Fifth Avenue Seeks “Alternative” Supply Arrangements for German La Casa del Habano Stores

With Germany’s Habanos distributor in insolvency proceedings since early September, Habanos S.A. is refusing to allow the country’s La Casa del Habano stores to sell cigars from other origins.

 

In a letter sent on October 22 to German La Casa del Habano (LCDH) franchisees, a copy of which was obtained by L’Amateur de Cigare, Fifth Avenue reveals that discussions are underway to find a solution to the disruption in deliveries that has affected the German market since early September.

“One option under consideration is to arrange an alternative supply of Habanos products to La Casa del Habano stores,” writes Christoph A. Puszkar, managing director of the exclusive Habanos distributor for Germany, Austria and Poland.

However, several obstacles remain. “Contractual and logistical prerequisites still need to be resolved,” the letter states. Discussions are ongoing, and no timetable can yet be announced.

Selling Non-Cuban Cigars?

The document also reveals that another option has been explored since Fifth Avenue entered insolvency proceedings: temporarily allowing German LCDH stores to sell cigars from other countries of origin.

At the request of Habanos S.A., Fifth Avenue consulted German franchisees to gauge their interest in a possible suspension of their franchise agreements, which would allow them to sell non-Cuban cigars. According to the distributor, a majority of the stores surveyed did not support this option. Several German LCDH stores confirmed to us that the consultation had indeed taken place after Fifth Avenue entered insolvency proceedings.

According to Fifth Avenue’s letter, Habanos S.A. has clarified the conditions under which such a change could take place: “If a La Casa del Habano decides to sell products from other origins, the agreement must be terminated. A new agreement could be concluded if both parties reach an agreement at a later date.”

In other words, franchisees wishing to diversify their offerings would have to relinquish their La Casa del Habano status, at least temporarily, with no guarantee that they would be able to regain it.

A Market Still Without Deliveries

These discussions come as Fifth Avenue faces an unprecedented crisis. On September 4, the company informed its customers that it was suspending new orders and shipments due to restrictions affecting its banking relationships, amid a sanctions and compliance review involving one of its shareholders. These difficulties come against the backdrop of international sanctions targeting Chen Zhi, whose indirect holdings in the cigar industry have triggered banking disruptions at several Habanos distributors.

A few days later, Fifth Avenue was placed under provisional insolvency administration by the Waldshut-Tiengen court.

Deliveries have not resumed since. The letter received last week provides the first indication of the commercial solutions being considered for LCDH stores. However, it offers no information on when deliveries might resume.

Nor does it specify what form the “alternative” supply arrangements for the franchises might take: the involvement of another distributor, a new logistics channel or some other arrangement. According to our information, the solution under consideration is more likely to be found within Germany than through a foreign distributor.

“Patience” and “Trust”

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

Contacted by L’Amateur de Cigare about the proposed alternative supply arrangements and the future of its German distribution network, Habanos S.A. had not responded to our questions at the time of publication.

Fifth Avenue is 80% owned by Habanos S.A. (through Altabana), with the remaining 20% held by Villiger Söhne.

Also contacted by L’Amateur de Cigare, Fifth Avenue’s provisional insolvency administrator, Dr. André Berbuer, said he was unable to comment due to ongoing negotiations.

According to the latest available figures, Germany was Habanos S.A.’s fifth-largest market in 2024, behind China, Spain, Switzerland and the United Kingdom.

Laurent Mimouni