Date: May 2019
Author: Inspector Z

Imperial Brands exiting the cigar industry. They are the second large tobacco company to say goodbye to the premium cigar industry in the last few years. Two years ago, Dunhill discontinued its cigar and pipe tobacco branch.

Imperial Brands is a much bigger player than Dunhill though. Dunhill didn’t own a factory or stakes in distributors. Imperial Brands has stakes in Habanos. And in a lot of Habanos distributors. They also own J.R. Cigars (the second largest online retailer in the United States) and factories around the Caribbean. Imperial Brands also owns the trademarks for the non-Cuban Romeo y Julieta and Montecristo brands.

Habanos S.A.

Habanos S.A. is the company that is responsible for the distribution and sale of the premium cigars coming from Cuba. Half of it is owned by Cubatobaco. Cubatobaco is the government-owned tobacco grower and cigar rolling company in Cuba. Habanos was founded in 1994. Cubatobaco owns a 50% stake in the distribution company, Imperial Brands owns the other half.

The La Casa del Habano franchise formula is also owned and operated by Habanos. Besides the 50% stake in Habanos and the La Casa del Habanos formula, Imperial Brands has stakes in almost all official Habanos distributors. They own stakes in the distributors for the Pacific, Hong Kong, Spain, Benelux, Africa, Middle East, Scandinavia, Germany, the United Kingdom, France, Caribbean, Russia, and more.

Ministry of Cigars LCDH

Casa de Garcia

Imperial Brands is the owner of Casa de Garcia. That is the largest cigar factory in the world. They produce cigars for Imperial Brands. Those include VegaFina, Don Diego, Gispert, Henry Clay and the non-Cuban Por Larranaga, Romeo y Julieta, Montecristo, Juan Lopez, and H. Upmann. Other brands are Aging Room, La Boheme, Casa de Garcia, Onyx, Omar Ortez, Te-Amo and many more. Imperial Brands also has a partnership with Flor de Copan in Honduras.

The reason

Imperial Brands announced they want to streamline the company’s portfolio and simplify. By selling the profitable premium cigar division, Imperial Brands expects to make 2 billion dollars. That will be used to reduce debt and invest where possible. Selling the premium cigar division also fits within the streamlining and simplification targets for Imperial. 

Imperial Brands released a statement which said “Premium Cigars has performed well over a number of years with good revenue and profit growth; however, it is a unique luxury business with a different consumer base and route to market relative to Imperial’s other businesses. The sale of the business provides an attractive opportunity to realize shareholder value.”

Imperial Brands will continue in the tobacco industry with a focus on cigarettes, roll-your-own tobacco and new types of smoking such as vaping. They also own rolling paper brands as Rizla.

Rumors that Imperial wanted to sell their stake in Habanos have been around for years. But now it’s official, Imperial Brands is exiting the cigar industry. But the question is, will a big player buy it as a whole, or will the Imperial Brands cigar division be broken up and sold in pieces? Time will tell.

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