email: crystal balling on production and stock supply this year?

[El Presidente]

I receive this type of email "crystal balling on production and stock supply this year? weekly at the moment so I thought it best just to put my thoughts down and link to it here. 

Feel free to chime in 

 

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There are no green shoots coming out of Cuba at this time. Factories are in full production but there are zero reserves being built up and much of the worlds HSA distributors are near empty (R&J Mille Fleurs excluded) and global retailer shelves shelves thin if not quite exhausted. In terms of premium, what they are rolling they are shipping OS to distributors or shelving in Havana stores. However they are shipping far less than existing demand let alone the quantity to meet the traditional 3  month Distributor reserves. There are a host of packaging bottlenecks currently that are not assisting.

 

Solution 1. 

  No one in the world buys a Cuban cigar for 12 months.   I personally am not an advocate of this solution 

Solution 2. 

 HSA puts in a massive price rise this May.  This one scares the bejesus out of me as I have seen some 4-11% "non seasonal" price rises this month on selected items  from PCC. A few phonecalls with global retailers has confirmed that this sneak attack is widespread. It may not be coordinated but the pressure is on. 

A major HSA global price rise in May could put the brakes on the Habanos market allowing them to catch up over the next 18 months - 2 years while not losing too much profit (if any).  However,I think  the damage done to their traditional customer base would be immense. 

Solution 3. 

No Regional, No LE, No Specialties. Core line focus only for 18 months.   This is more of a band-aid solution but it will buy a little time. 

crystal balling?

Official price increase 8% May.   Stock shortages will continue out to 2023/24 as their production/logistics is antiquated, financial situation (Govt) beyond perilous, and they struggle to meet existing demand let alone produce enough product to have reserves. 

I suspect there will be widespread ramifications for the Cuban retail industry and consumers.  

We will know soon enough. 

[JohnS]

36 minutes ago, El Presidente said:

I receive this type of email "crystal balling on production and stock supply this year? weekly at the moment so I thought it best just to put my thoughts down and link to it here. 

Feel free to chime in 

[dominattorney]

That's really disheartening to hear, but not terribly unexpected to me.  I've been buying more than I need for quite some time now and it seems like it's not as stupid an idea as my wife makes it out to be. 

Solution 4: muchos desnudos

[99call]

 

[Nevrknow]

Glad I didn't jump into selling on BR. Come next Nov-Dec, my Cohibas are going to be worth a mint! 🤣

[HawkI84]

44 minutes ago, dominattorney said:

I've been buying more than I need for quite some time now and it seems like it's not as stupid an idea as my wife makes it out to be.

It's investing. You're looking out for her future.

[Edicion]

[Rhinoww]

Was contemplating this question this am as I was looking at some other retailers stock - thin and crazy expensive. Glad I got in this hobby when I did and that I have a stash that will last quite a while. Problem is I have a lot of friends so this stash may not last as long as I’d like. 
Seems like this cluster will be around for a while. Sucks. 

[asudevil08]

2 minutes ago, Rhinoww said:

Was contemplating this question this am as I was looking at some other retailers stock - thin and crazy expensive. Glad I got in this hobby when I did and that I have a stash that will last quite a while. Problem is I have a lot of friends so this stash may not last as long as I’d like. 
Seems like this cluster will be around for a while. Sucks. 

Time to introduce your friends to your nicaraguans.  

[Rhinoww]

Just now, asudevil08 said:

Time to introduce your friends to your nicaraguans.  

They are well acquainted but yes, a reintroduction may be in order. I have a few hundred that are lonely. 

[Fuzz]

A mix of solution 2 and 3. Higher than usual price rise, whilst concentrating on core SKUs, with a hold on all RE/LEs but one or two specials released... on severely delayed schedules.

[Hammer Smokin']

1 minute ago, Lord Verulam said:

I don’t see how prices can rise 8% above what’s already happened and ppl still buy at the same rate …prices are getting insane


Sent from my iPhone using Tapatalk

this hobby has a high percentage of wealthier than average participants. 

you see it on the "brag" threads (look at my car, my watch, my cigar case, my lighter, my coffee maker, etc)

it'll knock out the bottom % of smokers, but won't reduce the overall sales. Just narrow the band of potential buyers. 

[Rhinoww]

The one factor not addressed in this thread is consumption v collecting. If we reach an endemic stage worldwide soon, my bet is that consumption will drop. Idle dollars will be spent elsewhere (dining out etc) and there will be less time smoking cigars at home. A decrease in consumption could in theory allow shelves to get restocked. Won’t happen fast but I’ll take the under on a line at two years. 
What I have trouble accounting for is how many folks have moved to the collection mode. This happened in bourbon where high end bottles are not consumed but rather admired and traded like baseball cards. It’s nutty, but true. If this happens to Cuban cigars we are doomed. 

