Cuban cigar brands heritage

Today there are thirty-three different kinds of cigars made in Cuba. Almost half of them have knock-offs: on the American market one can buy Partagas, Romeo y Julieta, and Montecristos, which are not real "Havanas". Cigar Clan investigated how these copies of famous Cuban brands came about, and what their future might be

Spot ten differences

Having emigrated from the island, former owners of famous Cuban brands tried to preserve not only the brand names, but also their company style. Before you there is a magazine advertisement for a 'namesake', appearing in American publications.

On January 1, 1959, Fidel Castro, having triumphantly entered Havana, became the new Cuban leader. His long fight with Dictator Fulgencio Batista to establish democracy in Cuba concluded with a victorious revolution. Fidel's comrades in arms were not only normal Cubans, but also many big industrialists, including cigar manufacturers. And some even sponsored the insurrectionary movement. One of them was the not unheard-of Carlos Torano. In 1957 he personally gave Fidel Castro one hundred thousand pesos (an amount equivalent to one hundred thousand USD) to buy provisions and weapons for the soldiers.

But Castro soon fell under the influence of the USSR, and his social-democratic ideas began to change. Large independent enterprises and private production did not figure in his concept for a new society.

Castro began to nationalize industry gradually and for some time did not touch the cigar industry. Then, under various pretexts, both the most significant makers and the smallest ones, with no strategically important plantations, came under state control. But the longstanding tobacco dynasties, who once upon a time helped Fidel come to power, remained convinced that nationalization would pass them by.

Lightening struck on September 15, 1960. It was a fateful day for the Cuban tobacco industry: sixteen cigar and fourteen cigarette factories were nationalized, along with twenty tobacco warehouses.

For Carlos Torano, who had considered himself a friend of Fidel's, the nationalization was a shock.
When jeeps with twenty soldiers drew up to the gates of his company in Pinar del Rio, Carlos himself went out to meet them to find out what was happening. An officer said that the production facilities and plantation no longer belonged to him, and asked him to leave the premises. Torano was a big man, nearly two meters tall and weighing more than a hundred kilos. Behind him stood five hundred workers, and he bravely replied that this was a private company and no one had the right to raid the premises. The siege lasted three days. Carlos gave himself up only after the soldiers captured several company employees and threatened to shoot them.

There is another version, as set down by Stanford J. Newman in the book Cigar Family: A 100 Year Journey in the Cigar Industry. Castro decided to meet personally with Torano and arrived accompanied by armed security personnel. Sitting opposite, he said, "I'm taking your business off you." Carlos replied, "Fidel, we've always been good friends. Remember how I helped you, how I sent money when you were in hiding in the mountains. Don't do this." Fidel answered, "Carlos, you're an idiot. And now, get lost!"

One of the first factories occupied by soldiers belonged to Fernando Palicio, and made Hoyo de Monterrey, Punch, and Belinda cigars. Next came the turn of the H. Upmann factory and its owners, Alonso Menendez and Pepe Garcia, making H. Upmann and Montecristo cigars. Soon the soldiers reached Ramon Sifuentes, the maker of Partagas cigars. As Sifuentes himself later recounted, people in military uniforms entered through the building's main doors and, having reached his office, said, "We are taking your company. From now on it belongs to the state." Ramon Sifuentes was thrown off the premises without even being allowed to collect his personal belongings.

The first wave of nationalization was finished by early 1961. Nearly all the tobacco plantations came under control of the state, which became the owner of most of the country's industry and trade enterprises. Chaos reigned in the cigar industry. The reorganization went so far as to close all the pre-revolutionary brands. And by the end of 1961, all Cuban cigars were being sold under the name Siboney, in three formats.

Representatives of Cuba's old tobacco dynasties stripped of their factories, lands, and homes, were left not just on the streets, but literally penniless – for the government had frozen their bank accounts as well.
But Fidel soon realized that the country, for which cigars and tobacco were one of the chief exports, could end up without its famous Havanas, and without its specialists. Having partially allayed his fervor after the nationalization, he tried to keep several of them close by. Ramon Sifuentes received one of the first invitations to remain in Cuba and head the tobacco industry. Castro proposed that he manage all the Cuban cigar factories and tobacco plantations, but Sifuentes refused and within days left the island. Next was Silvio Peres, who had at one time headed the plantations belonging to Carlos Torano. He also refused to work for Castro and was given twenty-four hours in which to leave Cuba.

