«People are smoking less, but better»

In 2008, Habanos reported a 1 percent gain in the market from the year before and amassed up to 70 percent of market share where its brands are on sale, and all this in spite of the ongoing economic crisis worldwide. The group’s perspective is “to continue working always under the same criteria of coming up with new products and exclusive items in all markets, and without getting carried away nor disgruntled by the prospects of a deeper crisis,” as put in this exclusive interview by a high-ranking exec of this world-leading company.

The launch of the Montecristo Open line, with its four vitolas –Eagle, Master, Regatta and Junior– will be no doubt one of the greatest highlights of the 11th Habano Festival. Can you give us further details about this decision and make a brief characterization of both the line and its vitolas, the reason behind the name Open and other interesting elements you might see fit to share? Speaking of Montecristo is a reference to the best-known and one of the most coveted Habano brands in the world. Many people consider Montecristo the benchmark brand to size up the rest of the Habanos and is no doubt an icon within the realm of Premium cigars in the world. Therefore, the presentation of the Open line during this 11th Festival is something peculiar because for the first time a Montecristo line will hit the market, and this is indeed a special brand for Habano smokers and a world reference, as I said before. We’ve picked the name Open because by doing so we’re opening the doors to a new generation of smokers. Open enhances the choices within Montecristo’s vitola collection in an effort to meet the needs of its staunchest advocates and welcome those new breeds of pleasure seekers who want to live their lives out in the open and do it with the company of this superb brand. As to the characteristics of the Montecristo Open, the new vitolas have been rolled with selected leaves from the finest tobacco plantations of Vuelta Abajo. The four vitolas are Master, Junior, Regata and Eagle. Among the highlights of the upcoming things, we’re finally going to add a robusto to the Montecristo range, something that has taken quite a long time to happen. In addition, the Junior fits perfectly in the new trend of smoking shorter habanos, bearing in mind the evolution of the smokers and the increasingly less possibility of smoking in certain places. Regata is a figurado that follows in the footsteps of the existing No. 2; and last but not least, the Eagle vitola is the thickest of the foursome in ring gauge, cut out for those who can enjoy a habano for the longest time. Following a longstanding development and now in the face of the ongoing economic crisis, how can you assess in brief the job done by Habanos S.A. and the presence of Cuban Premium cigars in the world? The economic crisis worldwide pounds all sectors and in this sense the habano is no exception to the rule. Even though there are different brands at different prices within the Habanos S.A.’s Cuban Premium cigar offers, the fact of the matter is the markets are being more cautious when it comes to making purchases. I must say that regardless of the fact that the group’s revenues dipped three percentage points in 2008, habanos chalked up a 1 percent gain in the market as compared to the previous year and it managed to have up to 70 percent of the market share where its brands are on sale. In a word, people are smoking less, but better, and our grip of the markets has strengthened. Either way, we’re on the lookout to see how the current economic developments are going to play out and we hope that, in spite of some discouraging news that have been hitting the headlines in terms of the evolution of the national economies in some countries that are major markets for our products, in coming months things could start getting better. In this ambience, Habanos S.A. will continue working and rolling out new products in a bid to rekindle the markets. Another positive indicator is that we now have 144 Habano Houses around the world, 13 more than in 2008, so that means there are 15,500 square meters of sale surface. The markets continue to put their smart money on the habano and that shows the tremendous trust they have in our products and brands. Furthermore, we’re coming up with new retail sale concepts that will be implemented in the course of 2009 and that will eventually increase the number of outlets where smokers could buy habanos all over the world, especially the new outlets called El Morro de La Habana. Therefore, the habano goes on to be an international benchmark in terms of Premium cigars around the globe, and under these circumstances there’re welcome news to break, like an increasingly larger market share based on our ability to continue offering new items and making people trust in us. A good case in point is the increase in the number of Habano Houses I mentioned earlier. How much influence are the tight antismoking measures exerting on habano sales and what’s the company’s position in this respect? It’s a fact that the increasingly tighter antismoking restrictions are making a dent in the number of cigar aficionados and, therefore they are chipping away at sales. Even before 2009, the ban on smoking in public places came into effect in many countries, including Germany, the United Emirates, France, the UK, Portugal and Holland. Habanos S.A. has always advocated for the rights of both smokers and nonsmokers. However, there are very restrictive guidelines that even prevent smokers from gathering in smokers-only locales and that’s too hard of a crackdown. The effort of Habanos S.A. in this sense focuses on our intention to prevent