Just months after acquiring the Habanos contract, David Tang opened Hong Kong’s first cigar lounge, the Cohiba Cigar Divan, in 1992. Before this, approximately 50,000 cigars were sold each year in Asia – now 6 million cigars are sold per year. Leadership from Chairman David Tang and current CEO Dag Holmboe, has shaped the company’s reach and influence. Hong Kong, home of PCC’s head office, is now one of the world’s premier cigar cities and Asian markets are growing rapidly. It has not all been smooth sailing though. The sale of counterfeit Cuban cigars in Singapore was vigorously pursued, resulting in a positive trademark infringement ruling for the company in the middle of 2007.
Norwegian by birth and with a career predominantly spent in the petroleum industry, CEO Dag Holmboe has guided the company since September 2001. The Asia-Pacific region, with its range of cultures, languages and economies ensures that by default, PCC is an innovative entity. With four main divisions – Wholesale, Retail, Export and Duty Free, it differs from other Habanos S.A. distributors explains Dag, “some markets are rather small like Samoa, but we try to cover them all. From a business perspective, we are different because we are Asia’s largest cigar retailer, giving us a very strong position in our local markets. Most other distributors are not in retail, except for the Middle East.”
A BURGEONING ENTERPRISE
Since 2001 the retail division has grown to 29 retail outlets, including 5 under management in China, whilst PCC staff across all divisions has doubled and now numbers 130 people. Dag puts this growth down to a well-executed strategy, “the strategy my team and I developed was based on talking directly to consumers – the cigar smokers. We developed our own accessories division under the ‘Siglo’ brand which is now exported around the globe, and of course we sell a lot more cigars.” Beginning in 2003, the Siglo line includes a range of cutting edge accessories, “we have a very good feel for what cigar smokers want, so we can respond to a specific demand and deliver products accordingly. It has been a real success story, thanks in no small part to our Marketing Director Ms. Audrey Choong, who has been responsible for the Siglo division. Sales have grown steadily and we continue to broaden the range with new and exciting products.”
Asia’s voracious appetite for cigars does not look like easing in the next few years. Dag lists Japan, Australia and Hong Kong as PCC’s most essential markets. Entry into China via a separate company, Infifon Hong Kong, is of strategic importance, but he identifies room for growth in most markets, especially Macau. Macau’s casino development continues unabated and plays a role in PCC’s development plans – three more shops are due to open in early 2008. Duty Free sales and Vietnam are recognised as potentially strong markets. “Once tobacco importation is legalised, Vietnam will be an interesting market. We believe we can continue to grow our retail and Siglo businesses while Duty Free is also demonstrating good potential due to increased travel in the region.”
DIFFICULTIES AND DISTRACTIONS
Dag is acutely aware of the tremendously different levels of antitobacco legislation that exists across the region, acknowledging it as PCC’s biggest challenge. Despite such impediments, he remains optimistic, promising cigar shops and lounges that meet local laws. “While these laws really target cigarette smoking, we get hit as well, even though cigars are not an addiction but a passion. As the laws are implemented, we need to make it possible for aficionados to still enjoy their cigar. In many countries, where one can still smoke in a cigar shop or lounge, we will open more such places. If one can not smoke inside – well then, we will open outdoor cigar lounges!” he exclaims. On the 4th of June last year, after relentless investigation, PCC announced a landmark win against operators of “Cigar Affair” for Cuban cigar trademark infringements in Singapore. The operators had 1500 cigars in their possession to which the Cohiba and Partagas trademarks had been falsely applied. At the time Dag was quoted as saying, “I am very pleased with the outcome … it will protect our clients against companies like Cigar Affair, selling fake Cuban cigars.” He recently followed this up by stating, “the message to companies selling fakes is don’t do it. We will come after you. The message to smokers is be careful and only buy from recommended retailers.”
HONG KONG’S CIGAR ROMANCE
Hong Kong is now regarded by many as one of the cigar “capitals” of the world. Shops, lounges and clubs dot the metropolis and current production, aged and limited edition cigars are quickly snapped up. Dag’s thoughts reflect the city’s intense love affair with fine tobacco, “Hong Kong people are passionate, they work hard and play hard, and they have a passion for luxury brands and premium cigars. Our cigar aficionados are probably the most knowledgeable in the world. The now famous Illustrated Encyclopedia of Post-Revolution Havana Cigars was written by a Hong Kong resident! Hong Kong people love good food, good wine and good cigars – a great combination.” The reception to the recent opening of private club Cohiba Atmosphere in Hong Kong and the response to the Habanos sa Asia-Pacific Regional Re- leases since 2006 has been phenomenal. The 2006 Punch Super Robusto and Ramon Allones Estupendo, and the more recent 2007 Por Larrañaga Robusto have acquired a legion of fans. “Our regional editions have had an amazing response. In 2006 we had the first release and sold out in a week. This time we ordered more, but still stock will not last long in my opinion,” concludes Dag. Asia’s markets show no signs of slowing. A healthy admiration of cigars, coupled with the Pacific Cigar Company’s strategic operations ensures this region of the world continues to flourish.
This article was published in the Cigar Journal Spring Edition 2008. Read more