F#%k the LGC Revolution where's my regular production at?

[Duxnutz]

Rhetorical question, Dux?

Of course that's what they are doing, and what they admit they are doing!

Pretty much.

[earthson]

It could just be efficiency.

Remember a few years back each region was getting 2-3 RE releases a year and backlogs were getting out of hand.

It may just be simpler for HSA and distributors to say "instead of having 2 REs this year at $15 a cigar, let's just produce one at $30"

HSA wins as less workload plus less tobacco is used whilst they're having production issues, distributors win as they get one release to manage/worry about instead of delays and stress

Agree. I see a little NC marketing at play as well, a la Fuente (big price tag driving hype driving sales).

Still, delays seem to drive demand, as seen recently on the RA 898 Alemania and, yes, Bushidos.

At least they're not packaged in another 50-count cab like the SP Eslavos, necessitating a box split and disgruntled wife.

[El Presidente]

Thanks for clarifying Rob but question.. when Regionals sell so well and so fast.. isn't Habanos s.a. more inclined to make more of those than regular productions?.. hence the cuts?

Not really.

Most Regional runs are in the 25000-100,000 unit range. Some more

• Distributors Pre Pay.
• Habanos charges distributors a premium on Regionals

Zero risk, normally straight batch production and high margin = mucho moola

Say 15 Regionals a year @ 70000 average production. 1,050,000 cigars. I could be off but no more than 15% either way. HSA made 88 Million cigars last year. On the above numbers the Regionals made up 1.2% of production.

Let's say 1-2% of production.

Let me flip it around.

It is Regional and LE sales that keep the following cigars from not being discontinued (OK...them and Cohiba....not that Cohiba has helped out much in the past 12 months )

• Quai D'Orsay Corona
• Sancho Panza (all)
• Rafael Gonzalez (all bar the Perla)
• Cuaba (all)
• Upmann Connie 1
• Saint Luis Rey (All)
• San Cristobal (all bar Principe)
• Trinidad (all bar Reyes)
• There are plenty of others.

None of the above are commercial successes on their own. I think they are all vital as part of the greater story that is the Habano Cigar. However, you need to generate profits to carry losses.

I don't get riled up on pricing of the RE's. I have had more than forthright discussions over the past week about the LGCR pricing and they are ongoing. However, it is their cigar and they can price it how they wish. If it swims it swims. If it sinks it sinks. No skin off my nose.

Back to your main question as I got sidetracked.

I really don't think Regionals and LE's are taking away current production. I am of the view that they are responsible for keeping some 20% of the portfolio alive.

[shlomo]

I disagree with the statement the some cigars are not commercial successes. I would guess they all are, with varying degrees. How much does it cost to produce a box of cigars from start to finish? Why bother with a 60% margin, when one can slap a second band, extra sticker and glue a little gold plate on a box and turn a 300% margin.

[El Presidente]

I disagree with the statement the some cigars are not commercial successes. I would guess they all are, with varying degrees. How much does it cost to produce a box of cigars from start to finish? Why bother with a 60% margin, when one can slap a second band, extra sticker and glue a little gold plate on a box and turn a 300% margin.

That is why Sancho Panza Belicoso can be found with 2013 boxcodes out of new mastercases or San Cristobal Morro December 12. Monte 1's from 13, Cuaba from 12/13 and earlier this year Connie 1 (case after case) from 11/12.

There is a cost to holding slow (or no) selling stock.

Opportunity cost is a real cost.

Take the money you invested in those above, and put it into an additional 2000 boxes of CRS where you can go and make a low risk squillion before reinvesting it into an extra 4000 boxes of Partagas Privala LE before reinvesting it into an extra 5000 boxes of Ramon Allones Club Allones.

In the above fictional timeline..the reality is that the mastercases of Sancho Panza Belicoso and El Morro hasn't moved from the HSA Warehouse.

It is not all about profits. You need a balanced portfolio or your rich history is gone.

If it were all about maximising profit, you would have 30 premium cigars to choose from and a dozen cheap and cheerfulls.

[bman75]

Agree. I see a little NC marketing at play as well, a la Fuente (big price tag driving hype driving sales).

I'd be pretty pleased with the Fuente approach - they continue to produce their core lines and sell them at a great price. Thanks to anyone who buys an Opus for helping to subsidize my enjoyment of the rest of their lines.

The difference with HSA is that some regular production isn't available. I think the lack of transparency from HSA is fueling the anguish as we don't know if/when we will see these missing production vitolas show up again. Something to the effect of "De Deux are expected to become widely available in Q3 2106" would do a lot to calm the restless masses. From what I have come to understand about HSA from this site, that's wishful thinking.

[El Presidente]

I'd be pretty pleased with the Fuente approach - they continue to produce their core lines and sell them at a great price. Thanks to anyone who buys an Opus for helping to subsidize my enjoyment of the rest of their lines.

