Winds of Change

THERE is considerable turmoil in the cigar world right now.

Change is something a lot of us fear, but it’s also one the certain thing in an uncertain world. Like it or not, change is coming.

The cigar market hasn’t been this volatile in decades. And by volatile, we mean things are constantly changing and evolving. Cuba – once unquestionably the world’s dominant handrolled cigar power, has changed beyond recognition in the last five years or so. For those unaware, in 2020, a secretive Chinese consortium bought up a 50% share of Habanos S.A., Cuba’s cigar marketing and distribution company. The other 50% is still state owned.

This generational shift in emphasis of distribution, plus the impacts of Covid 19, a downturn in already struggling Cuban economy, natural disasters like hurricanes during growing seasons, a ‘brain drain’ of expert Cuban tobacco workers leaving the island to seek their fortunes in Nicaragua and then the US and years of under investment in the industry has changed the long established ‘rules of the game.’

There is a new policy afoot at Habanos SA. And without inside information, our best bet is that this policy in general is to fix Cuban cigars – particularly Cohiba and Trinidad brands – as one of the world’s leading luxury products. With a price tag to match. Think Rolex, think Louis Vuitton.

Cuban cigars have increased in price exponentially in the last two or three years. Many former Cuban cigar lovers have been, and are being, priced out of the market. This has given impetus to the already surging ‘New World’ cigar industry – and by this, we mean those handrolled cigars made outside of Cuba, in countries like Nicaragua (now the world’s largest exporter of handrolled cigars) Dominican Republic, Honduras, Mexico and others. Much of this New World cigar market is owned by American dollars – and they haven’t been in short supply. Over the years, billions have been spent by the owners of cigar companies based in the above countries. There has been vast expenditure on infrastructure, design, marketing, quality control, agronomy, seed varieties and more.

The above acts as a quick explainer to the new cigar smoker or the simply curious, as to why we are where we are. Cuba makes less cigars and sells them for more money; the rest of the world is making more and more cigars too, and while their prices have also increased, it is not on the scale of Cuba. New Word cigars arguably offer better value now than ever before when compared to their Cuban counterparts.

The situation is ever changing. Quite how it all will pan out, no-one is able to tell you. Will we ever get back to a situation where shelves are well stocked with a library of Cuban brands, like they were in the ‘good old days?’ Or will Cuba concentrate on keeping its Chinese partner happy and supplied with the bulk, and cream of the crop, leaving the rest of the world to pick up the crumbs?

And what happens when China gets jaded with Cohibas and finds new avenues for its seemingly bottomless cash accounts? Will Cuba be able to return to the rest of the world and re-establish its former position?

Will New World cigars get better and take even more market share? How can they improve and use their ‘time in the sun’ wisely to make sure this ever-increasing share of the world market is secure?

Interesting times indeed. Unsettling, even. All things must change. Whether we like it or not, we must accept it. And learn to find the opportunities that change always brings.

Keep an open mind. Keep an open palate. Look for quality. Ask those who know for help. Your Sautter cigar merchant remains at your service, whatever your needs.