santela Posted August 28, 2014 Posted August 28, 2014 I have wondered about this myself and think there are a few things to consider: 1. A lot of Americans are already getting cubans from online stores (eg variouis swiss vendors) sending them in without bands etc 2. Americans don't like paying much for their cigars. I'm writing from Australia, where we pay a fortune, but time and time again see Americans online complaining about much cheaper prices being too much 3. I'm not sure that all Americans will prefer Cubans. I have smoked my way through most of last year's CA top 25 (only three cubans on the list), and didn't get over excited, which could be because I've grown up with Cubans, which have a very different flavour profile. I wonder if the American smokers who have grown up on the non-cubans will be the same with Cubans? 3. The Chinese - has the cigar market there taken off as much as the premium wine market has? I would imagine that it has to some degree and we haven't seen a huge price rise as a result. I guess these are all arguments against a huge increase in demand, at least after the inital novelty phase. Having said that, I would be putting my money on some permanent increase in price My experience is that the cigar market in China has definitely been on the rise, but not nearly enough to influence HSA to increase their price. Cigar is still seen as taboo and a symbol of wealth rather than something people geniuenly enjoy. I had strangers stare at me when I smoke a cigar, and ask me if it costs a few hundred Yuan (50usd) a piece.
Goodo Posted August 29, 2014 Posted August 29, 2014 My experience is that the cigar market in China has definitely been on the rise, but not nearly enough to influence HSA to increase their price. Cigar is still seen as taboo and a symbol of wealth rather than something people geniuenly enjoy. I had strangers stare at me when I smoke a cigar, and ask me if it costs a few hundred Yuan (50usd) a piece. Thanks for the insight on the China market, always good to hear first hand experience. Another issue which has been alluded to here is quality of Cubans. As I write I'm smoking a Trinidad robusto T, on a Friday afternoon, wife is annoyed because she wants help at home and I'm wondering if it's worth the trouble because this thing is almost unsmokable, the draw is that tight. A mate of mine only smokes non Cubans and says he has never had that trouble with nicuraguans or Dominicans. If the quality goes down and the already high price goes up, a lot of average joe USA stogie fans are not going to go for it I reckon. 1
tjohn7 Posted August 29, 2014 Posted August 29, 2014 A mate of mine only smokes non Cubans and says he has never had that trouble with nicuraguans or Dominicans. If the quality goes down and the already high price goes up, a lot of average joe USA stogie fans are not going to go for it I reckon. I totally agree. There's something to be said for consistency in the product being put out. I know a lot of people have mixed feelings towards Padrons, but even with my love of CCs, I still find myself smoking a Diplomatico on nights where I just can't stand to have a dud. If quality control does not improve with increased price, then either the price will drop correspondingly due to decreased demand for inferior product or HSA would in my mind decrease production to create a more scarce and subsequently more expensive product. Tom 1
Tino Posted August 29, 2014 Posted August 29, 2014 Wine and China has been mentioned a few times, particularly Lafite Rothschild that led the charge of Chinese conspicuous wine consumption. Hong Kong eliminated wine duty in Feb 2008, and in doing so became the gateway for wine into much of Asia. The below graph is the trading history of Lafite Rothschild 2008. Released in Spring 2009 at £1600 per case, led by Asian demand the price began to increase, the spike in the graph in October 2010 coincided with Lafite's announcement that they were putting the Chinese figure 8 on the bottle and the frenzy of trading peaked at £15,000 per case. Fast forward to now and the price has fallen back to £4900 per case. Too many reasons to go into why in much detail, but they include economic slowdown, a clamp down on diplomatic gifting in China, fakes in the market and too much stock being traded speculatively. Could we see something similar with the hypothetical end of the embargo, rising demand, speculative trading, the first Cohiba regional edition USA etc? Boring disclaimer: I work in the wine trade in the UK. Credit to Liv-ex for the graph (don't sue me). 2
dubleuhb Posted August 29, 2014 Posted August 29, 2014 Not that I think the embargo will end in my lifetime.
