Price of popular Cuban cigars face huge rise if US ends trade embargo
Widely considered the best in the world, Cuban cigars could jump in price if the US were to end an embargo on trade with the island nation.
This is according to Swedish Match, the world’s second-largest cigar maker, which said it has drawn up a detailed plan in preparation of a lifting of the US embargo, which was put in place by President John F Kennedy in 1962.
Speculation about an end to the embargo arose when Mr Castro resigned Cuba’s presidency after 49 years on Tuesday.
The US State Department, however, said there are no plans for change “anytime soon”. But Swedish Match has obtained a US registration for the trademark for Cohiba cigars, which rappers such as 50 Cent have referenced in songs.
The US embargo prohibits its residents from legally purchasing Cuban cigars on the market.
Swedish Match chief financial officer Lars Dahlgren said: “There’s no way you can serve Europe and the US if Cuban cigars became big in the US. If consumers would demand the same quality of cigars, prices would skyrocket.”
Mr Dahlgren added that they are prepared for this to happen sometime, but said Swedish Match would lose market share initially as sales of its other cigars fell.
The company makes cigars under brands from Macanudo to Garcia y Vega and owns Cuban heritage trademarks such as Partagas and Hoyo de Monterrey.
“The first few weeks we would not sell a single cigar because everyone would be buying the forbidden fruit,” said Mr Dahlgren.
He declined to forecast when the embargo might be lifted, though he said its end eventually would benefit the entire industry.
England-based Imperial, the maker of Davidoff cigarettes, might get a boost of as much as 2% to earnings before interest, tax, depreciation and amortisation if the US were to end the embargo, said Jonathan Fell, an analyst at Deutsche Bank in London.
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