The almost total thawing out of diplomatic relations between the US and Cuba, announced yesterday, 17th December by President Barack Obama, could lead to the smouldering of Cuban cigars from coast to coast in the US$8 billion dollar US cigar market. The biggest winners from the relaxing of the trade embargo with Cuba are likely to be Imperial Tobacco plc, the world’s 4th largest international tobacco company and part owner, with the Cuban government of the state cigar company Corporacion Habanos and the US tobacco specialist stores which currently supply around 40% of the country’s cigars and through which high price point Cuban offerings will largely be distributed.
Imperial Tobacco inherited a 50% holding in the Cuban state cigar company Corporacion Habanos through its purchase of the French-Spanish tobacco giant Altadis in 2007. It is thought that the company, which distributes the Cohiba and Montecristo premium cigar brands outside the US and non-Cuban brands such as Romeo y Julieta within it, has been anticipating the relaxation of the trade embargo for some time and has plans to ramp up production by 50% to meet increased demand. However, in an analyst briefing in November 2014, Imperial CEO Alison Cooper made reference to some supply issues in Cuba which may or may not impact this target: