By Timothy S. Donahue

Top Takeaways:

• Supply Disruption: Fifth Avenue is exploring alternative deliveries to German La Casa del Habano stores.
• Franchise Restrictions: Selling non-Cuban cigars would require terminating franchise agreements.
• No Timeline: Deliveries remain suspended as the distributor navigates insolvency proceedings.

Germany’s Cuban cigar retailers are running out of options, and Habanos isn’t making it easy to find new suppliers.

Fifth Avenue, the exclusive Habanos distributor for Germany, Austria, and Poland, is exploring alternative supply arrangements for German La Casa del Habano (LCDH) stores after nearly two months without deliveries. However, franchisees hoping to stock cigars from other countries would have to give up their franchise agreements.

In an Oct. 22 letter obtained by L’Amateur de Cigare, Fifth Avenue Managing Director Christoph A. Puszkar said that discussions were underway to restore supplies to specialty retailers. “One option under consideration is to arrange an alternative supply of Habanos products to La Casa del Habano stores,” Puszkar wrote.

However, he cautioned that “contractual and logistical prerequisites still need to be resolved,” and no timetable has been established.

The distributor also explored whether German franchisees would support temporarily suspending their agreements to permit the sale of non-Cuban cigars. According to Fifth Avenue, a majority of surveyed stores opposed the proposal.

Habanos S.A. subsequently clarified that franchisees who choose to sell cigars from other origins would have to terminate their existing agreements rather than simply suspend them.

“If a La Casa del Habano decides to sell products from other origins, the agreement must be terminated,” the letter stated. “A new agreement could be concluded if both parties reach an agreement at a later date.”

That would leave retailers surrendering their LCDH status without any guarantee of regaining it when Cuban cigar supplies resume.

The disruption began on Sept. 4, when Fifth Avenue notified customers that it could no longer accept orders or ship products due to banking restrictions tied to a sanctions and compliance review involving a shareholder.

The problems emerged amid European sanctions targeting businessman Chen Zhi, whose indirect interests in the Cuban cigar industry have complicated banking relationships among several Habanos distributors.

On Sept. 9, the Waldshut-Tiengen district court placed Fifth Avenue under provisional insolvency administration and appointed attorney André Berbuer to oversee the proceedings. The court later imposed additional restrictions on the company’s ability to dispose of assets.

Fifth Avenue is 80% owned by Habanos S.A. via Altabana, with Villiger Söhne holding the remaining 20%. The disruption is particularly significant because Germany was Habanos’ fifth-largest market in 2024, behind China, Spain, Switzerland, and the United Kingdom.

The proposed alternative supply arrangements remain undefined. They could involve another distributor, a different logistics channel, or a domestic solution, but no agreement has been announced yet. Berbuer declined to comment on the negotiations, and Habanos had not responded to the publication’s questions.

Puszkar closed his letter by thanking franchisees for their “patience,” “loyalty,” and “trust.”

For German LCDH operators, those qualities may be tested for some time. There is still no confirmed date for deliveries to resume.