Cuban cigar sales increase but face challenges in 2020 – Reuters

HAVANA, Feb 24 (Reuters) – Cuban cigar sales topped $531 million last year, state monopoly Habanos S.A. announced on Monday as the country’s annual cigar festival opened, most likely the last with partner Imperial Brands Plc.

Spain, China, Germany and France were the strongest markets as sales increased 2% over 2018, the company said.

This was good news for the Communist-run Caribbean island which is short of cash and under new U.S. sanctions aimed at further reducing its coffers.

Cuba was Habanos fifth market thanks to tourism, but domestic sales decreased slightly, Habanos President Luis Sanchez said, apparently due to tighter U.S. travel restrictions.

Americans can buy the “puros” to take home even though they are banned for sale in the United States.

“Americans love Cuban cigars,” David Savona, executive editor of Cigar Aficionado Magazine said, estimating tens, if not hundreds of thousands were puffed on annually.

Savona, in Havana with more than 2,000 others for the festival, said “it is everyone’s long-held dream to be able to buy Cuban cigars legally.”

Sanchez said that a continued decline in sales to American visitors and the coronavirus outbreak in China were market challenges this year.

“There are millions of tourists from other parts,” he said.

“And we are a very global company so we can compensate for some negative circumstances that arise in some market like Asia now with the coronavirus,” he said.

Habanos is a 50-50 joint venture with the British company Imperial Brands, which is selling its premium cigar division that includes the partnership.

Sanchez told Reuters he did not expect a management change would effect the company.

“Plenty of buyers are interested,” he said.

Savona agreed, but added there might be a U.S. twist.

“If a U.S. company were to buy the division, it would have to divest Habanos,” he said.

“Then I think the likely buyer would be someone big, well funded from outside the U.S.,” he said.

The Trump administration has piled new sanction on top of the decades-old trade embargo.

Those new sanctions include allowing former owners, their relatives and holders of deeds of properties taken over by Fidel Castro’s revolution to sue third parties for “trafficking” in them.

The cigar industry was nationalized in the early 1960s.

There are currently some 20 cases underway in the United States seeking damages from non-Cuban companies with economic interests in the country, most involving the tourism industry. (Reporting by Marc Frank Editing by Marguerita Choy)