$7

Seven dollars – this was all the money that Alonso Menendez had in his pocket when he immigrated to Miami with his wife and children. The once-influential tobacco magnate just barely had enough money to feed his large family of ten. Silvio Peres washed cars, and other tobacconists earned a living as taxi drivers, bartenders, or street musicians.

Lightening struck again on February 7, 1962. On this day the Cuban émigrés got another chance. President Kennedy signed a document initiating an economic embargo against Cuba: henceforth cigars and tobacco produced on the island could not be exported to America or sold there.

The world's largest consumer of cigars was cut off from the largest producer, and within days shelves in American tobacco shops were empty. And the small amounts of cigars and tobacco that lucky American entrepreneurs managed to get hold of in the days before the embargo came into force were either sold for unbelievably high prices, or disappeared underground. In this situation the US cigar market urgently needed new suppliers. American producers naturally tried to save the day with their own resources, but the results were more than modest and so all eyes turned to the Cuban émigrés.

The first cigar factory was opened in mid-1961 in Miami by Cuban Simon Camacho. Soon three eminent refugees followed his example: Jose Padron, Efraim Gonzales, and Juan Sosa. But the remoteness of the plantations and the high cost of labor made Miami-made cigars too expensive, and the Cubans had to search for other production areas.

The choice fell upon the Canary Islands – in this Spanish province, located in the Atlantic Ocean off the coast of Africa, cigars had been made for a long time. True, they were of quite mediocre quality and were intended primarily for domestic consumption. But this didn't deter the Cuban immigrants: they had tobacco seeds brought from Cuba, and on the Canaries they had resources and specialists. In addition to which, labor costs were much lower there than in thriving Miami. And the Cuban masters could attain minimum quality anywhere.

The first premium-category cigar intended specifically for the American market was produced on the Canary Islands in 1964 by Alonso Menendez and Pepe Garcia. The partners named their creation Montecruz – analogous to the Montecristo cigars they had once produced in Cuba. The question naturally arises –why didn't Menendez and Garcia use their popular brand name? Incidentally, they were not the only ones to make this decision.

First, the tobacconist-refugees understood perfectly well that neither the Canaries' soil and climate, nor the soil and climate of any other country on earth, would ever compare to Cuba's. And therefore they consciously decided not to use the old names for their new cigars, in order not to ruin the reputation of the real Havanas. Second, they simply didn't believe that Castro's government would last more than five years, and they hoped to return home.
Fidel, however, had no intention of giving up, and started developing the tobacco industry. The old brands were revived – Punch, H. Upmann, Hoyo de Monterrey, Montecristo, and many others. Famous Cuban cigars returned to the shelves of European tobacco shops, and indeed export volumes increased every year. A state tobacco monopoly – Cubatabaco – was created to oversee production and distribution.

The Cuban government was able to register its right to all the most popular brands of Havanas in many countries around the world, with the exception, of course, of the US. And then the former lords of the Cuban factories, to that day believing that they were the rightful owners of the legendary brands, started registering their rights to those brands in the US. Cuban lawyers tried to impede the process, but the American authorities took the side of the bankrupted tobacconists.

The émigrés at last had a realistic chance to reclaim their fame and fortune. And they took it. The cigar doubles started their conquest of America.

1st Cuban brand of non-Cuban origin was Hoyo de Monterrey, the rights to which belonged to Fernando Palicio. His American partners were tobacco magnates Frank Llaneza and Dan Blumethal. In those chaotic days, when news broke about the coming embargo, they quickly grasped the situation and were able to buy nearly all the Cuban tobacco that could be found in the US. In the words of Frank Llaneza, thanks to a series of lucky deals brokered at the right moment, their company Villazon & Co. overnight turned from a small, unknown producer, into a real giant of the American cigar industry.

Hoyo de Monterrey cigars, first made in Tampa in 1963, were sold in boxes with the phrase 'made with real Havana leaf'. This, along with Fernando Palicio's authority taking part in their creation, guaranteed the new cigars unprecedented success on the American market.

In 1965 Fernando Palicio died, but just before his death he sold his rights to Hoyo de Monterrey and Punch to Frank Llaneza. Villazon & Co. continued to make Hoyo de Monterrey cigars with Cuban tobacco right up until the end of the 1960s. When the reserves of 'Havana leaf' began to dry up, the Americans gradually changed the composition of their cigars, quite painlessly substituting Cuban tobacco with tobacco from other countries. In 1969 production was moved to Honduras. Soon another double appeared – Villazon & Co. released a new line of cigars under the brand name Punch.

