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“The Habano brand is paramount to the Cuban culture. There is no way you can enjoy one of them if their origin, evolution, or even their presence in momentous event, are not known. Habanos is Cuba’s ambassador par excellence, and has put the island in the gourmet world map due to their quality and fame of all Habanos’ brands. Indeed, cultivated areas, their benefits and productions, are now a must-see destination for anyone visiting the country. There is no doubt that having a franchise system such as La Casa del Habano, where the best tobacco of the world is exclusively sold, is a major milestone.”

These were the first words of Néstor Valera — CEO of the franchise La Casa del Habano (LCDH) — to Excelencias magazine, a propos of the important system, which is celebrating its 30th anniversary with an outstanding record of service excellence and the great reputation of its products.

"In the case of Habanos, S.A., these stores are perfect to communicating the product best qualities. They provide a platform for the launching of new products, which consumers regularly welcome, and consolidate as a safe alternative, aimed at the promotion and enjoyment of Habanos in order to counteract the effects of anti-smoking campaigns and regulations, especially in seasoned markets. Similarly, they play a key role in the development of emerging markets, where Habano culture is still insufficient,” says the specialist who professes his devotion to the Juan López brand, Vitola Selección No. 2, and the Trinidad La Trova, the latter is an exclusive launching for LCDH." 

The franchise is also a successful business model.  In this line, what has been and still is its impact?

It has been actually a successful business model: first of all, it has allowed Habanos to reach the final consumer through its chain of franchises and thereby know, to some extent, what the market demands and what its trends are — from the brands and formats approach. On the other hand, it allows having a new way of communication with one of the most important players in the market: retailers, as they channel the productions of Habanos, S.A. to its final destination. 

In financial terms, it has also been profitable: not only for Habanos, S.A. — the franchiser —, but also for its network of Exclusive Distributors, which have regarded LCDH as their most important customer in the market. In many of them, the decisive percentage of sales is achieved by franchises and this fact makes the impact of their sales on the market decisive. We are very satisfied with it.

What makes this franchise a network success? What are its benefits?

The key to success has been the confidence that franchisees have had in the proposed business model: the exclusive marketing of Habanos. In fact, experienced retailers with experience in the retail sale of Premium tobacco, with a solid, expert clientele who knows its full potential, have joined this project. 

"The LCDH Franchise Chain offers specific benefits to retailers; namely, entering a network of more than 150 highly specialized cigar stores under the “goodwill” of a well-known registered brand, tapping into unique products created exclusively for this network, and having the first-purchase option for the novelties of the Habanos, S.A. portfolio. These benefits are complemented by the specialized and priority attention provided by Exclusive Distributors in each of the markets, which helps to consolidate existing projects and create expectation among the rest of the retailers."

Néstor Valera details that at the end of 2019, 155 stores would be operational in 118 cities from 59 countries. Actually, there are cities where more than one franchise is operational, which is a sign of the project acceptance. He also highlights that it has been difficult to position the franchise in some markets due to strict anti-smoking regulations. It has directly limited the business model, which is to offer the visitor a unique experience in the purchase and enjoyment of Habano. However, he points out that the franchise is present all over the world with a critical concentration in Europe (40% of the total), the Americas (23% of the total), and the Middle East and Africa (17% of the total). Cuba stands out with the largest number of franchises with 12% of the total. The rest can be found in Asia.

The LCDH Franchise Chain is conceived as upscale boutiques for the exclusive sale of a product as sublime as Habanos, and that is why every franchisee is required to meet in its store the construction and decorative standards that may contribute to achieving this goal.  Of course, all of this must be complemented by the management's know-how on business, expertise, and good work of the sales force, explains Néstor Valera. 

Visitors, enthusiasts, and experienced smokers will find in LCDH the most varied selection of Habanos available in each of the markets, led by the products of the six global brands’ portfolio: Cohiba, Montecristo, Partagás, H. Upmann, Hoyo de Monterrey and Romeo and Julieta. You can also find Regional Editions for a particular market, the Special Productions for LCDH, the Habanos’ Special Productions (Limited Editions, Reserves, and Replicas), and the rest of the standard portfolio. 

Casas del Habano are characterized by spaces such as the walk-in humidor, where Habanos are preserved in optimal conditions of temperature and humidity; the Tasting Room, which invites you to enjoy the product with comfort and relaxation; and the Store, where you can buy, in addition to Habanos, accessories for smokers and other items that can range from jewelry and chocolates to textile products and souvenirs. Other services are the lockers area, where customers may leave their Habanos to the care of the store, certain that they will be preserved in optimal conditions for further enjoyment. Depending on your area and the market habits, Casas del Habano offer private VIP lounges, which include bar service.

For Néstor Valera, the greatest of challenges is to continue strengthening the consolidation of franchises in markets where they are already present and expand them, whenever possible, into those nations where, for different reasons, there is no presence of these kinds of stores. The goal is actually keeping a global identity taking into account the regional characteristics of each market.

“The most important thing is the quality and scope achieved— in terms of sales and specialized attention to the consumer — in each of the places where they are present. Due to its excellence and the business model proposed, Habanos is an indisputable leader. However, we shall bear in mind that the competition is becoming stronger. That is why this network is like a showcase of good work and a safe alternative to retail projects, which also make good use of a certain tobacco origin as a strategy to attract consumers.

“Habanos, S.A. and LCDH continue their active efforts to achieve a more effective interaction with franchisees by involving them in the conception of the products that the market demands. This is exactly the road we have chosen to take."

After 30 years, there are many stories to tell. What are the main challenges you have faced and the greatest satisfactions resulting from them?

There have been many challenges. It is worth mentioning that at the time of its creation back in the 1990s, some retailers (mainly European) distrusted to betting on selling points where Habanos could be sold exclusively since Habanos — even representing a high percentage of sales in stores — were always showcased accompanied by non-Cuban products. The company effort as well as the strength of the product, proved the validity of the project and therefore, Europe became the continent with largest presence of franchises. 

“Another challenge has been the impact of anti-smoking norms which, in some cases, have strictly prohibited smoking in closed spaces (even those that are conditioned for rapid and efficient smoke extraction). This has brought about that, in some franchises, the Tasting Room has had to be used in other functions different from its original conception. This reality has impacted negatively not only on the sales of franchises, but also on the perception visitors may have on them. However, the concept consolidation continues and it is a satisfaction to confirm that each year the number of openings is overwhelmingly higher than closures.

“There have been a lot of satisfactions. One of them is the ever-growing number of retailers who continue to trust in our business model. The greatest motivation is the recognition that visitors, enthusiasts, and experienced smokers have given to the franchise as a worldwide reference of upscale boutique and sanctuary of the best traditions of Habanos’ exhibition and conservation.”