With Hong Kong still under one of the world’s most restrictive COVID-19 containment measures, cigar sales are, not surprisingly, growing unimpeded, much like in the rest of the “already-open-for-business” world. Smoking lounges are busier than ever, sales are high and inventories low. And if there is a company that is experiencing this boom first hand, it is the Pacific Cigar Company Ltd. (PCC), the official Habanos S.A. distributor for the Asia-Pacific region.
Following up on our own Samuel Spurr’s Asia-focused pieces from 2009 and 2018, we thought 2022 was a good time to catch up with Dag Holmboe and Norio Hattori to get a sense of where the Asia Pacific market is and, more importantly, where it’s headed in the post-COVID world.
Dag is PCC’s chief executive officer (CEO) and Norio is the regional marketing director; they are both well-known figures in the Habanos community. We had a chance to sit down with them for a smoke at their newest cigar retail and lounge venue, La Casa del Habano, located in the heart of Hong Kong’s central business district, Central.
Jorge Tapies: Dag, you joined PCC in 2002 after a career in the petroleum industry and have led the company for 20 years now. What has been the biggest challenge and the biggest satisfaction in your career with PCC?
Dag: ‘Petroleum industry’ sounds grand! I was actually CEO of a joint venture company in Cuba, manufacturing and selling engine oil, Castrol Cuba S.A. There was a commonality, if you like: both products go up in smoke, but that’s where it stops. The main challenge joining PCC was probably moving from a large multinational to a then privately owned company, and getting used to Sir David Tang’s somewhat unique management style.
The biggest satisfaction: Being part of a great management team with amazing staff, and with the team, growing the company very substantially over the years, in all segments – retail, wholesale, export and duty free. The pleasure of all the very good friends I have made over the years with consumers and clients here in Hong Kong and across Asia. And of course, I met my now-wife here in Hong Kong. So yes, plenty of satisfaction, privately and professionally.
JT: Norio, when did you join PCC and what industry did you come from? What made you enter the cigar business?
Norio: I joined the PCC family in 2012. Funnily enough, I was a customer for many years before I joined, when I was still living in Japan. I come from the high-end luxury industry and I always considered the world of cigars as one of the pillars of luxury products.
JT: Give us an overview of where the Asia-Pacific market is at the moment. How many cigars per year is PCC selling in Asia?
Dag: We sell a lot more cigars than we did 10 or 20 years ago, that’s for sure. Sorry, but I can’t really disclose exactly how many we sell. The market has grown substantially over the years, and it’s still growing. The Asian market is quite diverse; remember that we cover from New Zealand and the Pacific Islands, to Sri Lanka and Bangladesh. I think what Asian cigar consumers have in common is that they are extremely knowledgable and passionate about cigars, and they are really aware of quality, taste, different brands, and enjoy the lifestyle that cigars are part of.
JT: How many retail points and lounges do you currently have in Hong Kong and in Asia? Any new openings in 2022?
Dag: Here in Hong Kong we have 13 outlets and lounges; in total, we now have 33 outlets across the Asia-Pacific, and we’ll continue to expand our retail business. Wherever possible, our strategy remains to provide cigar lovers with high-end outlets and lounges where they can enjoy the cigars. We just opened a second lounge in the Four Seasons Hotel in Singapore; in April, we’re going to open a small outlet in Sihanoukville in Cambodia, and we just extended our Cohiba Atmosphere in Phnom Penh. We’re looking at locations for new lounges in Hong Kong as we speak, so the answer is yes, we’ll continue to expand our retail business.
JT: How do you see growth in the region for the next five years? Apart from China, Hong Kong, Macao, where are the next hot markets in Asia?
Dag: Well, China is still very hot, and so is Hong Kong and Macau. Vietnam and Cambodia are both very exciting markets with substantial potential.
JT: The Punch Sir David Exclusivo and the Diplomáticos Bushido, have become “unicorn” cigars, which, along other regional editions, give you the ability to stay active in the special release and regional edition segment. Your latest regional editions are the 2020 San Cristóbal de la Habana Harimau Malaya ER Malaysia and the Cuaba APAC ER Asia Pacifico. Was the Diplomáticos Líderes ER China, the only Habanos regional edition for 2021? What’s coming next for 2022 and beyond?
