Even after 15 Habanos festivals the recipe of success continues to work – a combination of magic and marketing.
The director of Apple must experience this when he unveils a new iPhone: rapt attention, the newest developments within minutes of being connected to the net, every detail greedily absorbed and posted on Facebook. But on stage here it isn’t a technological gadget that’s being revealed, it’s cigars.
Habanos Vice President Jorge Luís Fernández Maique is giving a presentation on the business development. Hanging off his words are cigar lovers, retailers and the media. They excitedly follow his presentation about brands and markets.
The 15th Festival del Habano is in full swing. There are no signs of fatigue in the audience, even though nothing in the concept of the festival has changed for years: during the day, seminars and presentations offer the opportunity to learn new things about Cuban cigars.
Other points of focus are an excursion to the tobacco cultivation region Pinar del Río and, of course, trips to the processing plants and factories. At the evening events visitors learn about the latest cigar trends of the coming year. Over 1,500 participants from 70 countries don’t miss out on this spectacle.
The presentation of the business figures are also traditionally part of the festival. Business is good, as Jorge Luís Fernández Maique reports: compared to last year, sales have grown by six percent to US$416 million.
Asia and Africa are developing well; in Europe’s south there is still a crisis, but despite this, Spain and France are staying at the top of the most important sales markets. But Germany and Switzerland post above-average growth; European sales are still stable overall.
Consistent Market Orientation
The path to this success is creating debate. In the last few years many classics have been toppled from the selection and are being replaced by “stogies,” which are getting shorter and thicker. For example, within just a few years, almost all Corona formats have disappeared from the market. Last year, indignant about this development, members of the internet forum Friends of Habanos wrote an open letter in which they demanded respectful handling of the heritage of Cuban cigar culture from Habanos S.A. Several hundred cigar lovers from all over the world signed the letter.
Addressing the issue, Marketing Director of Habanos S.A. Ana López explains: “We’ve taken the demands to heart. But the decision about the continuation of a format depends on sales. The necessary minimum production per year is 50,000.” If Habanos sells less of a type of cigar, production is stopped or halted. “For cigar fans we re-release limited cigar series in special formats, like the Ramón Allones Extra,” Ana López continues.
Successful Brands and Problem Cases
Some veterans have to get used to the new marketing of the Cubans. This year Habanos is focusing on Montecristo. The portfolio of the success brand will be expanded by two Vitolas: with the Montecristo Petit No. 2 (120 mm, ring gauge 52) Montecristo presents a short version of the Piramide classic No. 2. In the future the Montecristo Double Edmundo (155 mm, ring gauge 50) will expand the Edmundo series. Both cigars have a ring with elements of gold. This will be introduced for all Montecristo formats, as a visual enhancement and for improved protection from fakes.
Habanos will be holding an event to present both new releases at the historical harbor fortress El Morro. Two days later, the starting position is different on the Noche de Vegueros. This brand is one of Habanos’ problem cases. But the concept of Vegueros is actually: the brand was launched over 15 years ago as an homage to tobacco growers. The cigars, which were supposed to honor the work of the farmers, were never really able to break onto the market. For this reason Habanos have given the brand a completely new makeover, with new formats and a new tobacco blend. The festival participants will know the result long before the “average consumers.”
The new Vegueros blend is somewhat milder and is supposed to be a reminder of the cigars that the tobacco growers traditionally produce for their own consumption. Our tasting specimens are a bit disappointing, though – they’re a little too young. In any case, the smooth character of the Vuelta Abajo tobacco shines through.
The three new formats Mañanitas (100 mm, ring gauge 46), Entretiempos (110 mm, ring gauge 52) and Tapados (120 mm, ring gauge 46) are rolled in the middle of “tobacco land,” in the factory Fransico Donatién in Pinar del Río, where the Vegueros sign hangs resplendent over the doors. The packaging concept has been a success: tins in white, green and black come across as modern, with a bit of a nod to the past.
Summer Sowing Experiment
Wednesday is tobacco day at the festival. We travel in busses from Havana to Pinar del Río two hours away, where the best tobaccos on the island are grown in Vuelta Abajo. Our group visits tobacco planter María Luisa Alvarez in the growing region San Luis. The harvest is already completed on this farm; the workers are now busy with threading the harvested leaves onto twine and lining them up on poles.
After that, the leaves will be hung up to dry. María reports a good harvest. This year they harvested tobacco for a total of 6,000 cujes, compared to a yield of 4,500 the year before.
In Cuba, tobacco farmers belong to the few branches that have enjoyed a certain freedom of enterprise for quite some time and are also better paid for quality and yields.
Farmers are paid between 1,200 and 1,800 Cuban pesos per tobacco bundle of 50 kg, which is between about $50 and $70. With this income, María Luisa Alvarez finances everything that she needs for production: gas for the machines, seedlings, fertilizer and of course the salaries of her employees. The workers earn about $60 per month – approximately double the average income. Employees are employed for the whole year; in the off-season they plant other plants, like rice and beans.
These yields are mainly for self-sufficiency, also for employees who receive a portion of the harvest. Currently, María Luisa Alvarez is experimenting with summer sowing. “Now we want to see what happens with it,” she says. The conditions are actually good for tobacco planting in January and February, but neighboring farmers have had success with sowing seeds in summer, she says.
The Art of Doing Business
Tobacco growers can also attribute this certain freedom to Alejandro Robaina, who was once able to convince the revolution government that the best tobacco leaves should be cultivated by free farmers who were to be rewarded for their good work. At other processing stages entrepreneurship hasn’t been an issue up to today.
The monopoly of Habanos S.A. is amazingly innovative and constantly develops new products – but what else would be possible if more competition was allowed?
In the last few years, an inkling of this idea could be seen in torcedor Reynaldo González Jimenez, who with his employees in the Casa del Habano Conde de Villanueva has been rolling cigars of his own blend from stored tobaccos and has sold them in increasingly large numbers.
But this year his stock has been empty during the festival. He doesn’t have “materia prima,” raw tobacco, according to the store in the old town of Havana.
Whether the short-age has natural causes or whether the raw-material supply was halted “from above” is not ascertainable.
“Habanos should use the success of Reynaldo and make an official brand from his creations,” says one Cuban exhibitor at the trade fair in Palacio de los Convenciones.
He offers humidors and porcelain jars and has similar problems himself. Doing business on your own doesn’t exist in Cuba. That’s why he has an “artist’s license.” It gets critical when his business prospers too much.
But Adorini doesn’t have to worry about such things. The German humidor company is also at the trade fair and is even the official festival sponsor.
For two years now the company exclusively provides the humidors for the charity auction with humidifying systems and hygrometers. With his trade booth, Adorini is mainly concerned with making international connections, as Business Development Manager Torger Brunken explains. Last year business partners Chile and India were acquired. One of the main challenges for both countries was transporting the humidors to Cuba. There have also been cases of the humidors getting stuck at customs.
This year, however, they used a little trick. “We sent the hygrometers and humidifiers for the auction together with the material for the booth together – and that way, everything got there on time,” explains Brunken.
The Big Finale
At the gala evening at the end of the festival week Habanos S.A. once again summons up everything that the country has to offer: dance, singing, mulatas and muchachos, a whole symphony orchestra. And a pinch of politics – Hollywood star Danny Glover will be honored with a special award for his support regarding the “Cuban 5” in the United States – and of course, cigars.
The 16th Festival del Habano will take place from February 24 to 28, 2014.
This article was published in the Cigar Journal Autumn Edition 2013. Read more