HSA's Top Markets?

[filltang]

Since its global introduction, it is undeniable that the Cuban cigar has demanded a global audience. "On paper," this global audience does not include the United States  (see Bay of Pigs, Cuban Missile Crisis, etc.)

 

 From what I understand (correct me if I'm wrong), France, Spain, China, and Switzerland are most recently HSA's biggest markets year in and out.

 

1. If we use the Barry Bonds/Mark McGwire asterisks... where could we rank the US on the list of top markets for CCs?

2. What influence does the *US market* have on changes/additions/deletions to marcas/vitolas/etc.?

 

 

[Booyaa]

I think it has a very large, indirect, influence.

[Corylax18]

1. Not #1. I would put China first, then wherever 80% of Switzerland's cigars go (Internet, Grey Market, China, US, Etc.) I've seen busloads of Chinese businessmen unload at the Nacional, clear out every last Cohiba and Maduro from the LCDH, then hop back on the bus. Their appetite for Cubans (and certain Cubans in particular) is staggering. I feel like the US definitely ranks in the top 5, if not the top 3 though. But, give it 3-5 years sans embargo and we shoot straight to the top.  

2. This is a much more nuanced and difficult question to answer. The US is the largest cigar market in the world, so is therefor a huge trend setter/taste maker for the global market. The growth in average ring gauge is probably the best indicator of US influence, that's been a growing trend in the states for the better part of a decade, unfortunately it seems that its spread throughout the rest of the world now as well. We all know a huge % of these new cigars hit the US market, but even if its something crazy, like 40%, the other 60% are still selling somewhere. If you ask and HSA exec, they would probably say 0, but there is clearly some influence.  

[Derboesekoenig]

I feel exactly the same. I also believe the US to be easily in top 5 countries, if not top 3. China has exploded and will control the market for now. I hope the embargo will cease to exist in my lifetime, as I would be very interested to see what the future of the Habanos market holds. They hit $445 mil USD in revenue in 2016, and $500 mil in 2017. Just imagine if the US market opened up. At this rate, they'll be at $1bil if they could keep up with production

[SigmundChurchill]

21 minutes ago, Derboesekoenig said:

I feel exactly the same. I also believe the US to be easily in top 5 countries, if not top 3. China has exploded and will control the market for now. I hope the embargo will cease to exist in my lifetime, as I would be very interested to see what the future of the Habanos market holds. They hit $445 mil USD in revenue in 2016, and $500 mil in 2017. Just imagine if the US market opened up. At this rate, they'll be at $1bil if they could keep up with production

I have mixed feeling about the embargo.  I think it will be very good for the Cuban people if it was lifted, and that makes me happy.  

For us, the outcome is not so cheery.  Taxes, regulations, and increased demand are what I see in our future.

[BrightonCorgi]

The future of the Habanos (and all cigars) is contingent on tobacco legislation in their respective locale.

[Corylax18]

4 minutes ago, SigmundChurchill said:

I have mixed feeling about the embargo.  I think it will be very good for the Cuban people if it was lifted, and that makes me happy.  

For us, the outcome is not so cheery.  Taxes, regulations, and increased demand are what I see in our future.

Yup. The Embargo needs to end, for a myriad of reasons. But as far as CC's go, these are the golden days for US citizens. It wont ever be better than this, easy access, no taxes/duties or gov. regulation. Enjoy while it lasts. 

[Fugu]

HSA officials are pretty frank about the fact that the US market has an important, direct influence on their current policy.

[Fugu]

As for the US CC market situation today:

A 2016 figure (published in WSJ, as "expert's estimate") is stating that about 3% of the premium cigars consumed in the US were estimated to be Cuban. The Cubans (Habanos SA) project a market share of between 20 to 30 % of the American market with an ending of the embargo.

The US premium cigar segment comprised about 150 million units by end of the 90s, rising to up to 300 million of today, give and take. Taking the above estimates as being close to correct, then about 10 million premium CCs are being consumed in the US already today, representing a good 10 percent of the Cuban export total (when the average projected annual 100-million unit export figure can be attained, which has not been the case all too often...).

A 25-percent market share in the US premium market - provided to be holding its level in the future - would correspond to ca 75 million units. A magnitude In the range of Cuba's entire current export production.... Cuba would have to at least double its premium cigar figures to be able to fulfill that plan. Still, a figure that isn't completely fantastic, as that has been shown to be achievable in the past.

[Fugu]

5 hours ago, Corylax18 said:

But as far as CC's go, these are the golden days for US citizens. It wont ever be better than this, easy access, no taxes/duties or gov. regulation.

