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UNDER
THE WRAPPER
Informed information about Cuban Cigars
March 2002 Issue #7
wrapper@ajaxcigars.com
Welcome
to Issue #7 of
UNDER THE WRAPPER
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IN THIS ISSUE
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=> Welcome
=> Feature Article - What Happens When The Embargo Ends?
=> Quotable Quotes & Cigar Stories
=> Spotlight - Our Newsletter Special
=> Reader Feedback Invited
=> How to Be Featured as our Guest Columnist
=> Subscribe/Unsubscribe information
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WELCOME
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For
long time readers of Under The Wrapper you may have noticed
that this issue is earlier than usual. Well its holiday time
for
us. We will be accepting order until March 7th and then we
will be
closed for a couple of weeks and re-open for business on March
24th.
Gee, I just had a thought, my wife and I are going to Mexico
on a
cruise. Now if I did an article on the counterfeiting of Cuban
cigars
in Mexico would the tax man let me write off the cost of my
trip as a
business expense? Nah!
I've been meaning to put to paper, my thoughts on what will
happen,
during the initial period, when the embargo with Cuba is lifted
by the US.
Its something that is important to my business and to the
American
consumer. I big plus for the consumer, other than the obvious,
will
be the elimination of all Canadian taxes and duties on international
shipments. That alone should reduce you costs from us by about
half,
but of course, American customers would be responsible for
the local
import taxes and duties. At the end of the day I'm sure the
final
cost for our American customers will be less.
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FEATURE ARTICLE - WHAT HAPPENS WHEN THE EMBARGO ENDS?
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Seems
like a fairly simple question doesn't it. All Americans get
to
partake in their favorite Cuban cigars. Yippie! But wait a
minute is it
that simple? Maybe not. Here's a point of view that's worth
considering.
But before I get into the heart of the matter lets go back
a few years.
When
the Castro regime took over Cuba, one of the first things
they did
was to nationalize all industry, including the cigar business.
There were a great number of families that had been producing
cigars
for generations. All of the hard work and effort was lost.
Not only
did the famous cigar producing families lose but so did you
and I.
The quality of cigars produced before the industry was nationalized
has
been unmatched since.
Many of those families left Cuba and started again in countries
like the
Dominican Republic, Honduras, Nicaragua and Costa Rica.
It was extremely hard work and cost intensive to re-establish.
This time
they were very cleaver. They registered the trademarks for
their product
in the US.
So
now we have issue #1 - Trademarks
General
Cigar has the following:
Bolivar
Cohiba (Red Dot)
Hoyo de Monterrey
Partagas
Punch
Ramon Allones
Sancho Panza
Altadis
USA Inc (formerly Consolidated Cigar - owned by the Altadis
group
who also own 50% of Habanos SA)
H
Upmann
Montecristo
Por Larranaga
Romeo y Julieta
I
don't know who owns the following, but they are also registered.
Cohiba
(Yellow Band)
Diplomaticos - Licenciados (uses the Diplomaticos band)
El Rey Del Mundo
Fonseca
La Gloria Cubana
Saint Luis Rey
Not
many Cuban names left is there!!
So
I ask you. You've been through the mill, kicked out of Cuba
for lack
of a better expression, worked you butt off and rebuilt again.
Now the
Cubans want to bring in cigars to cut into the market you
built! Not
only that but under the same name for which you own the US
trademark!
Screw me once, shame on you, screw me twice shame on me.
I suspect that not only would the phone lines be burning to
the trademark
lawyers but that the subject has already been discussed at
length.
So
here's what I did. I called my "Legal Beagle Buddy"
in the US and
posed the question to him. Here is his response.
"Hi
Rod,
After
bouncing the issue around a little bit, this is my best guess.
My
bet is that the current owners of the marks in the US will
prevail
as the courts will hold that the embargo created a constructive
abandonment of the marks in the US thus voiding any previous
rights
owned by the Cubans. A possible solution would be for the
courts to
allow concurrent use under the Lanham Act provided that the
source of
manufacture is clearly marked on the packaging.
This will come after either a series of infringement suits
or
cancellation actions by the Cubans.
A monkey to all of this might be in the Embargo lifting legislation
which may actually be smart enough to address these issues."
Having
read my friends response I had a thought. I wonder if the
US legal system is as bogged down as ours? Lets say the embargo
is
lifted on Jan 1/20??. I think it would be some time before
a court date
is set to hear the matter, and, that the lawyers would have
injunctions
in place to temporarily stop the sale of Cuban Cigars in the
interim.
