- Sunday, 18 January 2015
Rupert Mackintosh considers some of the repercussions for the Cigar industry in light of improving relations between Cuba and America.
Recent developments on the world stage indicate America is looking set to relaxing some of the strained relationships it has had with Cuba since the 1960s. Whether or not this will result in a direct unlocking of trade with the isolated island remains to be seen. It is worth remembering that during the initial days of the Castro administration the island was regarded as dangerous and at odds with western democracy. Indeed it was held with a similar view of distrust and distain as North Korea today, and also enjoyed a partnership with a Communist ‘sugardaddy’.
One question that frequently comes up however is what an establishment of diplomatic relations would mean for the cigar industry.
Financial sector commentators have forecast that price per stick will rise as a result.
Luxury goods commentators have forecast that prices may rise (shrugging their shoulders), but quality will plummet.
Cigar enthusiasts will forecast one, or the other, or both, depending on how scared they are feeling at that given moment.
My view, however, is a little more balanced. We have to remember that, first and foremost, this is a business for the island of Cuba and indeed a huge contribution to their state economy. In the event that the quality of cigars were to drop, more business would be wooed over to big name rivals in Dominica and Hounduras. Before you dismiss these locales offhand, remember that both Davidoff and Dunhill switched their production from Cuba to these very same spots a long time ago – and have been successful in commanding a premium price.
It is worth noting that while prices may increase – it’s business remember – the proposed problems with supply and demand are also unlikely. There are varying grades of qualification in the cigar rolling business, for example, with the average roller requiring 6 months of prior experience before being deemed ready to roll a petit corona, one of the most popular sizes (approx: Sigilo III sized). That’s really not that long at all, and especially when you consider the current situation. Cuba and the USA do not have diplomatic embassies in place, and have been performing their recent negotiations offshore, with some talks being brokered by the Pope at the Vatican!
The amount of time that will pass before anything much comes of the recent progress will allow the Cuban factories more than enough time to expand, buy bigger premises and factories as required, and hire more workers and get them trained up to roll the most common sizes. I think it highly unlikely that the ‘Regional Releases’ and other ‘Specials’ will drop out of production – they are big money spinners each year and a great marketing idea (by making something limited it implies rarity and value). Instead I think we may see some of the unpopular sizes and maybe even unpopular brands dying out over the next ten years, a case in point being the recent demise of the Trinidad brand (for now, at least) as factories seek to consolidate.
Prices will continue to rise – this we have observed since time immemorial. Quality will blip slightly, but will remain incredibly high. Survival of the fittest will endure. It will also be interesting to see what happens to the Dominican versions of our old favourites, such as Romeo y Julieta and Cohiba, once the Cuban kids are on the block in America – for these lines, the future doesn’t look good at all.
For more from Rupert on Cigars follow this link: what-leaves-make-up-a-cigar