Smokin'! Cuba sees cigar sales rise 9 percent

Associated Press

HAVANA (AP) — Sales of Cuba's famed cigars are hot, despite continued recession fears in Europe, and a U.S. embargo that bars American aficionados from legally lighting up.

Cuba's national cigar maker Habanos SA, a joint venture between the Communist-run government and the British-owned, Madrid-based tobacco giant Altadis, announced Monday that sales totaled $401 million in 2011, a 9 percent rise over the previous year.

Ana Lopez, the head of marketing at the company, said the jump was in line with that experienced by other global luxury products. Sales fell in 2008 and 2009, and were nearly flat the following year amid lingering global economic weakness.

While top-flight stogies are synonymous with Cuba, they represent only a small fraction of the island's flagging economy, which is primarily dependent on nickel mining, tourism and professional services.

Lopez estimated that the 50-year-old U.S. trade embargo cost Cuba's tobacco industry $79 million in sales in 2011. The company has also been hurt by the economic crisis in Spain, its No. 1 market.

But she and other executives said Habanos was well-positioned to weather the storm.

"We sell our products in 150 countries," said Javier Terres, the vice president of product development. "That is what permits us to compensate."

The executives spoke at the opening of Havana's 14th International Cigar Festival, which runs through March 2 and is expected to draw more than 1,000 people from 80 countries, including tobacco executives and connoisseurs.

While Europe remains the top market for such signature Cuban brands as Cohiba, Montecristo, and Romeo y Julieta, sales in Asian nations including China are growing rapidly. Terres said sales to China have doubled in the last three years, without giving specific figures.

Terres said 2012 figures to be a challenging year for the company because of lingering global economic weakness and increased restrictions on tobacco in many countries. He gave no specific sales predictions.

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Associated Press writer Paul Haven contributed to this report.

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