Dag: I think Norio is the best person to answer that, he is PCC’s cigar master.
Norio: We’re very proud of the Diplomáticos Bushido and the Punch Sir David cigars. Being part-Japanese, for me the Bushido has a very special meaning. The launch in Havana [in 2014], during the 400th anniversary celebration of the first Samurai [Hasekura Tsunenaga] to Cuba was a very unique moment for me. The Punch Sir David is, obviously, a very special cigar for all of us at PCC and we’re grateful to Habanos for accepting and making this tribute cigar to Sir David.
The regional edition program is a great way to offer something unique, different and perfect for collectors. The 2021 RE program was full of surprises. In 2022, it will be a special cigar to celebrate PCC’s 30th anniversary. The Diplomáticos Líderes are only sold in China, so these cigars are proprietary for Infifon, the exclusive distributor for mainland China.
JT: Let’s talk about China, understanding that Infifon is the exclusive distributor for mainland China, it’s hard to argue that PCC and Infifon’s business is not inextricably linked. Can you explain to our readers how the Hong Kong-China market works and what the relationship between PCC and Infifon is?
Dag: Sure, it’s relatively simple. Infifon is responsible for supply and sales to mainland China, while PCC is the exclusive distributor for the rest of Asia, including Hong Kong and Macau. When you buy a cigar in China, it should come from Infifon; when mainland Chinese visit Hong Kong or Macau, they buy cigars supplied by PCC. The two companies work closely together to promote Cuban cigars to mainland consumers when they are in China and when they visit other countries in Asia.
JT: What can you tell us with regards to the well-known Habanos supply issues for 2022 and the future? Sales are high and production is low … not a good place to be for any manufacturer.
Dag: Well as you know, PCC is not the manufacturer, so we cannot speak for the Cuban cigar industry. But yes, it’s no secret that 2021 was a difficult year as far as supply is concerned. However, it’s now a common problem not only for the cigar business in general, but across numerous industries, just look at the microchip industry. It has been a very difficult time for the whole world; it will improve and get back to normal, and I’m confident the Cuban cigar industry will do the same.
JT: What’s PCC’s view on the counterfeit and “Cuban custom-rolled” markets for Cuban cigars? Are both of these issues as big as they are in places like the United States and Latin America? What can PCC do to combat this in the Asia-Pacific region?
Dag: As you know, counterfeiting is a problem for any sought-after consumer brand, and cigars are not unique in that respect. Fake Cohibas and especially Behikes are quite a problem in countries like mainland China and Vietnam; the cigars look like Behikes, but they don’t taste like Behikes. However, as mentioned before, Asian consumers are very knowledgeable, they may be tricked once or twice, but eventually they will ensure they buy only from recognized Habanos points of sale. Habanos has done a great job creating the Habanos Specialist, Point and Terrace system. Buying from these appointed outlets ensures that consumers get the real Habanos cigars.
And in Asia, wherever you see the PCC’s red authenticity seal on a box, you know that box comes from PCC. It hasn’t been launched yet, but PCC will soon start using a new “intelligent” authenticity seal with NFC technology, giving consumers additional information about the cigar they have purchased. As far as “Cuban custom-rolled” is concerned, what can I say? They are not made by Cuban cigar factories, that’s for sure. Is it Cuban tobacco? Who knows. If you buy a Gucci handbag at the night market, and it’s a model Gucci has never made, would you think it’s the real thing? Fortunately, most cigar smokers in Asia are well aware of this; they may smoke one for fun, but they know it’s not the real thing.
Norio: As with most of luxury products, we’re seeing more and more counterfeit “Cuban cigars” arriving in the Asia-Pacific region. We’re actively assisting and supporting the local customs and excise department. We started with Macau, and now Hong Kong is also quite active in the fight against counterfeits. Unfortunately, we can only see this problem growing. Not only in the Asia-Pacific but all around the world. All of our boxes have a PCC warranty seal, confirming the origin of the boxes. I can tell you that we’re about to launch the next generation seal that has tracking technology. Communication with our clients is also fundamental, especially for those very creative boxes you see on some markets.
