Filed under: Cigars
The biggest problem with access to Cuba may not be production capacity, as many suspect. Trademark and copyright issues have the potential to be a greater problem, and there is no easy solution.
You've probably noticed that brands such as Partagas, Montecristo and Cohiba occupy your local tobacconist's humidor. A saunter through a duty free store at any airport outside the United States will put the same names under your nose. Of course, these cigars have nothing to do with each other. The latter are Cuban, the former are not and the companies have no relationships. Cohibas in the United States are not the "non-Cuban" or "legal" versions of a single company's product.
General Cigar Co. Inc., for example, sells Cohiba cigars in the United States. Cohiba is also a prominent Cuban brand. Unfortunately, Habanos S.A. never registered the name up here. Habanos sued General Cigar, and a nine-year battle followed. In 2006, the U.S. Supreme Court ruled against Habanos (shocking, right?), reasoning that the embargo barred a challenge to General Cigar's claim.
When the embargo is lifted, there will be more legal challenges, and several companies will have to change their names and labels – ultimately requiring the reconstruction of brand identities from scratch. Winning the brand battles will have profound consequences. For this reason, General Cigar has "invested" close to $3.5 million on lobbyists over the past 10 years.
As with all other Cuba-related speculation, there is no way to forecast where this issue will go in a post-embargo market. Even if we assume that the Cuban brands will lose their claims, the impact on the market would be nearly impossible to predict. What we do know, however, is that the transition will be far from easy.