Cuban cigars could become hand-rolled headache

From The Times
June 22, 2009
Cuban cigars could become hand-rolled headache
Christine Seib in New York

When John F. Kennedy banned Cuban cigars in 1962 as part of the American
trade embargo of the communist island, he sent out his press secretary
to stock up on 1,000 to ensure that his personal supply was well supplied.

Forty-seven years later, as his successor begins to relax the blockade,
tobacco companies are lining up to fight for the rights to cigars not
sold or owned legally in the States since JFK's stash ran out.

Gordon Mott, the executive editor of Cigar Afficionado magazine, said
that his readers were watching President Obama's overtures to Cuba with
interest. "If the trade embargo is lifted, anyone who's a cigar
connoisseur in this country will know about it," he said.

American smokers could soon have the chance to buy Cuban. In April Mr
Obama lifted prohibitions so that Cuban-Americans could travel to and
from the island and send clothes, agricultural goods and pharmaceuticals
to relatives there.

Charles Rangel, the Democratic chairman of the House Ways and Means
Committee, which monitors the Government's rules on trade, predicted
last month that all restrictions related to Cuba would disappear by the
end of next year.

Yet, as a result of the blockade, brands such as Cohiba, La Gloria
Cubana, Hoyo de Monterrey, Partagás, Sancho Panza and Punch have two owners.

Ignacio Sánchez, a lobbyist with DLA Piper who works with General Cigar,
told Congressional Quarterly: "The lifting of the embargo would
potentially create turmoil over who owns those rights."

When Fidel Castro nationalised Cuban cigar manufacturers in the 1960s,
many of the families who owned the companies fled overseas. In the
United States, some of the families sold their cigar brands to General
Cigar, a company owned by Swedish Match.

Swedish Match sells cigars made under these brands, but with tobacco
cultivated in Honduras and the Dominican Republic. The company claims 30
per cent of the premium market in the US.

Meanwhile, Cubatabaco, the Cuban tobacco monopoly, manufactures cigars
under many of these brands. In 1994 the country set up Corporación
Habanos to sell cigars to the rest of the world through exclusive
distribution agreements in each country. For example, Hunters & Frankau,
a cigar importer, has the right to sell cigars produced by Corporación
Habanos in Britain.

Imperial Tobacco owns half of Habanos through its purchase last year of
Altadis, the Spanish tobacco company.

To complicate matters further, other tobacco companies bought brands
from expatriate families and General Cigar snaffled the Cohiba brand by
registering it in the US and defeating Cuba in a nine-year legal battle.

Lawyers expect an array of court cases in America when the market opens
up, including an estimated $2 billion (£1.2 billion) of claims filed by
expatriates against Cuba for the seizure of their tobacco fields and
other property.

Gerry Roerty, general counsel to Swedish Match, said that the company
also feared that Cuba would not open up access to the Vuelta Abajo
district, famed among cigar enthusiasts for a microclimate that produces
tobacco with a flavour unlike any other, but instead would choose to
have a single distributor or franchised stores in the US. Swedish Match
has spent more than $5 million on lobbying lawmakers on issues related
to Cuban cigars.

Cuban cigars could become hand-rolled headache - Times Online (22 June 2009)
http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article6550095.ece