The union of Cuba's Habanos S.A. with European giant Altadis S.A. has been marked by a new management style and structure and an infusion of money into the Cuban tobacco industry.

Habanos S.A., the company responsible for marketing and exporting the full range of Cuban brands around the world, begin its first full year as the "new Habanos," created last October by its merger with the French/Spanish Altadis Group.

In the new arrangement, Cubatabaco - the parent company of Habanos - owns 50% of the company, and Altadis S.A. holds the other 50%. Habanos, which was itself spun off from Cubatabaco as a separate entity in 1994, has now evolved into a true joint venture with the world's largest cigar company. It has also meant the emergence of a new management structure.

Habanos is led by two co-presidents: Oscar Basulto in Havana and Jaime Garcia at Altadis S.A. in Madrid. A visit to Habanos headquarters in Havana leaves no doubt that Basulto has been designated the active, managing president, as Garcia holds other duties: namely the recently appointed Spanish co-president of Altadis S.A., joined in turn by a French co-president.

Joining Basulto are two co-vice presidents: Manuel Garcia, commercial manager at Habanos, and Fernando Domingez, financial manager representing Altadis. Both are men based in Havana.

Manuel Garcia reports to Basulto as manager of the company's five new directorates, each with its own director. Respectively, these separate departments are for handmade cigars, machine made cigars, Casa del Habanos operations, and for the company's commercial and marketing interests.

The Habanos-Altadis venture has been marked not only a new management style and structure, but also a key infusion of money into the Cuban tobacco industry - $439 million to date. This is already beginning to bring greater stability and potential for growth to Habanos. It is also assisting everything from fertilizer for farmers to increasing production capacity to meet the global demand for Cuban cigars.

Availability of some brands was very tight last year in several European markets. The shortfall, which alarmed distributors, tobacconists, and consumers alike, was caused by the devastating Hurricane damage to Cuban tobacco crops in 1999 and severe droughts last year. This reduced yields and put further pressure on the factories which were already being pushed hard to increase production just to meet the strong expansion in demand for Cuban cigars.

Fortunately, both increased production and attention to quality control are major concerns in the factories. The leaf crops since the hurricane have been good too, both in terms of yield and quality - enough so that the Cuban industry has begun to hoard a much larger stockpile of leaf for aging and to keep in reserve to cover production in the event of another disaster.

How availability has been affected is reflected in shipment figures of Cuban cigars in the past two years. Habanos exported 148 million units in 1999, but only 117.5 million cigars in the year 2000.

The situation in the retail sector was actually not so critical as these figures might indicate, as in the larger markets stocks kept total foreign sales about even with the previous year, at some 120 million units. Smaller markets, newer markets, these felt more of the impact. The good news is that Habanos predicts an export volume this year of 150 million units, which should help in restocking and meeting more of the demand.