Cuban cigar prices may double when US Embargo is lifted

[Jimmy2]

Cuban cigar prices may double when US Embargo is lifted

By Thomas Mulier | Bloomberg

Premium Cuban cigars would jump in price if the US were to end an embargo on trade with the island nation and permit their sale in its cigar market, the world’s largest, according to Swedish Match AB.

Demand for Cuban cigars might double overnight if the ban were lifted, a step Swedish Match managers view as “inevitable,” Chief Financial Officer Lars Dahlgren said on Wednesday. The Stockholm-based owner of the Macanudo brand has drawn up plans to prepare, he said in a telephone interview.

Speculation about an end to the ban arose on Tuesday as Fidel Castro resigned as Cuba’s president after 49 years, though the US State Department said no policy changes are imminent. American smokers buy two-thirds of the world’s premium cigars, according to Swedish Match, the industry’s second-largest member, which has contested ownership of the Cohiba brand with Cuba’s government.

“There’s no way you can serve Europe and the US if Cuban cigars became big in the US,” said Dahlgren, who declined to say when the ban might be lifted. “If consumers would demand the same quality of cigars, prices would skyrocket.”

The entire industry eventually would benefit from an end to the embargo, which would create more interest in smoking cigars, according to Dahlgren.

The ban, which was imposed in 1962 by John F. Kennedy and tightened by later US presidents, has sparked a dispute between Swedish Match and Cuba’s government over the rights to the Cohiba brand. It also was the cause of a legal battle between Bacardi Ltd. and Pernod Ricard SA for the Havana Club rum trademark.

Cigars sold now under the Cohiba name in the US are made in the Dominican Republic. Cuban-made Cohibas are sold outside the US by Corporacion Habanos, a partnership between the Caribbean nation’s government and Madrid-based Altadis SA.

Handmade Cohiba Corona Especial cigars from the Dominican Republic cost about $7 each on the website of Burlington, North Carolina-based JRCigars.com, which bills itself as the world’s biggest cigar store. A Cuban Cohiba costs 23.40 Swiss francs ($21) at the Davidoff cigar shop in Geneva.

Altadis has been taken over by Imperial Tobacco Group Plc, the Bristol, England-based maker of John Player Special cigarettes. Imperial might get a boost of as much as 2 percent to earnings before interest, tax, depreciation and amortization if the US were to end the embargo, said Jonathan Fell, an analyst at Deutsche Bank AG in London.

“We are prepared for this to happen sometime,” Dahlgren said of a lifting of the ban. “The US is our most important premium cigar market. If the US consumer wants Cuban cigars, we will seek to share that segment of the market.”

Swedish Match may lose market share initially if the ban were ended and Cuba kept its monopoly on production, he said. In addition to its own brands such as Garcia y Vega, the company owns Cuban heritage trademarks including Partagas and Hoyo de Monterrey that were bought from exiles.

“The first few weeks we wouldn’t sell a single cigar because everyone would be buying the forbidden fruit,” the CFO said.

Swedish Match, the world’s second-biggest maker of smokeless tobacco products, reported a 31 percent gain in fourth-quarter profit today after tax increases in Sweden prompted it to boost snuff prices.

[Hugomarink]

Precisely why now is the time to stock up on Havanas like there is no tomorrow. :-D

[tigger]

Rob and Lisa put you up to this, didn't they Jimmy? :-D

It will be very interesting to see how this all shakes out.

[joeypots]

I was told by a Swiss vendor, for what it is worth, that they expected cigars made during the embargo would get high prices on the secondary market. His rational was that the increase in production needed to satisfy the US market would result in an overall decline in quality. Cigars made during the embargo will take on the cache we attribute to pre embargo cigars today.

[havanaclub7]

If Obama gets elected President, I could see him lifting the embargo. If it's Hillary or McCain, I think the embargo stays in place at least until Raul Castro is gone. I think it will be difficult for any President to lift the embargo as long as there is a "Castro" ruling Cuba.

[brian1]

Its not as simple as just lifting the Embargo. If it was that sinmple it would have been done years ago. As Long as the Cuban Miami community support the embargo it will stay. No President will mess with this important voting block in Florida. Like most thing in the end its about politics. And I agree as long as there is a Castro alive there no end to the embargo.

» If Obama gets elected President, I could see him lifting the embargo. If

» it's Hillary or McCain, I think the embargo stays in place at least until

» Raul Castro is gone. I think it will be difficult for any President to

» lift the embargo as long as there is a "Castro" ruling Cuba.

[FLitiGator]

The Embargo will remain for 5-10 yrs minimum. I would be shocked to see any major changes until Castro's generation passes. As a Floridian I can attest to the changes in our state since the exiles arrival. They haven't been positive and I expect that their return to Cuba would be a detriment to that country as well.

» If Obama gets elected President, I could see him lifting the embargo. If

» it's Hillary or McCain, I think the embargo stays in place at least until

» Raul Castro is gone. I think it will be difficult for any President to

» lift the embargo as long as there is a "Castro" ruling Cuba.

[Claudius]

» Its not as simple as just lifting the Embargo. If it was that sinmple it

» would have been done years ago. As Long as the Cuban Miami community

» support the embargo it will stay. No President will mess with this

» important voting block in Florida. Like most thing in the end its about

» politics. And I agree as long as there is a Castro alive there no end to

» the embargo.

»

» » If Obama gets elected President, I could see him lifting the embargo.

» If

» » it's Hillary or McCain, I think the embargo stays in place at least

» until

» » Raul Castro is gone. I think it will be difficult for any President to

» » lift the embargo as long as there is a "Castro" ruling Cuba.

