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Tobacco Reporter‘s May 2016 edition: After the embargo

The recent thaw in Cuba-U.S. relations has prompted feverish speculation about the future of Habanos. Will the world’s most famous cigars soon be available to consumers in the world’s biggest market? And, if so, how would such a breakthrough impact global supply and demand?

For more than half a century, Cuba has exported its cigars everywhere except to their most obvious destination, the behemoth next door. In the early 1960s, the U.S. government erected an embargo, prohibiting virtually all trade with the communist island. Intended to force democratic reform and reverse the expropriation of American properties in Cuba, the sanctions instead entrenched the regime by providing a scapegoat for political oppression and economic stagnation.

Fifty-plus years and 10 U.S. presidents later, the communists remain firmly in charge, although their convictions appear to be wavering—witness Havana’s grudging but growing tolerance of free enterprise.

Despite the continuing differences between the two neighbors, tensions have relaxed considerably over the past year. In July 2015, Cuba and America re-established diplomatic relations; soon after the U.S. opened an embassy in Havana.

Unfortunately for American cigar lovers, the obvious next step—lifting the embargo—is still some ways off. That’s because doing so requires an act of Congress, and many U.S. lawmakers are decidedly less enthusiastic about re-engagement with Cuba than are their counterparts in the Obama administration.

If the U.S. market does open, however, it will be interesting to see how Habanos sales develop. While many expect a surge, others suggest the rise may be less than anticipated because Americans are already buying many Cuban cigars through outlets in third countries. When France declined to support America’s 2003 invasion of Iraq, for example, its tobacconists reported a significant drop in Habanos sales, which they attributed to fewer American visits that year.

The other question is: Will Cuban cigars live up to the almost mythical status they acquired in the minds of American smokers? Absence makes the heart grow fonder—sometimes irrationally so—and Dominican, Nicaraguan and Honduran cigars have come a long way over the past fifty-some years. And then there is the pesky issue of trademarks, with both General Cigar and Cuba’s state tobacco company claiming the U.S. rights to the Cohiba name.

While it’s impossible to predict the future, it’s always fun to engage in a bit of crystal gazing. Tobacco Reporter’s Timothy Donahue asked his sources to do just that when he visited Cuba’s Habanos Festival earlier this year. Their insights are as revealing as they are intriguing.

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