Whoever heard of cigars from the Canary Islands?

Well, actually, a lot of people. Many of us have just forgotten.

The Canary Islands, a province of Spain, are located off the northwestern coast of Africa. They are a popular vacation destination for Europeans and Americans, with clear waters, beautiful beaches (some with black or gold sand), and lush, tropical vegetation. The seven major islands are formed from the cones of ancient volcanoes rising from the ocean floor.

Some of those volcanoes are still active. One of them, in fact, may one day trigger a killer tsunami that will wipe out the east coast of the U.S. along with coastal areas in Europe and Africa. But that’s another story…

Cigars have been made in the islands since the 1700’s, and the Canaries were also the first haven for the exiled Menendez and Garcia families (and many others) after the Cuban Revolution forced them to seek a new home. In fact, throughout the 1960’s and 1970’s after the embargo took effect, if you were looking for a fine imported smoke, you probably looked to a cigar that had been rolled in the Canary Islands. Montecruz, Don Diego and Flamenco were U.S. market leaders at that time. The Canary Islands shipped over 21 million premium cigars to the United States in 1977 alone, a total that was more than that of any other country.

Labor costs and other problems in the 1980s caused cigar production to move back to North America, and the country lost market share to the Caribbean and to Central America. A small revival of Canary Island cigars happened during the cigar boom, with imports climbing back into the millions.

The revival was short lived. The United States imported only a little over 100,000 premium cigars from the Canaries last year. More on the background of Canary Island cigarmaking can be found in this excellent article at the Cigar Aficionado archive originally written in 1998.

Enter the Gallaher Group, PLC.

Gallaher is the British tobacco company that manufacturers Benson & Hedges cigarettes and Hamlet cigars among others. They have agreed to acquire cigar and cigarette maker Cita Tabacos de Canarias SL (CITA) for 85 million Euros ( that’s about US$102 million) in a cash deal.

Gallaher, headquartered in Surrey, England, is also assuming CITA’s outstanding debt of about 20 million Euros (US$24 million). CITA is a major producer of tobacco products, which in 2004 sold approximately 5.4 billion cigarettes and 125 million cigars.

CITA cigar brands include Goya and Peñamil. Its main cigarette brand is Coronas Blond. The company also makes a line of Cuban tobacco cigarettes and owns retail outlets. Operations are concentrated in Spain, the Canary Islands and Portugal.

“I am delighted that we are acquiring CITA,” said Nigel Northridge, chief executive of Gallaher. “The company fits well with Gallaher’s European operations. It is an attractive deal, bringing new brands to the Group which will strengthen our positions in appealing markets.”

CITA is a fifty-fifty joint venture between Altadis S.A. and Agrupacion Tabaquera Insular Canaria S.A., a Spanish company owned by the Zamorano family. The deal includes the acquisition of Tabacos Canary Islands S.A., a contract manufacturer of cigarettes, and Tabacos La Nubia SL, which made 6.7 million cigars last year. Finalization of the acquistion is conditional on regulatory clearances.

Don’t be looking for these cigars to show up at your local shop anytime soon. Gallaher has no interest in the American market. Most premium Canary Island cigars are blended with Cuban tobacco, making them illegal to export to the U.S. They used to blend special versions just for the U.S. market, but the quality just up to their regular lines. In return for full indemnities concerning any potential smoking or health related claims resulting from CITA’s sales of nearly three billion cigarettes in the United States between 1995 and 2004, the company transferred all of their acquired trademarks in North, South and Central America to Reynolds American Inc..

In the meantime, if you want to sample top quality sticks from here, you’ll have to look for them on your next trip overseas. Better still, consider a vacation to Tenerife or Gran Canaria in the Canary Islands to experience a place that is considered one of the last bits of paradise in Europe. Ask your travel agent for more information, and here’s a link for tourism information to help get you started.