My understanding is that the President of the USA cannot lift the embargo as it is not just the initial (JFK) presidential order anymore, but was voted into law. He could, of course, stop threatening to veto bills containing pro-Cuban amendments if these are proposed by Congress.

[Claudius]

» The Embargo will remain for 5-10 yrs minimum. I would be shocked to see

» any major changes until Castro's generation passes. As a Floridian I can

» attest to the changes in our state since the exiles arrival. They haven't

» been positive and I expect that their return to Cuba would be a detriment

» to that country as well.

Let's hope the embrago remains as long as possible so we can stock up as much as possible before it is removed and prices skyrocket and quality goes down the drain again.

[tigger]

» My understanding is that the President of the USA cannot lift the embargo

» as it is not just the initial (JFK) presidential order anymore, but was

» voted into law. He could, of course, stop threatening to veto bills

» containing pro-Cuban amendments if these are proposed by Congress.

Es verdad.

[luv2fly]

» » My understanding is that the President of the USA cannot lift the

» embargo

» » as it is not just the initial (JFK) presidential order anymore, but was

» » voted into law. He could, of course, stop threatening to veto bills

» » containing pro-Cuban amendments if these are proposed by Congress.

»

» Es verdad.

There have been votes in Congress to end it but to no avail.

The best way to bring about change is to let us travel and do business there and the people could have first hand experience with democracy.

[gyosa]

didn't most dominican cigar makers win trademark and copyright lawsuits against cuban brands to effectively shut out most cuban cigars from sale in the US ?

[tigger]

» didn't most dominican cigar makers win trademark and copyright lawsuits

» against cuban brands to effectively shut out most cuban cigars from sale

» in the US ?

Sorta.

But half or more are owned now by Altadis (Imperial now/yet?) which bought Consolidated Cigar (which owned rights to those brands in the US). Altadis also owns half of Habanos S.A.

The bulk of the rest of them are owned by Swedish Match, through their purchase of General Cigar.

Once the embargo ends, the only question really is what kind of deal, if any, HSA will strike with Swedish Match to sell Cohiba, Partagas, LGC, etc in the US.

[Jimmy2]

The US goverment has no right to tell another country how to run it as i would not want no one to tell my country the same.

Once they have no more use for the Cuban vote the embargo will end lets face it.

The embargo has nothing to do with the Cuban people in Florida it was about the missle crsis people seem to forget.

The embargo should have ended years ago as President Ford almost got rid of it but Castro messed that one up .

The one thing there was no Cuban vote than in Florida in the 1970's thats why it almost ended.

Its all bullshit and i should freely go as i please as that is what my country in based on hey even Kennedy agreed when signing in the embargo to this.

Cuban vote's in Florida keeps the Embargo alive and hurts ONLY the people of Cuba and not the Gov.

45 years and the Gov there is still in power what does that say to me a failed Embargo and another failed American policy.

Again i do not like the Castro brothers or there Gov and wish the people who live there a better life but the US has no say on how they should run there country.

The US backed Batista for a long time when he comminted terrible crimes against his people almost to the end.

Its been like that in that country for close to a hundred years it has always been unstable with there Gov's.

[havanaclub7]

Jimmy, I disagree with you. There are still people alive and living in the U.S. (as citizens) who had their personal property and businesses "Socialized" (ie. stolen) by Castro and his regime. These people have close family members who are also still alive. It will be difficult for the U.S. to openly concede the theft while they are still living.

[Claudius]

» The US goverment has no right to tell another country how to run it as i

» would not want no one to tell my country the same.

»

» Once they have no more use for the Cuban vote the embargo will end lets

» face it.

»

» The embargo has nothing to do with the Cuban people in Florida it was

» about the missle crsis people seem to forget.

»

» The embargo should have ended years ago as President Ford almost got rid

» of it but Castro messed that one up .

»

» The one thing there was no Cuban vote than in Florida in the 1970's thats

» why it almost ended.

»

» Its all bullshit and i should freely go as i please as that is what my

» country in based on hey even Kennedy agreed when signing in the embargo to

» this.

»

» Cuban vote's in Florida keeps the Embargo alive and hurts ONLY the people

» of Cuba and not the Gov.

»

» 45 years and the Gov there is still in power what does that say to me a

» failed Embargo and another failed American policy.

»

» Again i do not like the Castro brothers or there Gov and wish the people

» who live there a better life but the US has no say on how they should run

» there country.

»

» The US backed Batista for a long time when he comminted terrible crimes

» against his people almost to the end.

»

» Its been like that in that country for close to a hundred years it has

» always been unstable with there Gov's.

Exactly.

[Claudius]

» Jimmy, I disagree with you. There are still people alive and living in the

» U.S. (as citizens) who had their personal property and businesses

» "Socialized" (ie. stolen) by Castro and his regime. These people have

» close family members who are also still alive. It will be difficult for

» the U.S. to openly concede the theft while they are still living.

What? Why? What does it have to do with the US? Government expropriations happen all the time. If you choose not to do business with countries who occasionally expropriate people, you wouldnt get any French wine in addition to no Cuban cigars in the US.

Your country's government allows the import of merchandize from China and other places who do not respect human rights, and you're trying to tell me it should have an embargo against Cuba because the gvt there took people's farms 48 years ago?

[Jimmy2]

havanaclub7 as i said who are we the US to tell the Cuban Gov to do what we want or else they are there own country like them or not.

What ever happened there belongs there and the Cuban people who lived there and left during the Rev lost everything and will NOT get it back after the Embargo ends.

If the Cuban people try and get back there property or anything else it should be in a CUBAN court not the US.

We have no say period!

Again i do not like the Castro Gov and wish they were gone.

[havanaclub7]

Jimmy,

Did you vote for Ron Paul in the primaries? Just curious :wink: