Cuban cigar maker eyes growing market in Macau and mainland China

Cuban premium hand-rolled cigars are becoming quite popular in China, which is considered the most important emerging market for at least one particular company.

In an interview with Xinhua, Jose Maria Lopez, development vice president of Habanos S.A., said the company will seek to expand and diversify its presence in China in 2019. “China has the potential to be in the medium term the first market for Habanos S.A.” and there are “great possibilities” to increase sales in China, Lopez said.

According to official figures, China became the third largest market worldwide for the company in 2017 after Spain and France, with an increase in sales of 33 percent from 2016.

Premium cigars in China was an undersized segment until a decade ago because there was preference for cigarettes, said Lopez, adding that an increasing fondness of Chinese consumers for handmade tobacco has emerged in recent years and Cuba is currently the top producer in the world.

Due to the growing demand, Habanos S.A. reached an agreement with the China National Tobacco Corporation in the summer of 2017 to increase sales and work together to promote knowledge of and develop a taste for Cuban cigars in China.

“The Chinese consumer prefers our most exclusive and premium products with an authentic admiration for the Cohiba brand, which is our most important trademark and greatest exponent of luxury within the Cuban cigar market,” Lopez said.

“Between 40 and 50 percent of the Chinese demand is concentrated in the Cohiba brand, which is very high. One of our intentions when we talk about developing the tobacco culture in that country is to educate the Chinese consumer that not all cigars are Cohiba,” he said.

Habanos S.A. also sells another 26 brands of cigars and each of them has its own characteristics, flavors and different price ranges, according to the senior executive, adding that it is the company’s focus to make these brands widely known to the Chinese consumers.

According to Lopez, sales of Cohiba with respect to other brands is much higher in China than in other countries in Latin America and Europe.

With the State Tobacco Monopoly Administration through which domestic imports are made to the Chinese mainland, growth rates between 20 and 30 percent per year are expected, according to Lopez.

“Based on the collaborations that we are having, without doubt we trust that, with a relationship of mutual benefit, we will be able to grow in the market,” said Lopez.

Habanos S.A. plans to continue growing in three other marketing channels that have been identified in the Asian nation.

The company has shops in Hong Kong and Macau. It is also working to attract customers through the China Duty Free Group in the two regions.

Lopez told Xinhua the company is working on an exclusive product for 2020 to commemorate the Chinese Spring Festival as a sign of the growing demand and constant expansion of sales in the Asian nation.

“We believe that we have a very interesting idea to satisfy the expectations and interests of Chinese consumers in a moment so special for them as the celebration of the New Lunar Year,” he concluded.

Founded in 1994, Habanos S.A. is dedicated to commercializing hand- made Cuban premium cigars. Its distribution network includes 144 sale points on the island and over 700 additional establishments in more than 150 countries around the world.   MDT/Xinhua