The Cuban Cigar Mystery

by on December 21, 2005 at 7:10 am in Economics | Permalink

Why are Cuban cigars good?  It’s not as if communist economies are known for producing quality goods so why the exception for Cuban cigars?  I have a few hypotheses:

  1. Cuban cigars are not good.  The contrary impression is due to rememberances of things past and the sex appeal of the forbidden fruit.  (Testable hypothesis: Are Cuban cigars as highly prized in countries where they are not banned?)
  2. The Cuban "terroir," the soil, climate and environment are unique.   (Maybe but Communists destroy good terroir – see Zimbabwe, the Ukraine etc. – all the time.)
  3. Castro puts a huge amount of resources and incentives into producing cigars because a) he likes to smoke and b) exporting cigars and doctors is good for the brand image.  Cuban cigars are like Soviet chess.
  4. Castro has basically privatized the cigar industry allowing for significant market incentives.

Comments are open for those who know more about cigars and the Cuban cigar industry.

Chris Meisenzahl December 21, 2005 at 8:04 am

I don’t know anything about cigars. But I do think a good deal of the mystique is the forbidden fruit factor you mentioned.

jim December 21, 2005 at 8:47 am

I haven’t smoked cigars for nigh on twenty years now, but from memory Cuban cigars were better than others. In the US, I smoked Jamaicans; when I went abroad I smoked Cubans.

My understanding is there’s four elements which result in a superior cigar: terroir, varieties (you need different varieties of tobacco for filler, binder and wrapper), tobacco growing and curing skills and cigar making skills.

Any political system may destroy terroir (look what we’re doing to the North Slope of Alaska), but isn’t forced to. It’s probable that the Cuban government looked to preserve the tobacco-growing terroir, since cigars were, still are, an important source of hard currency.

The varieties available to cigar makers have evened out. By the time I quit smoking, Jamaicans were using good wrappers. So that’s no longer a factor.

Both tobacco growing and cigar making are (unpleasant) labour intensive. In other countries, people move away from them. In Cuba, there were, presumably still are, few alternatives. Less turnover means more consistency.

Put together the preserved terroir and preserved skills and you probably have an explanation.

neil December 21, 2005 at 9:30 am

Reporting from elsewhere in Latin America, I can verify that Cuban cigars are indeed preferred even where they are not contraband. In fact, the ‘sex appeal’ of Cubanos seems to be even greater — perhaps because more cigar consumers here have actually had a chance to try them?

As long as you’re addressing the issue, by the way, you could mention that Cuban rum is superior to any other as well. Havana Club is the top-shelf rum in every bar I’ve been to in Latin America. Unlike the famous Cuban cigars, the quality of their rum does not seem to be well-known to Americans.

michael vassar December 21, 2005 at 10:05 am

In Costa Rica they like the US and grow their own tobacco (I think tariffs are high too) and they still smoke Cubans.

Captain N December 21, 2005 at 10:08 am

United States of America has a lot of influence on the rest of the world. Especially when it comes to creating and promoting commercial brands. Whatever is sexy (or made to be so either by marketing firms or consumers) here is usually so outside of the US.

In my travels through Latin America I have found all things Cuban perceived as being cool. On numerous occasions people expressed their admiration of Fidel for ‘being the only guy having balls to say NO to the US’, no matter his policies etc.

One cannot be 100% certain on this before a scientific study is conducted, but could it be that the ‘forbidden fruit’ factor is an unexpected side effect of the US trade embargo? Similarly, books and movies of questionalbe artistic or literary value banned in some countries usually turn out as big hits in other parts of the world…

That’s marketing for you….

Wild Pegasus December 21, 2005 at 10:59 am

5. Communism works.

Hahaha…sorry, had to get that one in.

- Josh

robbbbbb December 21, 2005 at 11:49 am

I’m going to take a little issue with Anthony’s statement on the AK-47. The AK is a fine rifle, but its primary virtue is its simplicity. The AK-47 was designed on three parameters: (1) Be manufactured inexpensively, (2) Be rugged as all hell, and (3) Be able to pump out a whole lot of ammunition. Kalashnikov managed all of these at the expense of high quality. He knew the shortcomings of Soviet industry and worked around them.

You can take an off-the-shelf M-16 (at least one of the newer ones) and turn it into a high-accuracy rifle. You just can’t do that with an AK. They’re not manufactured to tight tolerances.

BigMacAttack December 21, 2005 at 11:57 am

The market sets the price. The profit incentive exists. You have competition.

I don’t think the relavent question is why does communist Cuba produce high quality cigars?

