Worth reading if you're interested in Cuban Cigars

**craig** · 03-26-2009, 06:21 PM

http://www.cigaraficionado.com/Cigar...4,2688,00.html

I always wondered what the real reason was for Davidoff becoming Dominican. (The Padron is Francisco Padron, former director of CubaTobacco.)

... "If I am the owner and I have the cigars, I want to control the distribution and not just the sales," says Padron. "I want to control the quality of my cigars and the way my cigars are handled, as well as participate in the profits."

Padron chose the best agent in each market and told it that his organization wanted 50 percent ownership of its company. If the agent said no, he wouldn't ship it the cigars it needed. "So I broke in one day 240 contracts," he recalls. "I don't remember exactly, but on the same day, I sent the telex to everybody all over the world."

He claims none of the agents fought the change. Nonetheless, a few did, and the biggest fallout was with Davidoff of Switzerland, which had become one of the most prestigious Cuban brands in the 1980s. "I wanted 50 percent of the sales profit from Davidoff cigars," says Padron, who added that Cubatabaco owned the Davidoff brand name in key markets such as France and Spain at the time. "They wouldn't agree. But it was fair because the name Davidoff was made because of the Habanos cigars! I told them that I would not send them cigars anymore if they didn't agree."

After several meetings, the Swiss firm decided, in the early 1990s, to move its cigar production to the Dominican Republic, and paid Cubatabaco $9 million for the brand in markets it did not already control. Davidoff claimed that it broke the production agreement with the Cubans because of inconsistent quality in its cigars, and it made a strong public relations campaign in France and Switzerland to say so, including a public bonfire of thousands of Davidoff Cuban cigars in Paris.

"It would have taken six or seven years to come to a decision on this dispute in court," Padron says. "And it would have cost about $1 million a year in lawyer fees. I thought it was better to take the money."

Padron launched the Linea 1492 Siglo line of Cohiba a short time after the Davidoff agreement, which covered all five sizes of the Swiss company's prestigious Château line. Ironically, Davidoff couldn't get permission from the top Bordeaux wine estates to continue the range in its factory in the Dominican Republic. Some, such as Château Lafite, only wanted to be associated with Cuban cigars.