The end of the 1960s was marked by another wave of moves: trying to improve the quality of their products, the Cuban émigrés starting opening up new areas in Central America, and they were followed by other big cigar manufacturers.

In the course of a whole number of complex commercial acquisitions, by the end of the 1960s the once-Cuban brand Macanudo ended up in the hands of the American tobacco giant General Cigar. Production had historically been based in Jamaica, but after the revolution it ceased. The Americans decided to revive the popular brand, and especially for this in 1969 they acquired the Jamaican factory Temple Hall and invited Ramon Sifuentes in as a consultant. He in turn had not been able to start production of cigars under brand names he owned – Partagas, Ramon Allones, and Bolivar – and therefore accepted the attractive offer. The cigars, hand-rolled from Jamaican tobacco under the guidance of the world-famous expert, became the first premium-grade Jamaican cigars and instantly conquered the American market. On par with Montecruz from the Canaries, and the Honduran Hoyo de Monterrey and Punch, the Jamaican Macanudo were named the best non-Cuban cigars of the late 60s and early 70s.

Starting from that moment, General Cigar actively cooperated with Ramon Sifuentes, attracting him to participate in their projects and, most importantly, investing money in his plantations – according to his wishes they were established in the Dominican Republic. Such close relations with the legendary Cuban tobacconist brought results for the American cigar giant – in the early 1970s Ramon Sifuentes sold General Cigar the rights to all his Cuban brands and took up a high position within the company. In 1977, production of Partagas started in the Dominican Republic, and soon Ramon Allones cigars appeared as well. But the Bolivar clone appeared significantly later, only in the late 1990s.

General Cigar wrangled into its portfolio yet another Cuban brand – La Gloria Cubana. In the mid-1960s it was registered in the US by exiled Cuban tobacco grower Ernesto Pere-Carilo. The first cigars under this brand name were released in Miami in 1968, but subsequently production was moved to the Dominican Republic and General Cigar, actively working with the Peres-Carilo family, got exclusive rights to distribute them in the US, effectively becoming the American holder of the La Gloria Cubana brand.

Very similar is the story of the appearance of the non-Cuban versions of the H. Upmann, Montecristo, and Por Larranaga cigars which, we recall, once belonged to Alonso Menendez and Pepe Garcia. When Alonso Menendez died in 1965, his thriving business on the Canary Islands and the rights to the Montecruz brand went to his son Benjamin. And the rights to the old brands passed into the hands of his former partner Pepe Garcia, who in 1968 together with American tobacco company Consolidated Cigar founded the company Cuban Cigar Brands NV. Noteworthy is that the American company held the controlling stake – practically speaking, Consolidated Cigar already at that time was the owner of three of the most famous Cuban brands. Dominican H. Upmann and Por Larranaga appeared in the mid-70s. Twenty years later, Montecristo cigars hit the American market.

The fourth big player on the American market of cigar doubles became Max Rohr Importers, which in 1975 registered the rights to the Romeo y Julieta brand and several years later added to its portfolio with brands such as Quintero, San Luis Rey, Gispert, and Juan Lopez. Before becoming the property of the American company, these brands had literally been doled out on a handshake, and occasionally this led to unexpected consequences. And so, at one time the famous Romeo y Julieta cigars were produced simultaneously in three countries, and American connoisseurs were confounded by aesthetically similar, but completely different in taste, Romeo y Julieta cigars of Honduran and Dominican origin.

In the late 70s and early 80s nearly all brands of cigar doubles were concentrated in the hands of large American tobacco corporations, and production was hugely profitable from a commercial point of view. The Dominican Republic, the new Mecca for cigar producers, guaranteed political and economic stability and provided relatively cheap labor. The opening up of new tobacco-growing regions allowed Dominican producers to use not only local tobacco in their cigars, but also tobacco from other countries, significantly enriching them from a sensory point of view. Of course, the Dominican doubles sold in the US differed greatly from their Cuban forebears in taste and aroma, but American smokers adapted fairly quickly to the new style.