Given the above it makes sense they should.

I think the relavent question is does communist Cuba efficiently produce high quality cigars?

jej December 21, 2005 at 12:39 pm

it’s down to the production technique – hand rolled on a maiden’s thigh

Robert Schwartz December 21, 2005 at 1:21 pm

Coke vs Pepsi — the tests were accurate. The problem is that Pepsi is sweeter than Coke, which is why it was preferred in the taste test format. But in th real world where people drink more than a couple of sips and often drink colas with food, Coke’s more astringent taste is less cloying than Pepi and is preferred by a majority.

“look what we’re doing to the North Slope of Alaska”

Is is so sad. It produced such a wonderful pinot noir, and the gewurztraminer was to die for.

Dan December 21, 2005 at 1:56 pm

Can’t believe no one has mentioned it yet, but 3(a) probably is not a factor.

Although many of the charicatures of Fidel still feature him puffing on a big fat Cuban, the fact of the matter is that he quit smoking almost 20 years ago and has been campaigning to reduce smoking among the population in Cuba. See, for example, this 1994 interview from Cigar Afficionado (and it’s good reading anyways):
http://www.cigaraficionado.com/Cigar/CA_Profiles/People_Profile/0,2540,4,00.html

neil December 21, 2005 at 2:48 pm

I’ll have to try that, if I can find it. Thanks.

andrew December 21, 2005 at 9:48 pm

so basically there is no one reading this blog in germany or somewhere where cubans are legal who could just do a small taste test? I was also under the impression that the cigar rolling plants in Havanna hadn’t changed in about a hundred years and that the workers there are treated fairly well (people read to them as they roll apparently). Also, I don’t recall Fidel making the same mistakes that many communists countries (read N.K. and China) made when it came to farming, which would be instituting one way of farming for several areas that aren’t suited for it. I wonder do they sell cubans in Taiwan or do I have to hit the mainland… ? =)

peace,
A

kp December 21, 2005 at 10:36 pm

Fidel did sell 50% of Habanos, SA to Altadis in September 2000.

http://www.altadisusa.com/company.asp

Cuban cigars did fall in quality in the late ’90s but have had a resurgence since the private investment.

Tobacco tastes vary significantly based on where it is grown. Once someone develops a taste for Cuban tobacco, other cigars don’t offer the same flavor.

Non Cubans score well in Cigar Aficionado’s blind taste tests, but they are only available in the US. When you do find them in other countries, they are priced significantly higher than the Cubans, so people outside of the US will tend to stay with the Cuban cigars.

In my opinion, the best Cubans cigars are the best cigars in the world. In addition, they are cheaper and easier to find than the best non Cubans, like Opus X and Padron Anniversary. But my cigar smoking friends in HK always ask me to bring over the best of the Non-Cubans.

A Tykhyy December 22, 2005 at 2:50 am

Please correct “the Ukraine”.

dee.are December 22, 2005 at 9:54 am

There are two big factors that go into the quality of a cigar: terroir and production quality. Cuban terroir is pretty unique. (They also produce high quality coffee, another terroir-intensive product.) Production quality in Cuba varies a tremendous amount from brand to brand, and in general suffered a great deal in the 90s special period, but is now quite high for externally marketed brands like Partagas or Cohiba.

It is true that Cuban cigar factories use 19th century production technology, but the reason why it’s a good job to have in Cuba is not because they treat the workers well. Workers sit side by side at small desks in large, humid rooms. They work hard. They do have a (propoganda) news reader at the front of the room, but it’s not all the time and it’s only to keep them alert. It’s a good job b/c it offers an ordinary Cuban access to tourist dollars. I have been on the shop floor of the Partagas factory in Havana and seen with my own eyes workers selling cigars out of their daily production to tourists taking tours through the factory. I have seen the tour guide himself sell cigars. And I have also seem the same guide chide tourists for being too conspicuous in their purchases, saying, “I don’t care if you buy the whole factory, except that I will get in trouble if you are caught.”

So the problem with cigar production under a command economy is efficiency, not quality. Many more cigars leave the factory through the back door than through the tourist shop in the front hall. To oversimplify, this is because by ignoring incentives, command economies generally exacerbate the incentives that are naturally there. Whether or not laziness trumps corruption depends on how hungry people are.

James December 23, 2005 at 12:44 pm

I started smoking cigars overseas where Cubans were legal and have continued to smoke cigars for many years now. I have smoked many cigars, both cuban and non, while discussing this topic.

