There is a new leader in the Cuban cigar market. During the Habanos World Days event today, Leopoldo Cintra Gonzalez, the commercial vice president for Habanos, made the announcement at a virtual press conference from Havana. “For the first time in our history, China has become our No. 1 market in the world,” he said.
Spain was the previous market leader, and in 2019, China was No. 2. However, growth has accelerated in China; sales to that country increased by more than 50 percent over the past six years. Last year alone, China’s demand for Cuban cigars grew by 5 percent, according to Habanos. While China ranks No. 1, Europe is still the largest region for Cuban cigars. In 2020, 60 percent of Habanos sales came from Europe, according to Gonzalez.
Spain has become the second most valuable market for Cuban cigars, followed by France, Germany and Switzerland to complete the top five markets worldwide. Asia has been the leading growth market for Habanos, according to Gonzalez. He said the region has grown more than 10 percent in the last year, even with the difficulties presented due to the Covid-19 pandemic.
The positive outlook from China, however, was offset by a 4 percent drop in Habanos’ total revenues in 2020. The pandemic was said to be the main cause of the drop, with stores closing and the lack of tourism dollars in many nations, but Habanos still earned nearly $507 million in total sales for the year, according to Gonzalez.
“2020 has been a challenging year, not just for our business [but also] for humanity,” said Gonzalez. “But if we analyze it in depth, we see that there are markets especially affected by the drop in tourism, such as Cuba.”
To prevent the spread of Covid-19, Cuba temporarily closed its borders to tourists in March 2020. A reopening in November caused infections to surge, prompting authorities to reduce flights and tighten restrictions again.
“If we discount the negative effect of this specific market, we would only be talking about a [cigar sales] drop in the 2 percent [region],” said Gonzalez.
Gonzalez said that, overall, the future for Habanos was still bright, and the company expects to exceed 2019 sales in 2021. “We must highlight the good mix of launches and actions carried out during the year,” he said. “This year, a total of 19 products have reached the markets to satisfy all the needs of fans where novelties in the standard portfolio are mixed with highly successful and profitable specialties, confirming the high demand in the super premium segment.”
The Habanos World Days event is going to be a new annual event for Habanos. During a Q&A session, Gonzalez told Tobacco Reporter that having an annual online event allows the global Cuban cigar community to learn about the company and experience all that the world of Habanos has to offer firsthand. —T.S.D.