A Note on the Cuban Cigar IndustryThe bargaining power of suppliers is dependent on whether major suppliers can exercisesufficient bargaining power to influence the terms and conditions of supply in their favor.The production in the premium cigar factories is under the direct control of Cubas Unionof Tobacco Enterprises and is completely separate from the Altadis-Habanos jointventure. Tobacco growers can buy land through government loans and then pay in kindthrough tobacco harvests. So the Cuban government is the only buyer of the output fromthe private firms, partly due to the Helm-Burton Act of 1996. This Act limited trade thatsubsidies of U.S. companies in other countries could conduct with Cuba, allowed the U.S.to impose sanctions on countries trading with Cuba, an
Cabrera Cigar is sold and made with a limited and inexpensive version of the Cuban Cigar Industry’s Havana line of cigars, which is known to be of higher quality and more robust than the Altadis-Diaz-Luis-Habanos brand.The new line features Cuban style with light-weight wrapper and a wide variety of wrappers. The line makes use of high-quality Nicaraguan tobaccos to make it more readily available and available for a lower price and lower number of cigars. Although the Habanos line will carry a larger quantity of cigars than the cigars of the Altadis-Diaz-Luis brand, it is still expected to produce about half the price of what is currently available through U.S. distribution.A cigar in Cubas Union of Tobacco Enterprises is a brand of Havana. Its tobacco is produced in the Cajon region where it is produced locally. U.S.-based producers can still sell cigars imported to Cuba; however, the import restrictions put a limit on the production value of imported cigars. The Cajon region has the highest minimum retail price of any region because of the Cuban Cigar Industry’s high-price policies, which have had an impact on Cuba’s trade with the U.S.–Mexico border.Cuban producers make the cigars of Cubans in Cuba at U.S. prices; Cuba’s is the only area of the world where it offers a higher local price for imported tobaccos with a higher wholesale price than the U.S.-based production.Cubans do not make the most of these special-edition products, however, because they often have a small production budget and have difficulty finding quality cigars because of the high import restrictions. Cuba’s production facilities do not have as much as U.S. production facilities and have high import competition. As a result, Cuban cigar producers lose money on each cigar and lose money on the profits brought from the U.S./Mexico border. Some Cuban producers earn their profits doing the same, but not all cigar producers make as many cigars as they might like.Cuban cigar producers have experienced economic hardships due to competition throughout the country. This is partly due to the fact that American makers are not used to importing many Cuban-made cigars, often not even at a price point that is high enough to compete with the international markets. Many Cuban products are smuggled in by boat or ship to the U.S. for higher prices, and American imports come with a significant surcharge when they are shipped to Cuba. The demand and volume of Cuban cigars in Cuba for the American market has also increased substantially, as Cuba’s imports of Nicaraguan and Nicaraguan cigars have dropped from $11.85 million in 2001 to $6.85 million in 2001, and this decreased in the years 2006 and 2007.
Cabrera Cigar is sold and made with a limited and inexpensive version of the Cuban Cigar Industry’s Havana line of cigars, which is known to be of higher quality and more robust than the Altadis-Diaz-Luis-Habanos brand.The new line features Cuban style with light-weight wrapper and a wide variety of wrappers. The line makes use of high-quality Nicaraguan tobaccos to make it more readily available and available for a lower price and lower number of cigars. Although the Habanos line will carry a larger quantity of cigars than the cigars of the Altadis-Diaz-Luis brand, it is still expected to produce about half the price of what is currently available through U.S. distribution.A cigar in Cubas Union of Tobacco Enterprises is a brand of Havana. Its tobacco is produced in the Cajon region where it is produced locally. U.S.-based producers can still sell cigars imported to Cuba; however, the import restrictions put a limit on the production value of imported cigars. The Cajon region has the highest minimum retail price of any region because of the Cuban Cigar Industry’s high-price policies, which have had an impact on Cuba’s trade with the U.S.–Mexico border.Cuban producers make the cigars of Cubans in Cuba at U.S. prices; Cuba’s is the only area of the world where it offers a higher local price for imported tobaccos with a higher wholesale price than the U.S.-based production.Cubans do not make the most of these special-edition products, however, because they often have a small production budget and have difficulty finding quality cigars because of the high import restrictions. Cuba’s production facilities do not have as much as U.S. production facilities and have high import competition. As a result, Cuban cigar producers lose money on each cigar and lose money on the profits brought from the U.S./Mexico border. Some Cuban producers earn their profits doing the same, but not all cigar producers make as many cigars as they might like.Cuban cigar producers have experienced economic hardships due to competition throughout the country. This is partly due to the fact that American makers are not used to importing many Cuban-made cigars, often not even at a price point that is high enough to compete with the international markets. Many Cuban products are smuggled in by boat or ship to the U.S. for higher prices, and American imports come with a significant surcharge when they are shipped to Cuba. The demand and volume of Cuban cigars in Cuba for the American market has also increased substantially, as Cuba’s imports of Nicaraguan and Nicaraguan cigars have dropped from $11.85 million in 2001 to $6.85 million in 2001, and this decreased in the years 2006 and 2007.
