British American Tobacco Venture Boosted by Cuban Tourism Surge

The thawing of U.S.-Cuban relations and ensuing increase in tourism to the Caribbean island is proving to be a boon for a British American Tobacco Plc venture.

Sales of cigarettes made by Brascuba, a joint venture between Brazil’s Souza Cruz SA and Cuba’s state-owned Tabacuba, have risen 18.5 percent in the first five months of this year, according to Co-President Alexandre Carpenter. Souza Cruz is controlled by London-based BAT.

“The consumption of the tourists is huge,” Carpenter said in an interview in his office in Havana. “And a large part of the money they spend on taxes and tips in restaurants and bars stays in Cuba. So Cubans working in the sector are earning more.”

Brascuba joins rum maker Pernod Ricard SA in noting an increase in business since the U.S. agreed to normalize relations with Cuba in December. As well as rising tourism, Cuba’s expanding private sector and initial steps toward unifying the island’s two currencies are also boosting sales, Carpenter said.

Most Cuban state employees are paid in Cuban pesos known as CUP, while foreigners typically pay for restaurants and guest houses using the stronger convertible peso, or CUC, which exchanges 1:1 with the dollar.

Some of Brascuba’s more expensive brands are sold only in CUC, meaning Cubans wishing to light up had to first go to a money exchange. Since October, customers can pay in both currencies, Carpenter said.