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"THEY’D HAVE ALL THE BRANDS"

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Who might be thinking about acquiring Swedish Match and its cache of Cuban brand trademarks?

Los Angeles, May 5 – One veteran cigar executive was musing last week about the future of Swedish Match, by its own account the U.S. premium cigar-market leader.

Can Swedish Match survive as an independent? If not, which of the tobacco giants will bid for it? It’s the next available prize after Altadis – the world’s largest cigar company, but also a major player in cigarettes – was acquired by Imperial Tobacco earlier this year.

“I still think Imperial should buy [Swedish],” said the executive, who preferred not to be identified. “Then they’d have all the brands.”

Cuban brands, that is.

This is a time when hope for the end of the 46-year U.S. trade embargo runs high. The Bush Administration, which has enforced the embargo with a zeal unseen up to this time, is coming to at end. Democratic candidates Barack Obama and Hillary Clinton have made comments about a more open relationship with Cuba and Republican candidate John McCain is famous for a foreign policy that’s built on practicalities rather than ideology. And Fidel Castro, the living icon of Communist Cuba, is in retirement and his brother Raul has shown a willingness to loosen a few of the many restrictions his government places on the Cuban people.

However, even if the embargo ended tomorrow, many of the Cuban brands that American smokers would like to smoke will be unavailable to them because of trademark ownership issues. And that’s where Swedish Match comes in. The situation, based on U.S. Patent & Trademark Office records:

If the embargo were to end, Imperial Tobacco – through its Altadis U.S.A. subsidiary – would be able to sell Cabanas, Gispert, H. Upmann, Juan Lopez, Montecristo, Por Larranaga, Quintero y Hermano, Romeo y Julieta, Saint Luis Rey and Trinidad right away as they own the trademark rights in the U.S. The nation’s largest cigar seller – J-R Cigars – is owned by a different division of Altadis and would undoubtedly be heavily involved in the marketing of these brands to American smokers.

However, Swedish Match has the U.S. trademark rights to 13 brands: Belinda, Bolivar, Cohiba, El Rey del Mundo, La Flor de Cano, Hoyo de Monterrey, La Gloria Cubana, Los Statos Deluxe, Partagas, Punch, Rafael Gonzalez, Ramon Allones and Sancho Panza.

That’s 23 of the 33 brands still produced in Cuba and all of the better-known ones. Five brand trademarks – Diplomaticos, Fonseca, Jose L. Piedra, San Cristobal and Troya – are owned by U.S. companies and the remaining five – Cuaba, Guantanamera, Quai d’Orsay, Vegas Robaina and Vegueros – are owned by Habanos, S.A., although a dispute over Guantanamera with a U.S. company is ongoing.

So if Swedish Match were to be purchased by Imperial Tobacco, it would have essentially a stranglehold on Cuban cigar sales in the U.S. as soon as the embargo ends.

Why not?

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Did you know?

“Bauza is not only a premium Dominican brand, but still made in Cuba for domestic consumption only.