The difference with HSA is that some regular production isn't available. I think the lack of transparency from HSA is fueling the anguish as we don't know if/when we will see these missing production vitolas show up again. Something to the effect of "De Deux are expected to become widely available in Q3 2106" would do a lot to calm the restless masses. From what I have come to understand about HSA from this site, that's wishful thinking.

Unfortunately HSA has never been transparent. I would settle for opaque

Dieux and LGC MO2 surprise me a little. They would be perfect to run out a couple of hundred thousand stick production every three years. That would be enough.

SLR DC every three years as well. Cuaba every century,

[shlomo]

I guess I dont see opportunity cost as a literal cost, more like a theoretical cost.

Profit is still there imo. Just smaller. If profit wasnt there, they would have stopped producing cigars 50 years ago....

[Blakes]

You need a balanced portfolio or your rich history is gone.

I think there is a feeling they are cutting quite fine with this balance in regards to regular production now though.

Obviously it doesn't make much business sense for them to have loads of different formats in each marca now as that would clash with the more profitable RE's. Saying that, it doesn't mean you should have any!! I can't understand why they don't at the very least have a Mareva or Minutos in each brand, these aren't going to affect the RE sales much, if at all, if anything may act as a introduction to brands that barely do anything other than RE's now.

Dieux and LGC MO2 surprise me a little. They would be perfect to run out a couple of hundred thousand stick production every three years. That would be enough.

SLR DC every three years as well. Cuaba every century,

This ^^^ Discontinuing classics like these and many others rather than limiting production periodically to fit demand makes no sense, the demand is out there... It's guaranteed sales, those who love them would stock up knowing they only come round every few years.

[El Presidente]

I just want to point out....leave no misunderstanding..... that I believe they are incompetent

I would recategorize cigars as per a production timetable.

1. Constant Production

2. Annual Production

3. Biennial Production.

4. Triennial Production

Minimum production run for cigars in levels 3 and 4. It may be say 10,000 boxes (25's) for level 3 and 5,000 boxes (25's) for level 4

If a level 4 cigar cannot sell 5,000 boxes globally over three years then it is cut. Something new is introduced and hopefully something that retains a tier 1 or 2 status.

It is like relegation in the English Premier League.

the numbers are made up....but you know what I am getting at.

HSA could continue to act as a secret service agency. The market would know how their cigar is travelling by how often it was released.

[Duxnutz]

I really don't think Regionals and LE's are taking away current production. I am of the view that they are responsible for keeping some 20% of the portfolio alive.

I agree with what your saying but up until recently the Regional Program was single handedly watering down at least one, maybe more of the marques. Look at Ramon Allones and Bolivar. Talk about flooding the market with every weird and wonderful size in just a couple lines.

IMO Habanos should be using this tobacco (if it's in as short supply as reported) and make an effort to develop their historic and storied core lines in balance with the Regionals and Limiteds. If a Regional or LE is successful why not make it a regular fixture?

I say this as a someone who smokes just as much Rafael Gonzalez, SLR and Sancho as the others.

[MrGlass]

I really don't think Regionals and LE's are taking away current production. I am of the view that they are responsible for keeping some 20% of the portfolio alive.

With all of the talk as of late about how regular production cigars are being sacrificed for the sake of producing more RE & LE's, this is a really profound insight that I had never considered.

[ChanceSchmerr]

Cuaba every century,

LOL!

[El Presidente]

I agree with what your saying but up until recently the Regional Program was single handedly watering down at least one, maybe more of the marques. Look at Ramon Allones and Bolivar. Talk about flooding the market with every weird and wonderful size in just a couple lines.

IMO Habanos should be using this tobacco (if it's in as short supply as reported) and make an effort to develop their historic and storied core lines in balance with the Regionals and Limiteds. If a Regional or LE is successful why not make it a regular fixture?

I say this as a someone who smokes just as much Rafael Gonzalez, SLR and Sancho as the others.

Keep in mind that HSA has not allowed the Distributors to do a regional from the global brands (Upmann/Cohiba/HDM/Partagas/R&J/Monte).

It would be "brave/suicidal" for a Distributor to run 25000 sticks (minimum) at a regional such as Cuaba/Fonseca/Veguero.

Rafael Gonzales there has been one. Not sure how successful that was. 60,000 Petit Piramides made.

Saint Luis Rey....Pacificos (100,000) in 2009 and still available until a few months ago. Inca (50,000) and again I am not sure of the success.

Sancho Panza has had three. 25000/30000/50,000

If you stump your own money up you would prefer it to be a bankable proposition...and so we come back to Ramon Allones, Bolivar, Por larranaga, Punch, LGC. Some of these are stronger in some markets than others. Not all distributors are equal. Some can move 200,000 sticks+ in a territory, some 25000.

