The Lázaro Peña Cigarette Company, part of the Tabacuba Business Group, recently announced that it has exceeded its Economic and Technical Plan. Meanwhile, a pack of cigarettes has reached a staggering 500 pesos on Cuba's informal market, highlighting the severe inflationary crisis plaguing the country. The company reported achieving 101.5% of the planned target by January 26. "Rest assured that your Holguín cigarette makers will do whatever it takes for you to fully enjoy these authentically Cuban cigarettes you love. Trust us, Cuba," the company stated.
However, Cuban smokers face a starkly different reality than the company's optimistic outlook. Prices continue to soar across the island, and cigarettes are no exception. In provinces such as Havana, Matanzas, and Villa Clara, a box of Criollos or Popular can fetch up to 500 pesos in the informal market, with individual cigarettes selling for between 30 and 50 pesos each.
Challenges in Cuban Cigarette Production
Tabacuba has been grappling with production challenges due to frequent power outages and a lack of spare parts for its machinery, much of which has been in use for 70 to 85 years. Despite recent efforts to restore some of these machines and resume production of brands like Criollos and Popular, shortages continue to affect the distribution and availability of the product.
Nevertheless, Tabacuba executives asserted on National Television that they expect to meet national market demand in the early months of 2025, although the thriving black market seems to contradict their claims.
Official Price Hikes
In April 2024, the Cuban regime announced a rise in the prices of cigarettes and tobacco sold in state-run establishments, arguing that these are not essential consumer goods. According to Resolution 63 by the Ministry of Finance and Prices, new values were set for these products: packs of 20 black Criollo, Titanes, and Popular cigarettes were priced at 30 Cuban pesos (CUP), while Aroma brand blond cigarettes remained at the same price.
The "Popular Auténtico" pack rose to 60 pesos, and H. Upman Clásico unfiltered cigarettes reached 50 CUP. Domestic tobacco was set at 10 pesos per unit. Finance and Prices Minister Vladimir Regueiro Ale defended the increase, stating that previous prices did not cover the costs of production, industrial processing, and marketing. He also claimed the measure aims to "mobilize new financial resources to support social spending in priority sectors like education, health, sports, and culture."
Nonetheless, the regulated price hike has not deterred speculation and sales on the black market at exorbitant rates, reflecting an economy characterized by scarcity and rampant inflation.
Understanding the Cuban Cigarette Market
Why are cigarette prices so high in Cuba?
Cigarette prices are high due to rampant inflation, shortages, and inefficiencies in production and distribution systems, leading to significant price hikes in both formal and informal markets.
How is Tabacuba addressing production challenges?
Tabacuba is working to repair aging machinery and resume production of popular brands, although power outages and lack of spare parts continue to pose significant challenges.
What was the government's justification for raising cigarette prices?
The government justified the price increase by stating that previous prices did not cover production costs and aimed to generate financial resources for essential public services like education and health.
Will Tabacuba meet the national demand for cigarettes?
Despite assurances from Tabacuba leaders, the thriving black market suggests that meeting national demand remains a significant challenge.