But this has less to do with the embargo per se than more with the effect that U.S. Customs and Excise are the douchebags that they are (sorry guys). Prior to the revolution the US had been one of the biggest importers of CCs and that was pretty straightforward back then. Ok, those times will never come back, for the many US-based producers of today will take measures to limit competition. Still, this is nothing that has to come genuinely linked with the embargo. Instead it depends solely on the question whether today's "loopholes" will be kept open or closed. I don't see any reason why this is not being done already today....

[BrightonCorgi]

30 minutes ago, Fugu said:

Cuba would have to at least double its premium cigar figures to be able to fulfill that plan. Still, a figure that isn't completely fantastic, as that has been shown to be achievable in the past.

Expect much higher wholesale prices should a legal US market come to fruition. 

[Bagman]

Spain is the number one importer of cuban cigars.

Even if the embargo ended, it would take years and years till they became available due to endless lawsuits over trademarks.  Cuba could I guess create a new brand just for the US market.  But selling Cuban Cohibas in the US may never happen, even with the embargo over.

[filltang]

22 minutes ago, Monterey said:

Even if the embargo ended, it would take years and years till they became available due to endless lawsuits over trademarks.  

How would this even work? Didn't the original proprietors sell the rights of the CC marcas (Cohiba, RyJ, Partagas, etc.) to American companies many years ago? It would sure be a cluster**** that's for sure.

[cmbarton]

How would this even work? Didn't the original proprietors sell the rights of the CC marcas (Cohiba, RyJ, Partagas, etc.) to American companies many years ago? It would sure be a cluster**** that's for sure.

Imperial Tobacco/Altadis owns much of the NC versions of Havana’s marcas (H. Upmann, Monte, RyJ). When you consider that Altadis has a 50% ownership stake in Habanos, it’s easy to imagine a time when both NC and CC versions of the same marca are sold side-by-side in the U.S.

Where it gets sticky is for NC versions of CC marcas sold in the U.S. by companies like General that don’t have any ownership stake in Habanos (Cohiba, RA, Party, Bolivar, HdM). Those will be litigated for years and years, I imagine.

[El Presidente]

In terms of premium Cuban cigars i would put the US first, China second and daylight third. 

[Notsocleaver]

Couldn't Habanos SA just side step the copyright problem by just relabeling their US market cigars? Montecristo becomes "Dante" Hoyo de Montery become "Pride of Monterrey" or whatever.

[Bagman]

8 minutes ago, El Presidente said:

In terms of premium Cuban cigars i would put the US first, China second and daylight third. 

Spain first, France second, then China.  Per Habanos SA.

Article doesn't break out "Premium" though.

 

https://www.reuters.com/article/us-cuba-cigar/cuban-cigar-sales-hit-record-as-china-demand-surges-idUSKCN1GA2YL

 

[El Presidente]

2 hours ago, Monterey said:

Spain first, France second, then China.  Per Habanos SA.

Article doesn't break out "Premium" though.

 

https://www.reuters.com/article/us-cuba-cigar/cuban-cigar-sales-hit-record-as-china-demand-surges-idUSKCN1GA2YL

 

It's a different story when you tease out Jose Piedra, Quintero etal. 

[El Presidente]

The numbers for Cuban cigars into the US is not science. The best estimate I have seen is 30%. 

Say 70 million cigars last year produced. 30% is 21 million cigars. 

Rocky Patel sells 20 million cigars alone so for 21-30 million cuban cigars into the US is not far fetched at all. 

[SCgarman]

There are a good bit of Cuban cigars coming into the US ever since the internet age. Nobody has exact numbers for obvious reasons, but no doubt the US market as is has an influence on what HSA does. As for the embargo, our cigars are at very good quality at reasonable prices. Prices, taxes, quality will all be effected with an embargo end. I think it is safe to say it isn't going anywhere for at least the next several years for unmentionable reasons.

[Lotusguy]

Legal importation of CCs into US would mean a huge price increase for us - because then taxes and duties would have to be added. Right now, CC are cheaper for us than NC in most states. That would end for sure.

[filltang]

While it is interesting to speculate on post-embargo effects, it is likely unrealistic in our lifetimes. I'd imagine the US government has several other more pressing "moneymakers" (marijuana, sports gambling, etc.) that would score a much larger loot than CCs would at this time. I wouldn't doubt that they are certainly turning a blind eye to the ever-growing CC market in the US, so that when they choose to pay attention, their proceeds are at a maximum.