International pricing policy by Habanos SA

[medzikone]

Quote

Cuban cigar prices are expected to substantially increase in the coming days. According to reliable sources, Habanos S.A. intends to introduce a new international price homogenization policy, similar to that applied by global luxury brands.

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[Çnote]

Well

[rcarlson]

!50%?  Jesus.  

[djrey]

This is like if your house is on fire you run out to the shed, grab as many cans of gasoline as you can and run back inside and start trying to extinguish the fire with the gas. Sometimes it really does seem like they are purposefully sinking their own ship. The current situation has already pushed a few CC smokers I know back to the NC market. I'm only still a CC smoker because I stocked heavily over the past 3 years. I was hoping to use that stash to pull through all this but maybe there will be no coming back after all. WTF. 

[Nevrknow]

Agreed. There will always be the CC or die crowd but imho most fall into the diminishing return on the price point and will gravitate elsewhere. 

[MrBirdman]

Nice knowing you guys! It’ll take a few years but once my present stock is depleted I will be done with this hobby for good. I really like cigars, but not that much. I can get my occasional fix from non-Cubans if necessary. It’s not that I can’t afford cigars at that price, but that I’d never spend so much money on them. 

Kinda saps the joy from smoking now though knowing I’m doing so on borrowed time. I feel for the retailers out there who will have to close their doors.

[benfica_77]

This moronic strategy will cause many LCDHs and other cigar shops close. Habanos SA will see in 2-3 years that this pricing strategy was a poor decision.....try to revert things but it will be too late those businesses won't come back and retail side will be F$CK3D. 

Want to see what continuous price increases do? Go check the Netflix stock price dropping 25-30% in one day last week. 

Longer-term what this means is that online retailers and a handful of elite LCDH will survive. For those who can visit Cuba buying on the island will become even more critical for the hobby. 

Locally in Canada this means in my opinion the death of Cigars buying from retailers forever....the plain packaging laws combined with these insane price increases on top of already crazy prices it's done. Terrible news. 

[SmokyFontaine]

1 hour ago, djrey said:

This is like if your house is on fire you run out to the shed, grab as many cans of gasoline as you can and run back inside and start trying to extinguish the fire with the gas. Sometimes it really does seem like they are purposefully sinking their own ship. The current situation has already pushed a few CC smokers I know back to the NC market. I'm only still a CC smoker because I stocked heavily over the past 3 years. I was hoping to use that stash to pull through all this but maybe there will be no coming back after all. WTF. 

That is EXACTLY where I am. I love variety and I went big the last 3 years. But the value in CCs is quickly approaching "not worth it" territory for me. Almost $20 for a Monte 2? Robustos routinely at $10-12. And the inconsistency factor? Just insane. 

[MrBirdman]

22 minutes ago, benfica_77 said:

For those who can visit Cuba buying on the island will become even more critical for the hobby. 

Good luck finding any if they don’t implement these price increases in Cuba. The margins for professional resellers will strip shelves bare. There’s just too much money to be made. The markup on one box of Siglo VI alone could cover airfare and lodgings. 

It’s a little unclear what role taxes will play in wholesale price calculations. Certainly there will need to be wide discrepancies to account for differing tax rates if true homogenization is to be achieved. But what happens if a retailer decides to sell duty free online? Will they be contractually required to markup the cigars accordingly??

[jakebarnes]

13 minutes ago, MrBirdman said:

Good luck finding any if they don’t implement these price increases in Cuba. The margins for professional resellers will strip shelves bare. There’s just too much money to be made. The markup on one box of Siglo VI alone could cover airfare and lodgings. 

I imagine that is part of the calculus. Getting more people to replace tourism that has gone away.

[SGD316]

I don't know who is making these decisions, but it's clear they lack any long term vision. An increase of this magnitude will cause people to either quit the hobby or smoke NCs once they're out. 

Even if revenue stays the same or increases, the loss of market share will become an issue. Add to that to the fact that Cuba's quality control is very suspect compared to NCs and this is all around silly business decision making. 

[Lfhard]

This is sad and crazy. Looks like I’ll slow down a little bit on my CC and start throwing more NC in the rotation. It was already hard enough for me to buy at this price. 

[NickV]

Maybe I am reading this wrong, but it sounds like they are synching prices to Hong Kong. I have to believe we are already paying at least that price point. I think this cuts into resellers and online sellers margins (those who buy low and sell high) while leaving gray market retail very close to what we are already seeing. As you all have said there’s a limit to the price people will pay and we are already near or at that point collectively. Correct me if I’m wrong here 

[porkchop]

Henry Hill voice "This is the bad time."

