Middle-class creates red-hot market for cigars

Sales of Cuban cigars are rising in China thanks to a burgeoning middle-class who are wealthier and more concerned about quality of life.

Habanos SA, the global tobacco distributor that controls Cuba’s cigar industry, said China is now its thirdlargest market after Spain and France — and it still has significant growth potential.

The company, which started selling its products in China in 2000, exported 300,000 units of cigars to the country in 2014, up by 9 percent on 2013. The rise in Chinese outbound tourists means more are buying the cigars abroad, too.

Habanos said more cigars could be shipped to China, but the storage requirements limit the number that can be sold.

“People from smaller Chinese cities and remote areas are contacting us, as they are interested in opening cigar bars, but those places may not have the climate-controlled facilities to store cigars,” said Omar Leon Sanchez, Habanos’ chief representative in Beijing.

Unlike cigarettes, cigars need to be stored at 18 C and in 70 percent humidity, which can be expensive for small retailers.

In China, cigars were traditionally luxury products purchased by affluent middleaged consumers. But as smaller, cheaper varieties have hit the market, cigars have become affordable to a wider range of consumers, according to Euromonitor International.

Despite the government’s austerity drive and anti-graft campaign, and a slowing economy, sales of cigars have remained steady. New consumers include young Chinese businessmen, particularly those aged 25 to 35. A variety of handmade Cuban brands are popular in China, such as Cohiba, Romeo y Julieta, Montecristo, Bolivar and Partagas, with prices ranging from 500 to 5,000 yuan ($75 to $750) a box.

Shanghai is the biggest market, consuming about half of all cigars imported from Cuba and the Dominican Republic. Many cigar lounges have also opened in affluent cities like Beijing, Shenzhen and Guangzhou.