It is interesting that cubans are the standard by which all cigars are measured, whether a person has smoked many or none. Furthmore, specific brands are considered the benchmark within given shapes and guages, ie. montecristo#2, RJ Churchhill. So when many people speak of cuban cigars, these top tiered cigars are what they are refering to. After smoking many of them over the years, I would argue that they are very good cigars. And at 20-30 USD per stick, I would expect them to be.

But how many of us spend 20-30 USD every time we smoke a cigar. Smoking a cuban cigar is usually occurs during some other greater event, or the act of smoking a cuban cigar is treated as special event unto itself. Either way, the cigar is going to be good, cuban or not.

So, are cubans the best cigars in the world? Maybe. But for many the best a non-cuban cigar will ever be is better than a cuban. However, the best a cuban can be is the best cigar they have ever had.

That’s what being a yardstick gets you…

Danny McDaniel December 25, 2005 at 3:38 pm

The Cuban cigar issue is very much like the desire for Coors beer in the American Midwest and South in the 1970s. The quality and perceived superiority of Coors beer was that it could not be purchased East of the Mississippi River. The attitude was to have something you could not obtain legally or easily, e.g. Cuban cigars. Like an old Alabamian once told me, “a watermelon always taste better when it is stolen.” Enough said about contraband Cuban cigars!

gelfey February 1, 2006 at 5:45 am

ya i have in depth knowledge about cuban cigars. i am also having full description about these cigars online.

gelfey February 1, 2006 at 5:45 am

ya i have in depth knowledge about cuban cigars. i am also having full description about these cigars online.

Stephanie February 3, 2006 at 2:58 pm

Cigars are very bad for you! you can die from them! never touch them or smell them in your life!

Stephanie February 3, 2006 at 2:59 pm

Cigars are very bad for you! you can die from them! never touch them or smell them in your life!

Stephanie February 3, 2006 at 2:59 pm

Cigars are very bad for you! you can die from them! never touch them or smell them in your life!

Jonathan T. Dunner October 1, 2006 at 2:44 pm

What a stupid comment. All the world knows that these cubans are the heaven of tobacco! You want to test, you want to buy? Come and visit our website http://www.cubatabaco24.com !

Jonathan, the one who smokes daily at least three Cohiba No. 6

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weight loss September 13, 2007 at 12:46 am

Who is not charmed by a beautiful and curvy shape? And this desire gets more intense when you have a big flabby body. Of course you won’t like to be a gag at your friend’s party or some gathering. All what you try is different tactics and diet plans to trim down your stubborn fats. But which diet to go for? Everyday you can hear of one or the other new diet in the weight loss market which promises to give the desired results. If you are unable to decide the right one, here goes the answer! For most of the cases, low calorie diet and low sodium diet is suggested by health care professionals and dieticians. It is because these diets are found not only easier to follow but also most effective so far. However, vegetable diets are also preferred as it is healthy and stuffing where you are less likely to starve while dieting. For those who are non-vegetarian, chicken soup diet can be a delight. Other diets include peanut butter diet and popcorn diet that can add fun while watching a movie and stuffing your stomach even if you are on dieting. Well, do you see any problem in weight loss when you have so many choices? Of course not! Just decide on the diet that suits you the best; however, it would be even better if you consult your dietician too. Good luck!

Flavius January 18, 2008 at 11:01 pm

Excuse my english.
You are misunderstanding communism. A communist country can achieve very good quality levels without leaving communist system.
Maybe you are confused: USSR, China and others called himselves “communists” but they never was communists. USSR, for example, was communist in the very first years, but then, Stalin ruined all, and turned a worker-oriented system into a oligarchy-based dictatorship. When in an scenery like this one, quality isn’t relevant.
In the case of Cuba, this country is the closest one to real communism. Although not completely democratic, Cuban people are most comfortable and considered than in any other dictatorship ruled country.
Cuban government knows the way they gets resources: tourism and cigars. Cuban government knows what they have in pro: very good tobacco and a tradition in cigar manufacturing.
Cuban cigars are good because better they are, then more are sold, then more resources to Cuba.

J. Smith January 21, 2008 at 8:49 pm

The comments posted above are primarily normative statements, most of which are at best mythical and at worst, complete nonsense. The initial comment posted by Alex Tabarrok is both shrewd and positive. Cuban cigars, while elusive and widely desired in the United States, are essentially the bread and butter of the cigar industry in other parts of the world. Demand for Castro’s “contribution† to the modern world has diminished in recent years due to a decline in product quality and the entrance of new competition within the premium cigar market.

