By Timothy S. Donahue
Top Takeaways:
- Sanctions ripple outward: U.S. sanctions on Chen Zhi have halted production for export to the U.S. at the world’s largest cigar factory.
- Workforce impact is significant: Roughly 600 rollers have been laid off as Tabacalera de Garcia scales back operations in non-U.S. markets.
- Supply chain adapts: Tabacalera USA has shifted production to other manufacturers while relying on its existing U.S. inventory.
Tabacalera de Garcia, the world’s largest cigar factory, has reduced operations to roughly 40–45% of capacity and laid off about 600 cigar rollers following U.S. sanctions imposed last October on Chinese businessman Chen Zhi.
The sanctions halted purchases by Tabacalera USA, Tabacalera de Garcia’s largest customer and the U.S. distributor of brands including Montecristo, Romeo y Julieta, and H. Upmann. As a result, production at Tabacalera de Garcia’s flagship facility in the Dominican Republic—and at the affiliated Flor de Copan factory in Honduras—has been sharply curtailed, as reported by L’Amateur de Cigare.
Before the disruption, Tabacalera de Garcia employed about 2,000 workers, including roughly 1,000 rollers, and reported annual output of around 40 million cigars, with approximately 23 million destined for the U.S. market. With U.S.-bound production suspended, the factory is now producing cigars exclusively for non-U.S. markets, primarily under the VegaFina brand.
Industry sources said Flor de Copan has been hit even harder because of its greater reliance on U.S. sales. To maintain supply, Tabacalera USA has shifted production to alternative manufacturers, including AJ Fernandez and Plasencia, as well as other factories in Honduras and the Dominican Republic.
One U.S.-based industry source said these producers are expected to absorb demand for roughly 30 million cigars without major disruption. Tabacalera USA is also believed to hold more than a year’s inventory in the United States, easing immediate pressure on retail supply.
Chen Zhi, sought in connection with allegations of large-scale cyber fraud, was arrested in Cambodia on January 7 and extradited to China. Earlier this year, when asked about workforce reductions tied to the sanctions, both Tabacalera SLU in Madrid and Tabacalera USA declined to comment.
The operational impact has also affected industry events. Organizers of the 2026 Procigar Festival confirmed that the traditional visit to Tabacalera de Garcia was removed from the program, a change communicated to participants in November.