Cabrera Cigar is sold and made with a limited and inexpensive version of the Cuban Cigar Industry’s Havana line of cigars, which is known to be of higher quality and more robust than the Altadis-Diaz-Luis-Habanos brand.The new line features Cuban style with light-weight wrapper and a wide variety of wrappers. The line makes use of high-quality Nicaraguan tobaccos to make it more readily available and available for a lower price and lower number of cigars. Although the Habanos line will carry a larger quantity of cigars than the cigars of the Altadis-Diaz-Luis brand, it is still expected to produce about half the price of what is currently available through U.S. distribution.A cigar in Cubas Union of Tobacco Enterprises is a brand of Havana. Its tobacco is produced in the Cajon region where it is produced locally. U.S.-based producers can still sell cigars imported to Cuba; however, the import restrictions put a limit on the production value of imported cigars. The Cajon region has the highest minimum retail price of any region because of the Cuban Cigar Industry’s high-price policies, which have had an impact on Cuba’s trade with the U.S.–Mexico border.Cuban producers make the cigars of Cubans in Cuba at U.S. prices; Cuba’s is the only area of the world where it offers a higher local price for imported tobaccos with a higher wholesale price than the U.S.-based production.Cubans do not make the most of these special-edition products, however, because they often have a small production budget and have difficulty finding quality cigars because of the high import restrictions. Cuba’s production facilities do not have as much as U.S. production facilities and have high import competition. As a result, Cuban cigar producers lose money on each cigar and lose money on the profits brought from the U.S./Mexico border. Some Cuban producers earn their profits doing the same, but not all cigar producers make as many cigars as they might like.Cuban cigar producers have experienced economic hardships due to competition throughout the country. This is partly due to the fact that American makers are not used to importing many Cuban-made cigars, often not even at a price point that is high enough to compete with the international markets. Many Cuban products are smuggled in by boat or ship to the U.S. for higher prices, and American imports come with a significant surcharge when they are shipped to Cuba. The demand and volume of Cuban cigars in Cuba for the American market has also increased substantially, as Cuba’s imports of Nicaraguan and Nicaraguan cigars have dropped from $11.85 million in 2001 to $6.85 million in 2001, and this decreased in the years 2006 and 2007.
When anyone mentions the country Cuba, two products register in our mind – sugar andcigar. Cuban cigars are renowned for as the sign of upper echelon style and class even for an uneducated cigar smoker. They are highly reputed for distinct taste and feel andconsider containing the worlds best tobacco. As a tropical region, Cubas land is possiblythe ideal place to grow the finest tobacco and wrappers in the world. Even though cigarshave been manufactured in other countries as well, Cubas cigars still hold the foremostchoice of all cigar aficionados around the world. Cigar is mostly popular in United Statesas a symbol of class and posh lifestyle. This means that anyone would be tempted toinvest in the cigar industry. However, the importation of the Cuban cigar to the UnitedStates is illegal. Due to the trade embargo imposed on Cuba by the Kennedyadministration forty years ago, all economic trades between United States and Cuba are blocked.With the former U.S. president Jimmy Carter, the first U.S. president to visit Cubafollowing the embargo, there are speculations that the U.S. – Cuba relations would soften,leading to lifting the embargo restrictions. Obviously the potential slackening of thetrade barrier would be an investors dream within this industry, but the reality of thesituation is still very unpredictable. Forty years have passed since the embargo, and manycigar manufacturing industries have evolved around the world during this period, allcontributing to U.S. cigar consumption. Even United States has its own cigar industries inConnecticut and Tampa.Anyone considering investing in the cigar industry as a possibility of alleviation of theembargo should identify the external environments forcing the shape this industry. Thisstudy identifies the Five Forces Model of Competition identified by Michael E. Porter:(i) Rivalry among competing sellers, (ii) Threat of new entrants, (iii) Other industriesoffering substitute products, (iv) Bargaining power of suppliers, and (v) Bargaining power of buyers. Consequently, the strength of each force is also identified
1. Rivalry among Competing SellersThe strongest among the