Knowing that the Platonic form of a premium cigar (e.g., Cohiba, Padron Anniversario, Fuente Hemingway Short Story, etc.) is widely known, the various shadows of the form defer widely with one difference being the most striking—consistency of demand preference. Enter the prized and adored Fuente Fuente Opus X. Unlike its Cuban rivals, the Fuente Fuente Opus X is sought after by cigar aficionados the world over. Why? The consistency of demand preference in due in part to the cigar’s scarcity, exclusivity, and socio-cultural mystique. According to cigar-review.com, the Opus X “is unarguably the rarest cigar in the world†¦one of the only Dominican Puro’s produced in the world†¦the Fuente Fuente OpusX is released sparingly†¦[and] consistently ranked among the world’s finest (http://www.cigar-review.com/Arturo-Fuente-OpusX.html).† Only a few retailers can sell Opus X (scarcity). While cigar preference is inherently subjective, there are no other reasonable substitutes on the market (at the moment) that consistently garners the kind of respect, status, and downright lustful desire that the Opus X offers. Additionally, the majority of those who smoke and demand long-filler cigars are willing, yea, even gleeful to spend $25-$50 per cigar to enjoy one of life’s simple pleasures.

J. Smith January 27, 2008 at 6:28 pm

If you were to purchase a Fuente Fuente Opus X cigar, where would you buy it? Ten years ago, the cigar aficionado would trek down to the local bricks-and-mortar tobacconist and spend a premium on a premium cigar. This has changed dramatically over the past few years given the entrance of Internet giants such as J.R. Cigar, Cigar.com, etc. Walk into any bricks-and-mortar tobacconist not connected with the above mentioned Internet behemoths and ask them to match the price of an Opus X or supply the added free merchandise that the Internet companies offer. At worst you will be asked to leave or you will immediately feel a sense of ostracization due to the coldness of the store owner’s apologetic for why his/her shop has a more “personal touch† or offers greater customer service. To put it bluntly, traditional cigar markets are suffering while Internet based companies are thriving.

Traditional tobacconists lack the type of market power that Cigar.com, for example, maintains. Cigar.com achieves lower costs through thwarting the traditional issues of inventory, regional legislative controls, building rental, etc. They also buy in huge quantities and offer fantastic weekly deals. In many cases, Internet tobacconists offer free shipping and no sales tax if one lives out-of-state. Additionally, the issue of cigar shop socialization is being challenged. Many cigar aficionados would frequent the local tobacco shop to “hang-out† and “shoot the bull† with the guys whilst smoking their newly purchased object of desire. This was and still is one of the primary reasons for spending more money per “stick† (i.e., cigar) rather than sitting at home and being a cyber cigar nerd. Let’s face it, most people want to be around someone else when smoking a cigar. This centers on consumer preference and is extremely powerful, especially with Opus X smokers. How can one purchase an Opus X online and still retain the destination and socialization desire that has traditionally been touted by local smoke shops? While this remains the great issue to be surmounted by e-commerce tobacconists, local tobacconists are having to fight for one of their greatest selling points. In many cities, legislation is moving toward banning smoking even in businesses whose sales in tobacco related products constitute more than 50% of annual revenue. The days when bricks-and-mortar tobacconists used the Saturday morning social smoke as one of their greatest marketing tools seems to be coming to an end.

I was told several years ago that if I wanted to lose a million dollars quickly, I should open a cigar shop. This statement has been buttressed time and again by other friends in the industry. Bricks-and-mortar tobacconists seem to have more working against them vis-à-vis e-commerce retailers, market power, and legislative hurdles than helping them today. As our society in general becomes more e-intensive, it would be safe to assume that the traditional tobacconist will suffer, while those taking advantage of IT will continue to thrive.

Anonymous October 13, 2008 at 10:34 pm
Cuban cigars May 23, 2009 at 7:02 am

I think #2 plus the experience from the hundreds of years of tradition passed down amongst Cubans. The experience of the technique how to grow tobacco, age tobacco, blend tobacco and roll cigars.

I still love Cuban cigars and want it only.

biki July 4, 2009 at 5:49 am

You are right mate…The Cuban cigars are very popular because of their quality where the tobacco plays the main role. Along with that the special rolling technique and the technique of creating the cuban cigars also have their part in the popularity

Allen Baker August 18, 2009 at 10:22 am

I don’t agree with you Alex. Yes the environment is suitable to plant tobacco, But the workers are traditional workers. Their fore fathers were also in the same profession. They got this art from their parents. They know how to make a great Cuban cigars. And also by exporting Cigar it will definitely develop the country’s economy.I buy my cigars through http://www.royalhabanos.com/

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