Habanos SA increases its income in foreign exchange, at the cost of the shortage of cigarettes in Cuba?

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TOBACCO

Habanos SA increases its income in foreign exchange, at the cost of the shortage of cigarettes in Cuba?

In the black market of Holguín, a box of cigarettes costs 120 pesos, 12 times the official price, and even then it cannot be found.

https://diariodecuba.com/cuba/1653935194_39861.html

OSMEL RAMIREZ ALVAREZ

mayari 30 May 2022 - 20:26 CEST

Tobacco plantation in Mayarí, Holguín. CUBAN JOURNAL 

The news, from a few days ago, seems very encouraging: " Habanos SA achieved a record of 568 million dollars in business ", which —according to the official newspaper Granma— are mainly focused on the export of cigars , cigarettes, raw materials and sales in foreign exchange in the domestic market, the latter very depressed due to the drop in tourism.

It is specifically about the foreign exchange marketing subsidiary of the Cubatabaco company , belonging to the Tabacuba business group, with the category of "Superior Organization of Business Management" (OSDE) and which has a greater number of companies in charge of the rest of the activities.

The Cuban and Spanish directors of the joint venture, quoted in the Granma article , attribute the good sales results (15% increase over the previous year) to a more efficient marketing strategy. "The company knew how to adapt" to market anomalies, according to Leopoldo Cintra González, vice president of development at Habanos SA

But it is striking that the company's general data is not made public or mentioned to explain what production support the increase is based on, especially when the background in the last two years is negative, with production drops due to lack of inputs and tobacco producers' dissatisfaction with the unfair prices Tabacuba pays them for their crops.

A company can see increased revenues due to increased production, more added value due to greater efficiency, better sales strategy and, in the case of Cuba, which is a very particular market due to strong state intervention, the increase in export to the detriment of the domestic market in national currency (CUP). And the latter seems to be the support of such a unique economic result.

" The (official) price of a box of cigarettes is ten pesos , but it is not sold anywhere: neither in cafeterias nor in stores. The only place you can find it, and from time to time, is on the black market , but at 120 pesos or more, that is, 12 times the established price. It is an abuse in a country that produces so much tobacco ," Ricardo, a Mayarí resident who has smoked for 18 years, told DIARIO DE CUBA.

"I wish it were easy for me to leave it and that's it. It's a difficult vice to let go. I've spent up to three days without finding it; you have to go neighborhood by neighborhood to find out who has it. People are pitiful, running around for a box of cigarettes and so expensive, because whoever sells you today doesn't have tomorrow, it's not something fixed, stable," he added.

This is more or less the situation throughout the country. Even in stores in Freely Convertible Currency (MLC), whose sales are taxed in the economic results of Habanos SA, there is a shortage.

"It is that all the cigarettes that can be sold abroad, they sell abroad , and the currency that is here is collected with sausages or chicken. The one that is inside the country (the currency) we already have for sure, the one from abroad is the one that matters to increase revenue," said an official linked to wholesale trade, on condition of anonymity.

"The task now is to collect foreign currency everywhere, even if people have a hard time smoking. In the end, it is a vice, it is not essential. Basic necessities are missing, tell me the cigarette , which is harmful," he added.

Tabacuba made public that, in the last tobacco campaign, 2021-2022, it reduced the planted areas by 10% "due to lack of inputs", a fact that could have a negative impact on the quality of the leaves that are harvested. This contradicts the export mentality promoted by the Díaz-Canel government, since it limits investments in a sector where sales are very secure, while others are prioritized in sectors such as tourism, with an uncertain immediate future.

With the planned drop in production, and even ignoring the impact of the displeasure of the producers, it is predictable that, if Habanos SA intends to continue increasing its income in foreign currency, it will continue to be to the detriment of the internal market, that is, of the Cuban consumer who does not he has dollars.