At a certain point, with a sense of their own strength, the producers of cigar doubles decided to expand their sphere of influence to the European market as well. But their efforts to promote their non-Cuban clones there came to naught, except for scandals and additional expenses. By the way, there were after all a few positive results from this expansion: those same cigar doubles designed for the American market began to be sold in Europe under entirely new names.

In general, the Dominican Republic and other new tobacco-growing regions became, as a result of their development, the birthplaces of a multitude of entirely new brands which were equally successful on both the American and European markets. And today the cigar doubles account for a very small percentage of the total volume of cigars appearing in the world after the Cuban revolution and the implementation of the embargo.
One way or another, by the late 80s the world cigar market had achieved relative stability. Producers from the Dominican Republic, Nicaragua, Honduras, Jamaica, and several other countries offering both doubles and completely new brand names, either independently or under control by American corporations, had secured the US market. But the cigar boom, starting in the US in the 1990s and quickly spreading around the world, destroyed this stability. Never before had there been such international demand for cigars, and never had their production been such a lucrative business.

1996

In this year General Cigar, then the undisputed leader on the American cigar market, decided yet again to strengthen its position and acquired Villazon & Co, expanding its portfolio of doubles. Now, in addition to Partagas, Ramon Allones, Bolivar, and La Gloria Cubana, it includes Punch and Hoyo de Monterrey.
A year later the Spanish tobacco giant Tabacalera S.A. – a company traditionally involved in importing Cuban cigars to Europe – announced its desire to enter the American market. In 1997 the Spaniards bought Hollco Rohr (formerly Max Rohr importers), gaining the American rights to such archetypal Cuban brands as Quintero, Romeo y Julieta, San Luis Rey, Gispert, and Juan Lopez.

The French, who together with the Spanish were the largest consumers of cigars in Europe, were not left by the wayside. The French tobacco monopoly Seita S.A. acquired Consolidated Cigar and bought the remaining shares in Cuban Cigar Brands NV, becoming holder of the American doubles of H. Upmann, Montecristo, and Por Larranaga.

The appearance of European companies on the American cigar market significantly increased competition between the main players, although General Cigar was able to maintain its leadership position – both in the current situation and in terms of potential development. In general, the last aspect in the 90s began to worry players on the cigar market more and more. The possibility of the embargo being lifted forced the largest players to think about the cigar market's future, and to start getting ready for global changes.
In October 1999, an event took place which today can truly be called a historic moment: as a result of the merger between the Spanish Tabacalera S.A. and the French Seita S.A., Altadis Group was founded. It came into all the assets of the two amalgamated companies, including the brands gained as a result of acquiring Hollco Rohr and Consolidated Cigar. The cigar boom and globalization made their mark, and just two big players were left on the international cigar market – the transnational Altadis and American General Cigar. When something like this happens, there seems little point in talking about further developments and mergers – instead an open battle begins under hyper-competitive conditions. But in this case it's not all so simple, because the tastiest, albeit relatively small, piece of the pie remains unclaimed – Cuba.

And there the all-powerful General Cigar has proven to be completely helpless. The American company is a victim of the embargo, under which Americans cannot have any economic relations with Cuba whatsoever. Against this backdrop, Altadis Group got the chance to start talks with the Cuban government, as a result of which in 2000 it acquired fifty percent of the Cuban state monopoly Corporacion Habanos S.A.

Practically speaking, one company now holds the rights to both original Cuban brands, and their US-registered copies. This means that should the embargo be lifted, there will be no legal proceedings regarding the rights to these brands. The only question that remains open is one regarding those brands for which General Cigar controls the American rights. These include Partagas, Hoyo de Monterrey, Punch, and Ramon Allones. These brands would probably cause huge legal battles, for in the rest of the world Altadis Group holds the rights.

In the US there are also separate brand doubles which still belong to small companies. Among them, the only truly famous one is Fonseca – the American rights belong to Manufactura de Tabacos S.A. (Matasa), which was founded in 1974 in the Dominican Republic by Cuban émigrés Manuel Quesada and Juan Sosa. The fate of such brands is difficult to predict – most likely they will be bought up by one of the market giants.

There is virtually no one left of those who stood at the very beginning and knew the cigar world as it was before the Cuban revolution. Alonso Menendez and Fernando Palicio died in 1965. Carlos Torano Sr. passed away in 1970. And in 2000 at the age of 91, Ramon Sifuentes breathed his last breath. It is inevitable...

Cigar Clan 5,2007 vol.1. Eldar Tuzmukhamedov