Cuban cigars will never be legal in the US.
All day, every day, customers ask me when Cuban cigars will be available. Last year, I wrote an article siting the “what’s in it for us, what’s in it for them?” perspective on lifting the trade embargo. The only thing in it for the US, would be to look like a “bigger man,” being able to forgive and forget. And, that’s how I answered my customers. The trade embargo will be lifted, but Cuba is having a tough enough time with production right now, so don’t expect a flood of sticks to hit the market. And, don’t expect the best quality.
How they will bill sold here, creates an entirely different set of problems. Will they sell directly to US retailers? Will they have a sole US importer and distributor? Or, will they open their own, or franchise, Habanos branded, Cuban-only, shops to compete with US retailers? And what about trademarks? Cohiba, Montecristo, Romeo, Upmann, Punch, Partagas, yada-yada blah-blah. That’s gonna be a mess. How it will play out, is anybody’s guess.
Today, May 21, 2016, The Wall Street Journal published an article addressing Cuba’s plan to increase production by 20% over the next 5 years, which would equate to another 18 million cigars a year. Hooray! Everybody can have, uh, one! And, that’s per year. Ok, it’s something, and only the beginning, and it can improve over time.
I need to criticize WSJ, along with the ignorance of the editor and author of the article. Two weeks ago, they published two articles on the new FDA regulations. Did they forget? Do they not read their own articles? Their article today wasn’t news, it was fluff, made to fill pages and sell more advertising space. What a bunch of crap.
So, let’s get to the deal breaker, the reason you will never be able to buy Cuban cigars in the US. According to the new FDA regulations, all Cuban cigars will be categorized as “newly deemed” products. I’ve heard quotes of $250,000-$500,000 per blend and size to go through the FDA approval process. How many different blends and sizes are there of Cuban cigars? I have no idea! But, I can estimate. Just one brand, Cohiba must have at least 50 different individual products. What about all the other brands? I bet there’s 500 or more unique products. I’m going to be conservative, and say 300 that might make there way to the US. Uh-oh, wait, $250,000 per blend/size for FDA approval? Let’s see, eight, carry the one, Holy Habanos!!! That’s at least $75 million dollars, on a conservative calculation. According to WSJ, annual revenue for Habanos, SA in 2015 was only $428 million. Are you starting to see the problem? After all the workers, farming and production costs, how much is left? Is it a wise business decision on Cuba’s part to pay? I think not.
To make matters worse, the FDA ruling will affect all of your favorite cigars from Nicaragua, Dominican Republic, Honduras and other countries. Your choices are about to become greatly reduced.
There is something you can do, but you need to act quickly. There are currently two petitions, one congressional and one to the White House demanding an appeal to the recent FDA ruling. One at Cigar Rights of America and one at We the People. They won’t cost you a penny, just a minute of your time. Sign both, then have your friends and family sign them too. Together, we can make a difference!