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. Last Updated: 07/27/2016

Cigar Firm Mounts War To Snuff Out Imitators

After losing millions of dollars a year to fakes, leading Cuban cigar company Habanos announced Wednesday that it is mounting an all-out war to smoke out counterfeiters of its elite brand.

Habanos has licensed an exclusive distributor, intends to sign pacts with local shops to guarantee that real Habanos cigars are sold, and is even sending out two experts to poke around warehouses and stores to judge the authenticity of the cigars being handled. Its range of cigars sell in boxes of 25 for $48 to $150.

"There is no market without counterfeits, but the level of counterfeits in Russia is incredible," said Carlos Ferran, general director of new distributor Infifon II N.A.N.V., at a news conference.

Ferran estimated that fakes accounted for 80 percent of the nearly 2 million Habanos cigars sold here last year. Habanos sold 345,000 cigars here for $855,000 in 1999, while counterfeiters sold 1.4 million to 1.5 million fakes for some $3.5 million.

In comparison, in Western Europe where counterfeiting is next to nothing, Habanos sold 17 million cigars in France, 6 million in Britain and 5 million in Germany, Ferran said. Total revenues for the company last year rang in at about $255 million on sales of 156 million cigars.

About 10 million cigars were sold here in 1999, industry sources estimate.

Habanos is the latest foreign company to attempt cracking down on piracy here, which is estimated by the Washington-based Coalition for Intellectual Property Rights to cost foreign firms over $1 billion a year in lost revenues. Firms such as Philip Morris, Microsoft, the Motion Picture Association of America and Borzhomi-producer Georgian Glass & Mineral Water have fought piracy for years, but none have launched drives quite as rigorous as Habanos'.

Habanos officials said they are sending two specially appointed experts to shops throughout Moscow and St. Petersburg to sample the wares, and they would fire off letters of complaint to store owners stocking fakes.

The company is also in negotiations with retailers to sign deals under which a shop would pledge to sell only real Habanos cigars and the Cubans in return would hand over a customer-satisfaction guarantee. The agreement would also call for company representatives to visit the shops undercover to test the cigars.

Ferran said he had yet to sign a deal with any shop.

Industry trackers on Wednesday applauded Habanos' efforts. "This is a very serious problem," said Erkin Touzmohamedov, editor of tobacco and beverages for men's magazine Medved. "The quality of the cigars being sold on the Russian market is being brought down by these fakes. A person who first buys a fake cigar will in the future want to buy a fake cigar."

That is just the problem Ferran wants to nip in the bud, and in doing so boost sales to the levels seen in other countries.

"We could easily sell 4 million to 5 million cigars a year here if we had a market with less counterfeits," he said. "But I would be very happy to just increase our share to 30 percent of all cigars sold with the Habanos name this year."