Now, the “Cuban custom-rolled cigars” are a different issue. We all know that the various La Casas del Habano in Cuba have their own in-house rollers, each with their own specialities. But we also know that these cigars are not available in large quantities, so what we can see on the market here is far surpassing the actual number of “custom-rolled” cigars. We all hear the story of “I know a guy, who knows a guy, who knows a guy in Cuba, who has family/contacts in a factory, etc. …” Some people take advantage of such stories to bring in “custom-rolled” cigars and most of the time the products are not even from Cuba.
JT: As you both know, New World cigars are staring to make their presence felt here in Hong Kong and across Asia. What’s your view on the growing market for these cigars and the possibility that they will become a serious competitor for Cuban cigars in your territory?
Dag: It’s a strange description, “New World” cigars! Most of these brands have been around for ages, even in Asia. And some of these brands have recently achieved good exposure and grown in popularity maybe due to the shortage of Cuban cigars. Don’t misunderstand me, there are good non-Cuban cigars out there, but in my view they generally can’t match Cuban cigars in aroma, taste and complexity. However consumers like to try new things – cigars included. I personally don’t think they will become serious competitors, but a bit of competition is always healthy. In the end, only Habanos cigars are made in Cuba and will remain the reference for hand-rolled premium cigars, also in the future.
JT: Hong Kong has become this “El Dorado” city for massive and rare cigar collections. While respecting the discretion and confidentially of your customers, tell our readers what can be seen in some of these cigar collections in Hong Kong. What is the rarest cigar you’ve ever seen or smoked here in Hong Kong?
Dag: Yes, you’re quite right, there are some absolutely unique and exceptional cigar collections in Hong Kong. The cigars are not just kept in warehouses, but displayed in massive humidified and temperature controlled rooms, a dream come true for anyone loving cigars. You would see every limited and special edition launched by Habanos, early editions of every Cohiba ever launched, Cuban cigars made prior to Habanos and Cubatabaco’s branding, Habanos Auction humidors, a museum of the Cuban cigar industry. Norio and I have had the privilege to see some of these collections. Probably the most memorable was a box of the first Cohibas ever produced, prior to being commercially available. And a smoke I will always remember was a commemorative Partagás made especially for PCC for the Hong Kong handover in 1997. Norio, what’s the smoke you remember best?
Norio: The list would be too long to start here, Dag. It’is now a fact that Hong Kong is home to some of the largest single collections in the world. I remember Max Gutmann telling me in Havana that, after his last trip to HK, he knew that the biggest collections were now in our small territory … Some collections include cigars from the 1930s, long-discontinued vitolas and brands. Personally, one of the best cigars I had the privilege to smoke from a private collection was a Bolívar Especiales from 1987. Maybe not the rarest of cigars (although impossible to find now), but in my humble opinion, the most perfect expression of what a Cuban cigar is and should be …
JT: Tell us about the SIGLO business, started in 2003; it has now grown into a significant line for PCC. What’s next for the brand in terms of products and markets?
Dag: At the time we were promoting and selling many of the high-end, prestigious cigar accessory brands – we still do, of course. After one of these promotional events, we had a review meeting, and someone suggested that we make and promote our own brand of accessories, and make it fun and colorful and at the same time functional and high quality. And that was how it started in 2003. I’ll leave it to Norio, who is also the SIGLO brand manager, to talk about what’s next.
Norio: SIGLO is an important part of PCC. The cigar accessory market is quite saturated with various gadgets, for all types of wallets. We can’t reinvent the wheel all the time, so our focus is on the quality and the functionality of the accessory. If you take a humidor, the only purpose we expect from the humidor is to maintain the condition and to protect the cigars inside. You can make a solid gold humidor if you wish. If the wood inside, the construction of the box, the hermetic function of the box is not good, you’ll ruin what’s most important: the cigars. People tend to forget that, most of the time, the cigars you keep inside humidors are far more expensive than the actual humidor.
It’s the same logic for other accessories. Cutters have to be able to cut cleanly, lighters have to start the cigars … we don’t need a welding torch. Some products on the market are just too much. Having said that, SIGLO allows us to be creative, sometimes silly, sometimes edgy, sometimes risky … From collaborations with internationally renowned artists (the Christian Develter series) to uber-luxury materials (alligator cigar cases) to the “007-Q-Branch mind” (the fingerprint humidor) … We’re trying to surprise our customers around the world.