It also begs the question as to whether each case will be
heard
separately or if it would be a joint action.
In any event I can see a protracted fight occurring.
Well
unfortunately I don't think it ends there.
Issue
#2 is Supply and Demand
There
are a lot of figures being bandied about as to the annual
production of Cuban cigars. It depends who is asked but its
anywhere between 150 - 200 million sticks annually. Whatever
the
real number is not that important. The important thing is
that the
entire production is already allocated.
You see for the most part each country has its own distributor
who has a
contract to receive a certain percentage of the production.
Those
of you who have been buying Cubans for a number of years are
aware of
existing supply and demand problems . It shows in the availability
of
your favorite cigar. When the big cigar craze was on (thank
goodness
that's over!) you couldn't get some cigars for love or money.
High demand
low supply. Look what you have to pay for an Opus X in the
US if you
can find one. Again high demand and low supply.
To meet the immediate US demand, at the end of the embargo,
I think that
production will have to be increased by at least 100 million
sticks.
That means finding additional good farm land to grow the tobacco
and
training additional rollers to make the cigars. Not a job
that can be
accomplished overnight.
Well, you say, the hell with that, I'll just jump on the plane,
fly down
to Cuba and get my own. In fact I'll buy a lot and resell
them at a
profit when I get back to the States. OK but lets do the math.
If memory
serves me right, I think that Cuba gets 15% of production
for sale to
tourists. The price will be high, remember the high demand.
But anyway, 15% of 150 million is 22.5 million or 900,000
boxes.
If 900 people bought 1000 boxes - its all gone. If 9000 people
bought
100 boxes - its all gone. If ---, oh, never mind, you get
the picture.
It wouldn't take long for the cigars stores to look like a
Russian GUM
Department store -- all empty shelves. The Cubans want tourist
dollars.
They will be looking for visitors who stay awhile. I think
that they will
limit the quantity you can take out of the country so that
there will be
some for all, rather than a few.
Once
the embargo is lifted I think that the trade in offshore sales
will
soar. US citizens who have been sitting on the fence because
of the
embargo will jump into the action. It will become trendy to
try Cuban
cigars. I don't know how others will deal with the increase
in
volume, but we at Ajax Cigars will put our existing customers
first.
We will never forget who has supported us during the embargo.
We intend
to give our present customer base the first opportunity on
supply.
I'm
often asked if I'm worried about my business when the embargo
is
lifted. My answer is "I can't wait".
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QUOTABLE QUOTES & CIGAR STORIES
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Writer,
Somerset Maugham, said of cigars, that they were, "the
only
realized ambition which has not brought disillusion."
American
humorist, Mark Twain, said, "If I cannot smoke cigars
in
heaven, I shall not go!"
Cigar
Insurance
A
Charlotte, North Carolina man, having purchased a case of
rare,
very expensive cigars, insured them against...get this...fire.
Within a month, having smoked his entire stockpile of fabulous
cigars,
and having yet to make a single premium payment on the policy,
the man
filed a claim against the insurance company. In his claim,
the man stated
that he had lost the cigars in "a series of small fires."
The insurance company refused to pay, citing the obvious reason
that the
man had consumed the cigars in a normal fashion. The man sued...and
won!
In delivering his ruling, the judge stated that since the
man held a
policy from the company in which it had warranted that the
cigars were
insurable, and also guaranteed that it would insure the cigars
against
fire, without defining what it considered to be "unacceptable
fire,"
it was obligated to compensate the insured for his loss. Rather
than
endure a lengthy and costly appeal process, the insurance
company accepted
the judge's ruling and paid the man $15,000 for the rare cigars
he lost
in "the fires."
After the man cashed his check, however, the insurance company
had him
arrested...on 25 counts of arson! With his own insurance claim
and
testimony from the previous case being used as evidence against
him, the
man was convicted of intentionally burning the rare cigars
and sentenced
to 25 consecutive one year terms!
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*-----------------HOT
TIP------------------*
Please use distilled water in your humidor.
*-----------------HOT TIP------------------*
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SPOTLIGHT: THIS MONTHS NEWLETTER SPECIAL
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This section is devoted to specials for e-mail subscribers
to
UNDER THE WRAPPER.
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READER FEEDBACK INVITED:
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to: wrapper@ajaxcigars.com
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HOW TO BE A GUEST COLUMNIST INSTRUCTIONS
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COPYRIGHT INFORMATION
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Copyright 2001 Ajax Cigars
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