I agree with you on the Heritage Release aspect. Have been pushing that barrow for a decade.

From the sidelines it appears they would rather dance with the devil they know (at least for now) and let the distributors do the running (and take the risk) while they get their direct increased ROI on LE's,LCDH, Special Releases and Cohiba while regular production (not so premium) cigars such as, Monte, Partagas, Punch, R&J, Upmann, HDM, Jose Piedra, Quintero, do the volume grunt work.

Adequate wrapper is indeed a problem for them. I suspect logistics more so. Delayed releases, no releases, no Cohiba. They have a few problems on thier hands which they are not about to disclose.

The single biggest problem with HSA is the lack of engagement with their customers. Yes, they will frequent the LCDH's and attend top end events in Paris, London, lebanon, Beijing etal....but few if any want to put the time in with the average joe group whom account for the lions share of global sales at least by volume. I suspect they feel they don't have to. They engage with their distributors (whom in the majority of cases they half own). It ends up becoming a myopic view of the Cuban Cigar world based upon 5 star restaurants and well planned lounges.

[El Presidente]

If a Regional or LE is successful why not make it a regular fixture?

I forgot to address this one.

Hard one.

Take the successful RACF

If HSA released it in 2018/20 it would also be a success. .

However (as explained to me), they are bound to do the same blend. You cannot have two RACF with different blends. In the end they may taste a little different (different tobacco available in 2016/17 than 2009) but they would attempt the same profile.

So they do the same blend/profile. How do they price it and who do they upset in the process? Will buyers hold off and wait for the HSA version for a successful Regional knowing they will be released in 3, 4 or 5 years? Will this lead distributors to order 25000 runs as opposed to 50,000 or 75000?

How does it affect the collectable value of the original RACF? Have they destroyed that collectors market for future Regionals?

It is easier, less stressful to release the Ramon Allones Club Allones LE.

[Fugu]

Let me flip it around.

It is Regional and LE sales that keep the following cigars from not being discontinued (OK...them and Cohiba....not that Cohiba has helped out much in the past 12 months )

• Quai D'Orsay Corona
• Sancho Panza (all)
• Rafael Gonzalez (all bar the Perla)
• Cuaba (all)
• Upmann Connie 1
• Saint Luis Rey (All)
• San Cristobal (all bar Principe)
• Trinidad (all bar Reyes)
• There are plenty of others.

None of the above are commercial successes on their own. I think they are all vital as part of the greater story that is the Habano Cigar. However, you need to generate profits to carry losses.

Agreed, Rob, that effect is certainly there - sparking interest in the smaller marcas. On the other hand you have to wonder about the bulk output of ERs in Boli and Ramon Allones. Also in a small marca, such as LGC. With only one regularly produced vitola left (MdO 4), you wonder why this marca got seven regionals plus one LCDH. So if the goal is achieved and the interest is finally there (as seems to be the case in LGC), why then not finally bring vitolas back to life? (More regular MdO2 output, reviving the Tainos (and cutting the Inmensos instead!))

I really don't think Regionals and LE's are taking away current production. I am of the view that they are responsible for keeping some 20% of the portfolio alive.

With all of the talk as of late about how regular production cigars are being sacrificed for the sake of producing more RE & LE's, this is a really profound insight that I had never considered.

That seems not to be the case in fact. If you look into the previously mentioned CA interview, there are some very interesting and some very frank statements being made, such as:

"We do have a momentary shortage of tobacco," Núñez Blanco admits. "But we are trying to minimize it and find solutions, especially in regards to the balance in the market between our Ediciónes Regionales [Regional Editions] and our traditional brands."

So, there certainly is cannibalization in action, or let's better say competition for materials. At least to some degree and at certain times.

[Fugu]

With all due respect to everyone and their opinions, if Habanos produces a good-great cigar I am going to buy it. I've smoked two of the four Montesco releases for this year, and I have to say the Juan Lopez Malecon and the Ramon Allones 35th anniversary are two of the best cigars I've smoked all year. Both are true to their marca and very flavorful. People paid for the Bushido, which was about the same price so why shouldn't PCC price this release the same way? As long as the cigar is true to the LGC profile I will probably buy a box, or three.

I have to add on:

Do I like the size? No I do not, I much would rather a especiales, and I am pissed the VR Especiales was canceled for this year.

Do I like the price? No, I don't 3 boxes of LGC MDO 4 instead is very tempting. But if it is good, I can't really complain.

Honestly though, instead of this 55x50 how cool would Bolivar, LGC, RA, and JL especiales have been this year? Hell, they could be more expensive and I would still pay for them.

Yes, each to their own. But that exactly is the mindset that doesn't keep them (HSA or their distributors) from churning out more of these formats. If they still sell great, why should they bother? People have to boycott them if they don't want them.

