Saturday, May 12, 2007

Fake Cuban Cigars (Part 1)

It's a billion dollar industry that Javier Terres believes will triple in size once the US embargo is done away with, but whose history, according to Isaiah Thompson, "is steeped in intrigue, blood, global politics, and greed." Thompson, writing for this week's Miami New Times, narrates a tragic tale of a Cuban balsero, whose pursuit of the American dream to be his own boss is ironically crushed between a corporate giant and a failed American policy of isolation which continues to divide and conquer.

According to the American Cancer Society, Americans in 2005 smoked about 5 billion cigars. Another source indicates that about 220 million of those are top-end cigars. Worldwide, billions of dollars are made in tobacco, and Altadis SA has corned the Cuban cigar market. In a 2000 joint venture with the Cuban government, Altadis SA was given official rights to 20,000 acres of Cuba’s finest tobacco fields, and brand names like Cohiba, Montecristo and Romeo y Julieta. Altadis SA has been making some headlines recently because they are the target of a bidding war that has now reached $17.4 billion, in what may be the largest purchase of cigars in European history.

Smoking bans around the world may be triggering some of the latest buyouts of tobacco companies, but there may be an extra incentive for the purchase of Altadis. Javier Terres, development director of Corporación Habanos (the joint venture with Altadis and the Cuban government) believes that when the US market opens up to Cuban cigars there might be a threefold expansion of sales, a market estimated to be worth $1.8 billion. The recent developments in Cuba, and possible changes to the US embargo, may also explain the recent bidding war for Altadis SA, a company that sells the finest Cuban cigars to the rest of the world except the US.

In the 90's, Juan Penton got a taste of that market.

[Part 2]

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