Goodo Posted August 31, 2014 Posted August 31, 2014 About educating Chinese re: wine. I heard a story, pretty reliable source, about a big Australian wine company (they produce a very iconic red), doing a high level exhibition tasting in China. One of the main guys from this company realised during the tasting that a lot of the wines were slightly off - none of the Chinese noticed, they all loved them. Looking into the matter they realised once the wines had arrived in China they had been stored in warehouse without temperature control. I'm not sure if this was from the Chinese end or just poor planning from the Australians. Either way, it seems they may have a fair way to come, as previous bloggers have noted
Blippio Posted August 31, 2014 Posted August 31, 2014 I agree will all that has been mentioned... Lower initial quality with a rush to meet demand, fakes flooding the market, etc... One thing not mentioned is the possibility for further consolidation in the tobacco industry post embargo. It appears that Habanos SA is 50/50 owned by Cubatabaco and Altadis (which in turn is owned by Imperial)... Even though Imperial has a market cap of around $48Bn, there still is PhilipMorris, a company with American roots, that is almost double in size... I'm sure PM would drool at the chance to own HSA (and if it ever happened it would no doubt have impacts on quality, production volume, distribution, etc.)
Blippio Posted August 31, 2014 Posted August 31, 2014 One more thing... I would highly recommend seeing the movie Mondo Vino. It rambles a bit but tells the story of how the current global wine market and "taste" has largely been shaped (unfortunately) by the surge of demand from the US in 70s, 80s. They document one "wine consultant" going to many of the big French wine houses giving the advice to "Oxygenate! Oxygenate!" the wine to make it more palatable to the watered-down tastes of the masses (at the expense of individual characteristics/flavors from unique regions--the "terroir")... It's not a stretch to extrapolate this to cigars (*cough*, large ring gauges, *cough* Montecristo OPEN *cough*) and how this would be made worse, potentially, with open access to a larger market
Mckucci Posted September 3, 2014 Posted September 3, 2014 I fear for this day.... The demand for Cuban cigars is becoming increasingly higher, causing lower production standards and quality control in Cuba, as it is now they are having a hard time keeping up with the demand... Imagine what will happen if they introduce Cubans for sale to the American population....
SeriesV Posted September 7, 2014 Posted September 7, 2014 if and when the embargo is lifted, i think that the trademark issue is the next huge problem that will prevent genuine cubans from flooding the shelves in the states. and i also think that the counterfeit and "copycat" or "knockoff" stuff will explode in order to take advantage of all the non smokers who just think that cuban cigar = good.
PigFish Posted September 7, 2014 Posted September 7, 2014 Maybe I go into the tobacco business, if my government still allows it. I run a bonded warehouse because the local taxes means no one in there right mind buys domestically and I sell cigars to my friends in Australia, while he sells them to my friends here. We get a cooperative "gray market" system going that screws both our governments nefarious tax strategies and we laugh it up each year with our annual meeting in Cuba! -the Pig
BehikeLover2 Posted September 7, 2014 Posted September 7, 2014 cubans will have to deal with the anti tobaco/anti smoking lobby...
Smallclub Posted September 7, 2014 Posted September 7, 2014 One more thing... I would highly recommend seeing the movie Mondo Vino. It rambles a bit but tells the story of how the current global wine market and "taste" has largely been shaped (unfortunately) by the surge of demand from the US in 70s, 80s. They document one "wine consultant" going to many of the big French wine houses giving the advice to "Oxygenate! Oxygenate!" the wine to make it more palatable to the watered-down tastes of the masses (at the expense of individual characteristics/flavors from unique regions--the "terroir")... It's not a stretch to extrapolate this to cigars (*cough*, large ring gauges, *cough* Montecristo OPEN *cough*) and how this would be made worse, potentially, with open access to a larger market This.
CaptainQuintero Posted September 7, 2014 Posted September 7, 2014 Would the average guy who visits a US cigar lounge even enjoy CCs? The trend for bigger RG Cubans is down to hsa copying what is popular in the US, a copy is never as good as the originals, and to my mind Cuban cigars are at their best when 38-47 ring gauge, so would an average Joe just see the new generation of fat Cubans as just watered down versions of NC cigars with a huge price tag? The only cigars which would compete (Imo) would be classics like lonsdales and coronas, lanceros and panetelas etc but they are essentially gone.
dangolf18 Posted September 7, 2014 Posted September 7, 2014 Most NC producers will go out of business. Pricing will go down substantially for brands like Padron and davidoff.
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