Robaina, founded in 1845, is one of Cuba\u2019s premier cigar brands.\u00a0 Less than two weeks ago, I visited both the Partagas cigar factory (F\u00e1brica de Tabaco Partagas) in Havana and the Alejandro Robaina tobacco plantation (Finca El Pinar Robaina) in Pinar del R\u00edo.\u00a0 The entire Robaina operation was a model of effective business and operational alignment.<\/p>\n
Business model<\/u><\/strong><\/p>\n Robaina is in a unique situation because the business model is fixed by the government.\u00a0 The Cuban government mandates that 90% of production be sold to Cubatabaco, the state-owned tobacco company, while 10% of production can be sold to friends and family, loosely defined.\u00a0 Quality is judged by a government inspector, who sets the final price the government will pay for the cigars.<\/p>\n Production is ~5 million cigars per year and is capped by the quantity of fertile land available.\u00a0 A government-granted monopoly for the region ensures that Robaina has no competition for labor locally.\u00a0 The Robaina family controls cigar production end-to-end, from growing tobacco leaves to selling cigars to the government.<\/p>\n The plantation claims that its primary asset is the unique soil.\u00a0 However, in my opinion, Robaina\u2019s primary advantage is its operational excellence.\u00a0 The company uses 80% of its harvest in cigar production, compared to 35% for other plantations.<\/p>\n Operating Model<\/u><\/strong><\/p>\n Robaina\u2019s business model is supported by a unique operating model.\u00a0 Given that Robaina\u2019s value capture (price and quantity)\u00a0is fixed, the interaction between business and operating models is that much more important.\u00a0 Robaina has masterfully used its advantages to build a brand that has lasted for more than 150 years.\u00a0 The unique attributes of Robaina\u2019s operating model include:<\/p>\n High raw material costs and low labor costs<\/strong><\/p>\n Flexible, adaptable workstreams<\/strong><\/p>\n Employees motivated to focus on quality<\/strong><\/p>\n Introduction of new line to expand production<\/strong><\/p>\n\n
\n
\n
\n