Unfortunately HSA has never been transparent. I would settle for opaque

Dieux and LGC MO2 surprise me a little. They would be perfect to run out a couple of hundred thousand stick production every three years. That would be enough.

SLR DC every three years as well. Cuaba every century,

But that's what they are actually doing, aren't they? The last production of MdO2 and SLR DC has been 2014 (bxc), last DD 2014 or 15. So, still room for a three year hiatus.

[El Presidente]

That seems not to be the case in fact. If you look into the previously mentioned CA interview, there are some very interesting and some very frank statements being made, such as:

"We do have a momentary shortage of tobacco," Núñez Blanco admits. "But we are trying to minimize it and find solutions, especially in regards to the balance in the market between our Ediciónes Regionales [Regional Editions] and our traditional brands."

So, there certainly is cannibalization in action, or let's better say competition for materials. At least to some degree and at certain times.

Without Cohiba $ returns running through their veins, they would be counting on Regionals and LE's to carry an increasing share of the ROI load.

You can assume they are trying to get it right. It would have been easy to cull HDM DC production and provide those excellent wrappers for the Bushido which is two years late and still not all received. Same witht the 898 Regional, How are those Monte 80's smoking?

If they really wanted to screw with regular production and push the pedal to the metal on the RE/LE platform, they would be on time everytime with those RE/LE/specialty formats. That is when I would be convinced that they have completely crossed to the dark side. They are not however.

SLR DC were produced every 3 years (approximately). Sir Winston as well. Maybe they think the market can wait for those.

Des Dieux/MO2.....hopefully no more than temporary sacrificial lambs. Have you noticed most major retailers have run out of 898V or have removed all discounts? None available now for coming on 7 weeks.

HSA looks to be playing traffic cop. You aren't happy. Distributors aren't happy (they would like what they paid for) and I can tell you that retailers are not happy either.

....and the embargo has not even been lifted yet

Looks like everyone has taken a bite out of the s*** sandwich.

Lot's of questions but essentially: what led to this situation? how to get out of it? and how to ensure it doesn't happen again?

[oliverdst]

I will read again and carefully all the posts later but to me the one and only point is: they are expensive.

[Fugu]

Without Cohiba $ returns running through their veins, they would be counting on Regionals and LE's to carry an increasing share of the ROI load.

You can assume they are trying to get it right. It would have been easy to cull HDM DC production and provide those excellent wrappers for the Bushido which is two years late and still not all received. Same witht the 898 Regional, How are those Monte 80's smoking?

If they really wanted to screw with regular production and push the pedal to the metal on the RE/LE platform, they would be on time everytime with those RE/LE/specialty formats. That is when I would be convinced that they have completely crossed to the dark side. They are not however.

Valid point! They are obviously trying to "balance" it, as they put it. At least they seem to be very conscious of it.

Thanks for the additional insight, from a retailer's POV. I'd really be interested to get an idea of their ROI share for the supposed volume of 80% regular compared to thir 20% special.

Lot's of questions but essentially: what led to this situation? how to get out of it? and how to ensure it doesn't happen again?

Well, simple - vastly expand the cultivated area...

[dangolf18]

If these were released in the European market, they'd probably be 250-300 euros a box.

[Pixa]

If these were released in the European market, they'd probably be 250-300 euros a box.

What European market big continent with a load of distributors and a lot of different taxes and prices.

[dangolf18]

What European market big continent with a load of distributors and a lot of different taxes and prices.

I was mainly thinking of the Spanish, German, and French markets. Could probably add Portugal and Switzerland as well.

[CanuckSARTech]

I guess I dont see opportunity cost as a literal cost, more like a theoretical cost.

Profit is still there imo. Just smaller. If profit wasnt there, they would have stopped producing cigars 50 years ago....

Storage costs money. Money to build a warehouse, power it up, staff it, logistical support, etc. Money spent on that is money lost from the profit margin.

Yes, profit is there, but like Rob says, some of the higher profit things keep the overall production afloat. Some of those "past relics" cigars that are there for the connoisseurs, for the "love of it", etc.

[PigFish]

I don't want any.

From Rob's review on the 24:24 I know it will be an almost $30 disappointing experience. The best lay down cigars I have ever bought were big and brash when young and calmed down into amazing smokes. None of my "light, but complex" cigars aged into anything but "light, but complex" cigars - meaning too light of a profile for me. I don't need to smoke a $30 wind tunnel that might develop some real flavors over the next few years. I'll stick with cigars that have an actual track record like the Cohiba robusto or Siglo VI if I want that road map. Shoot I didn't even complain about the RA EL 2015 at $16ish per cigar! I'll stick to RASSC, Partagas shorts, RASS, Ramon Allones Superiores, JL2, etc and stock up before they get rid of these too to make way for $30 limited addition pieces of dookie!

...brilliant!

-Piggy