those measures from becoming too extreme. We want common sense to prevail; we want adult smokers to be authorized to smoke in those places reserved only for them, and we want the rights of smokers to remain undisturbed. It’s highly important for the future of habanos that national regulations and prohibitions in that sense don’t go to the extremes because in the long run that could have serious repercussions on sales. Habanos S.A. is working on the promotion of a harmonic coexistence between smokers and nonsmokers in an effort to equally enforce the rights of Premium cigar smokers. From your position, what do you make of this other big newcomer which is the Gran Reserva whose primetime launch has been specially slated for the Festival’s closing gala dinner? The Habanos Gran Reserva goes deeper into the Habano’s unique character as a Protected Guarantee of Origin or trademark. The launch of the first Gran Reserva by Habanos S.A. is a token of the dynamics of habanos. In this festival we’ll be unveiling not only a new Montecristo line, but also and for the first time ever, the Gran Reserva. Gran Reserva is made of the very best Cuban tobacco leaves that have endured a long and thorough aging process of 5 years, in all of the leaves that make up a habano: the wrapper, the binder and the filler. It’s been five years of caring, controls of the aging process of these precious leaves, and finally of masterful hand-rolling by the expert rollers at the El Laguito factory, the same place where the coveted Cohiba-brand cigars are made. And make no mistakes about it; it’s Cohiba the brand we’ve handpicked to be the recipient of this first Gran Reserva launch. In addition, the emblematic Siglo VI vitola has been chosen for this one-and-only production of 5,000 numbered cases of 15 units apiece. The entire birth of the Gran Reserva pays heed to the caring and selection criteria that anyone can expect from such a unique product, ranging from a long and thorough aging process of the finest tobacco from San Juan y Martinez and San Luis to the tasting panel that supervised the suggested mixture. It’s all about the unique spirit of the Cohiba. This is an extremely limited production and the truth is that, as we speak, we can now bode a tremendous success based on the overall reaction of journalists, smokers and experts. How meaningful is this Festival in the face of the ongoing situation? The Festival is holding its eleventh edition this year. It’s the most prestigious and renowned smoking event in the world, not to mention that it has beefed up its stance as an international reference for smokers of Premium cigars around the globe. This events grows with each passing year and our commitment is to provide a much better program each time. One of the most important things about the Habano Festival is the chance to live a unique experience, to meet again with friends, retailers, smokers, artists, execs from Habanos S.A. and the industry. It’s all about this feedback, this update, the debates, the chance to share the mysticism of the habano and be there to welcome the new breed of Habanos that becomes the name of the game during this intense weeklong frenzy. It’s a celebration of the senses. This time up, despite the crisis, the Festival continues to be a gathering force as we expect a turnout of over 1,000 people from more than 60 nations, as well as personalities from all over the world and from all walks of life. Another new thing for this year’s Festival will be the match between the finest Cuban rums and habanos, as a continuation to a tradition of association between habano and the best items worldwide. That’s why I’m so confident that this eleventh edition of the Festival will once again make our regular visitors and the new smokers alike joining us now catch their breaths. How do you assess your company’s projections for 2009 and its different markets? In Habanos S.A. we’re always committed to working under the same criteria of coming up with new and exclusive products for all the markets, without getting carried away nor disgruntled by the prospects of a heightened economic crisis worldwide. The case-by-case assessment of the market evolution is something we do within the company on a regular basis in order to make our offers and marketing policies fit in the new trends we detect along the way. In a way, Habanos S.A.’s great offer, with its variety of brands, allows us to meet the demands of different consumer profiles depending on the variations of their purchasing motivations. Anyway, we hope that the economies of major European markets, like Spain, will work out this crisis swiftly and have as less negative effects on the sale of our products as possible. Other expanding markets, like Asia, are also showing some level of resilience, and we also hope this glum international situation will be over soon and they could get over it. The best way to minimize the slowdown effect on the overall world economy, and on some of the most important markets in particular, is to continue working hard in the launch of new habanos that might catch the attention of both regular smokers and newcomers by offering them a larger and more diverse amount of new things. In this sense, we’ll cling to the presentation of Regional Editions adapted to the tastes of each and every market, and to the Limited Editions and Special Productions for the different markets and for the duty-free segment, which is by and large a key recipient of our offers within the exclusiveness our products and brands are characterized by. As far as the duty-free segment is concerned, the decline in the number of passengers at airports worldwide in the course of 2008 has also given us a relative loss in sales.