[chris12381]

1 hour ago, Rhinoww said:

If this happens to Cuban cigars we are doomed. 

Consider it doomed then. 

[LordAnubis]

To me you'd be crazy to increase supply back to where it ever was. Keep production at 70% of what it has been, keep prices going up, i almost think Habanos has picked up on this, and is no hurry to get back to 100%.

[El Presidente]

7 minutes ago, LordAnubis said:

To me you'd be crazy to increase supply back to where it ever was. Keep production at 70% of what it has been, keep prices going up, i almost think Habanos has picked up on this, and is no hurry to get back to 100%.

........I love the consummate optimist who believes HSA/Tabacuba has the ability to plan an outcome  

[tjkoala]

I think the realistic long run solution will be twofold.

1. NC providers provide more supplemental supply to traditionally Cuban markets in the rest of the world. The reality is that we’ve seen a first cigar boom, a wine boom, a scotch boom, a bourbon boom, a craft beer boom, and now a second cigar boom. These things run in dads but there will be some people who stick around on the back end of it. HSA won’t be able to significantly move the needle anytime soon and NC providers would be wise to expand outside the North American market to pick up the slack.

2. HSA folding in and allowing outside investors to bring non-Cuban techniques to provide better yields and quality for an increasingly more expensive product. As a consumer this would be amazing (although unlikely anytime soon) and would love to see the QC of NC brands brought to the CC world. Hell, some might call it an abomination but it’s be interesting to see a CC / NC blend one day.

[LordAnubis]

4 hours ago, El Presidente said:

........I love the consummate optimist who believes HSA/Tabacuba has the ability to plan an outcome  

Honestly they aren't stupid. If you just at a glance look, and think that you've had half your staff off, made bugger all, put prices up and and you're still prety much making the same money as before... thats like a lazy mans wet dream! i think they are picking it up 🤣

[djrey]

This is very frustrating. Factories up and running yet another 2 years before *possibly* back to normal. A box of D4's through retailers now is a touch less than $300. Add on two years of HSA price increases and relative inflation. I'm seeing CC becoming much less appetizing to many smokers, especially new smokers or potential NC converts. 

I have stock to last me for years but one also needs to continuously resupply smoked stock if you want a constant rotating supply. I'm also not so confident of a return to price normality once shelves are finally stocked again. Retailers know what consumers are willing to pay, why are they going to charge less? I think it'll be more than a few years before supply outpaces demand. 

[BrightonCorgi]

Solution 2 sounds most likely.  Price increase will give Habanos some time to build stock yet retain similar profit.  Keep raising the wholesale prices and Habanos will truly be that luxury item they want it to be.

[Silverstix]

14 hours ago, Edicion said:

Boxes of CoRo for $750.....SOLD OUT!! 😢

[Monterey]

2 hours ago, djrey said:

. Retailers know what consumers are willing to pay, why are they going to charge less? I think it'll be more than a few years before supply outpaces demand. 

Retailers know what SOME are willing to pay.  Simple supply and demand.  If they suddenly have 3 times as much boxes, will they find 3 times as many buyers?  who knows.  But the supply/demand curve shows that as supply increases, prices decreases.  Probably not an issue for years, but eventually things will smooth out.  Keep in mind that prices out of Cuba changed last in May of 2021.  So all prices increases since has been done by vendors.  So even if there is a larger increase out of Cuba this May, the supply/demand curve could make prices lower then they are now. if vendors have more boxes to move and can lower how much they added to the prices since May.    All delusional thinking for now.  Nothing will change for the better until supplies significantly increase.

[Silverstix]

13 hours ago, Hammer Smokin' said:

this hobby has a high percentage of wealthier than average participants. 

you see it on the "brag" threads (look at my car, my watch, my cigar case, my lighter, my coffee maker, etc)

it'll knock out the bottom % of smokers, but won't reduce the overall sales. Just narrow the band of potential buyers. 

1000%.....Cuban cigars (cigars in general) have really become a luxury item that the average Joe has a tough time affording - look at how crazy Cohiba prices are now and they still sell out in 10 seconds

[SMELTZ]

I don't know the answer, but I know my 2021 boxes of RA Gigantes, D4, Lusitanias and Montecristo 2's are tasting better then my 2018 & 2019 boxes.  The quality seems to be getting better with less production.  Far fewer plugged cigars as well. I will take higher quality and higher prices over lower production numbers any day of the week. 

[BEVOSREVENGE]

1 hour ago, Monterey said:

  Nothing will change for the better until supplies significantly increase.

and pent up demand is satisfied.