of high-consumption households is more exposed to fluctuations in aggregate consumption and income than that of low-consumption households in the Consumer Expenditure (CEX) Survey.

Accompanying chart:

[caption id="" align="aligncenter" width="400" caption="The exposure to aggregate consumption growth of households in the top 10 percent of the consumption distribution in the CEX is about five times that of households in the bottom 80 percent. Given real aggregate per capita consumption growth about 3 percentage points less than its historical mean during the past year, these figures predict that the ratio of consumption of the top 10 percent to the bottom 80 percent has fallen by about 15 percentage points (relative to trend)."][/caption]

Basically, what this graph shows is that during a downturn there is less cigar money; especially amongst the wealthier cigar smokers.

I don’t think it’s too controversial to claim that the goal of governments all over the world is to create a permanent recession in the tobacco industry. Through increased taxes and more aggressive smoking bans, governments are in the process of destroying the cigar industry. It will take time but, with small, incremental steps, governments all over the world are working overtime to make cigars too expensive even for the so-called wealthy people who smoke them.

Cuba cutting back tobacco acreage may turn out to be a reaction to the global recession. Or it could be a harbinger of more serious cutbacks to come.

FIGHT BACK! Join Cigar Rights of America.

Cuban Cigar Outlook for 2009

This first story got me worried about Cuban cigars:

    Why are sales of Cuban cigars down? The minute the subprime mortgage crisis turned global, of course, demand had no place to go but down. And, there’s always the quality issue that has plagued manufacturers in recent years. So far, the damage hasn’t been bad.
    Habanos S.A., which makes the storied Montecristo, Cohiba and Partagas brands, moved $390 million in 2008. That’s a drop of 3 percent from 2007.
    ****
    Unsurprisingly, Habanos blames smoking bans in France, Germany and the United Emirates (among others) in addition to the financial crisis. If you can’t find a place to smoke, you aren’t likely to do it as much (a trial I endured in Scotland last year).
    ****
    American cigar dilettantes weren’t able to piss away as much on Cuban sticks as they may have in the past. Duty free shops thus moved fewer cigars than usual, with total sales in these venues down 24 percent from 2007 to 2008.

Maybe since demand isn’t forcing more production the Cuban cigar makers will get to focus more on quality. Unfortunately, for me mainly, I can’t really talk about the quality of Cuban cigars since I’ve only had one. Yes, I know, that sucks.

Not everything is all doom and gloom for Cuban cigars, not by a long shot. Even though they were whacked with two big storms in 2008 they are set to have a great crop in 2009.

    The world’s premier tobacco region in western Cuba has recovered from two powerful hurricanes in 2008 and is about to produce one of the best crops in years, growers said on Tuesday.
    Lush green fields of the leafy plant stood ready for harvest in the island’s Vuelta Abajo region of Pinar del Rio province, a sacred place for cigar smokers around the globe.
    Curing barns were filled to the roof with leaves that have already been picked.
    “The tobacco has a lot of oil, and it’s good size. The more oil you have, the more flavor,” said planter Leonardo Moreno.

To rap all of this up Cuba is set to have their annual cigar fest:

    The 11th Habano Cigar Festival was opened on Monday at the Havana Convention Center by Raul de la Nuez, minister of Foreign Commerce.
    The event brings to the Cuban capital more than 1,000 participants from 70 countries including producers, experts, smokers, business people and researchers.

In summary, the state of Cuban cigars is strong! Cuba, on the other hand….

Is the Embargo on Cuba a Good Thing?

Cigar Aficionado doesn’t think so. In their latest issue, which hasn’t arrived at my house yet, they argue for lifting our embargo on Cuba. Here’s a little taste of what they have to say:

We believe it is time to end the trade embargo and open the doors of Cuba to Americans. We don’t gloss over the widespread and justified condemnation of some of Cuba’s domestic policies that have limited political freedoms and human rights. But after 50 years of isolating Cuba to try to achieve change there, we think it’s time to try something else, and we believe that opening up the island to American visitors, and thus our influence, will help produce the kind of changes we want much quicker than any other policy.

To tell you the truth, I am conflicted about this issue. Obviously, opening up Cuba would give me more access to what are suppose to be the world’s best cigars. That would be a plus.

On the other hand lifting the embargo could be construed as a tacit acceptance of a brutal communist dictatorship. That would be a negative.

Here’s my thoughts – right now – on lifting the embargo on Cuba:

Cohiba Name Battle – The Cubans are Winning

Reversing previous court decisions the courts have found that Cubatabaco might actually have a good claim against General Cigar and their use of the name “Cohiba.” I don’t think anything is going to happen now but if the Cubans get everything they’re going after then the Cohiba that is made in the Dominican Republic will no longer exist and all profits made by using that name will go to Cubatabaco.

The Cubans are winning! AHHHHH!

Don’t Judge a Cigar by the Way it Looks

I will occasionally take a peek at Cigar Aficionado’s site because it is a great resource. Today, I went on there and saw that they had a new cigar of the week featuring a Cuban cigar called Cuaba. It’s a pretty big perfecto that received a score of 92 points from the experts.

But Holy crap! The cigar is ugly!

I guess beauty is in the eye of the beholder but, in the end, all that matters is that the cigar functions well and tastes good.