Tim Lince

As part of World Trademark Review’s fact-finding trip to the Dominican Republic last week, we spoke with a number of representatives from the country’s premium cigar industry. The key message they communicated was that legislators misunderstand how cigars are consumed, and that plain packaging is significantly more damaging to premium cigar brands than cigarette brands due to the industry’s reliance on IP as part of the consumer experience.

We wrote earlier this week about a Dominican government-hosted international press trip (as a reminder, while we visited the country on their invitation we were under no obligation to report – positively or otherwise – on what we were told on the trip). The potential impact of plain packaging for tobacco products was the main motivation for hosting international journalists, mostly due to the $780 million that the cigar industry contributes to the Dominican Republic’s GDP. In all, Dominican premium cigars (typically those that are handmade and often sold individually) have a global market share of 44% (over double that of the often misperceived market leader Cuba).

While in the country, we spoke with Carlos Fuente Jr, president of the Arturo Fuente Cigar Company.  He rarely speaks to the media and when asked by World Trademark Review about the effect plain packaging could have on his business, Fuente did not hide his impassioned views on the subject. “You just shot my blood pressure up about 40 points,” he retorted. “The labels of our products are part of our history, it goes back for centuries of my heritage. Every single detail on the package and label has an emotional meaning; it goes back to my grandfather, my grandmother, and to destroy that is like taking a Rembrandt and covering it up. It's destroying history. Tobacco is an important part of our culture - for social and religious purposes - and to destroy that by targeting the packaging, it seems immoral, it is wrong, and it is politically destructive.”

A key frustration for Fuente is how, when it comes to the plain packaging legislation in Australia, the same plain packaging warnings are used on cigarette packaging and on premium cigar packaging. “Cigars are an adult product for leisure - it is a luxury, not a necessity,” he argued. “It is totally different than other products which are sometimes confused and compared.” Presumably to his dismay, it is also expected that the same restriction will be enacted with upcoming plain packaging in Ireland and France.

The message that premium cigars should be differentiated from cigarettes was echoed by Ernesto Pérez Carrillo from another cigar company, Tabacalera La Alianza. In a forum with other cigar industry figures, he compared premium cigars to expensive bottles of wine: “Our industry is very similar to the wine industry in many aspects. Both wine and cigars are produced through fermentation. Wine is aged in an oak barrel, tobacco leaf is aged for many months or years before being made into cigars. They both have an agricultural process and both often rely on geographical designation of origin because the genuine source of the product is so important to the consumer. Years ago, there used to be a myth that the only good wine is from France and the only good cigars are from Cuba. Today, that is different and branding and IP is used to dispel those myths. Therefore, in that regard, we want to be viewed similarly to the wine industry - as something that provides pleasure to responsible adults, not something that is consumed by children or leads to addiction.”

Also visibly angry about the legislation was Lito Gómez from La Flor Dominicana, who argued that for luxury products, much of the value derides from the packaging: “Branding is a very important part of the experience of a premium cigar. People want to experience the IP as part of the cigar they purchase, as it appeals to all their senses - including examining and unwrapping the uniquely designed and decorated wrapper. If there is no distinctive packaging, you lose the soul of the cigar. To that end, it means that premium cigars are more affected by plain packaging than cigarettes.”

In a positive development for the premium cigar industry, it looks like at least one national government recognises the difference between cigars and cigarettes. In the UK’s upcoming implementation of standardised packaging (due to come into effect in May), it appears that cigars will not be required to be plain packaged (although the wording in the legislation is unclear and does make reference to ‘cigars’). World Trademark Review has contacted the Department of Health to clarify if cigars will be exempt, and we await a response (update: the Department of Health has confirmed that standardised packaging will not apply to specialised tobacco products, including cigars and pipe tobacco). Furthermore, many of the other countries that have voiced an interest in introducing plain packaging, such as Canada and New Zealand, have not released specific proposed legislation to date.

Of course, those citing public health as an over-riding concern will argue that, as cigars are a cancer-causing tobacco-based product, the same considerations with respect to the presence of branding should apply. But the premium cigar industry is adamant that there are important nuances to the debate that are being ignored. Ultimately, then, the two camps will remain at loggerheads as the wait goes on for the World Trade Organisation’s ruling on legal challenges to Australia’s plain packaging regime.

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