[djrey]

59 minutes ago, SmokyFontaine said:

That is EXACTLY where I am. I love variety and I went big the last 3 years. But the value in CCs is quickly approaching "not worth it" territory for me. Almost $20 for a Monte 2? Robustos routinely at $10-12. And the inconsistency factor? Just insane. 

Yup! Even at current prices I am out of the game except smaller format minutos when I find them on sale.  A box of Pardon 2000 Robustos is $187. A damn fine cigar just for reference. If prices don't manage to drop in the future I sadly will have to leave the Cuban market.  

[jakebarnes]

A bit of a gut punch. Cohiba pricing was already losing me and I will be ok with what I have. But the hit to Trinidad is what is going to frustrate me. Glad I've been able to add a few boxes of Coloniales and Reyes over the past year. But this definitely sucks. That said...I probably have enough cigars to last my natural life and my collection is miniscule compare to many here. 

[Eric05]

If they are trying to match HK pricing. It’s only going to make HK go higher. 

[Edicion]

Will many stop or reconsider buying Cohibas at the new prices? Yes.

Will HSA still be able to sell all the Cohibas they make? Yes.

Just sharing my experience that there's very little stock in HK of Cohibas and Trinidads, but a very strong demand, so if HSA needs to shift their pricing to match prices here they have no issues in doing that, even if it means they lose customers in other parts like Europe because there are buyers here anyway that would be comfortable in buying at HK prices from other markets simply because of demand and supply.

In other words, production numbers won't go down, just prices will go up, to make more profits based on demand and ability to pay.

Will HK prices increase too? Yes, they have already gone to levels most (HK based) would think are too high or unimaginable just 3 months ago, and even with the price increases, Cohibas are out of stock. This has been a reality for 1+ years already.

Will HSA take into consideration our hobby/passion/interest and wishes? No.

I'm not trying to paint a worst case scenario, I'm just trying to explain our reality here which unfortunately others will share with us very soon sounds like.
 

[MrBirdman]

37 minutes ago, Edicion said:

Will many stop or reconsider buying Cohibas at the new prices? Yes.

Will HSA still be able to sell all the Cohibas they make? Yes.

Just sharing my experience that there's very little stock in HK of Cohibas and Trinidads, but a very strong demand, so if HSA needs to shift their pricing to match prices here they have no issues in doing that, even if it means they lose customers in other parts like Europe because there are buyers here anyway that would be comfortable in buying at HK prices from other markets simply because of demand and supply.

In other words, production numbers won't go down, just prices will go up, to make more profits based on demand and ability to pay.

Will HK prices increase too? Yes, they have already gone to levels most (HK based) would think are too high or unimaginable just 3 months ago, and even with the price increases, Cohibas are out of stock. This has been a reality for 1+ years already.

Will HSA take into consideration our hobby/passion/interest and wishes? No.

I'm not trying to paint a worst case scenario, I'm just trying to explain our reality here which unfortunately others will share with us very soon sounds like.
 

Well if HSA plans to sell 90% of all their premium stock in HK then you may be right. But every market has it’s saturation point, and the risk is heightened in an authoritarian country that’s increasingly concerned with wealth disparities. 

Pointing to bare shelves is hardly conclusive evidence of anything when shelves are bare across the world. 

[Edicion]

27 minutes ago, MrBirdman said:

Well if HSA plans to sell 90% of all their premium stock in HK then you may be right. But every market has it’s saturation point, and the risk is heightened in an authoritarian country that’s increasingly concerned with wealth disparities. 

Pointing to bare shelves is hardly conclusive evidence of anything when shelves are bare across the world. 

Not sure if 60 USD per stick of COROs will be of interest to many because that's today's going rate in HK shops if there's any stock. This has been the case for a long time already.

[BrightonCorgi]

2 hours ago, NickV said:

Maybe I am reading this wrong, but it sounds like they are synching prices to Hong Kong. I have to believe we are already paying at least that price point. I think this cuts into resellers and online sellers margins (those who buy low and sell high) while leaving gray market retail very close to what we are already seeing. As you all have said there’s a limit to the price people will pay and we are already near or at that point collectively. Correct me if I’m wrong here 

Do different regions pay different pre-tax wholesale pricing?  It's taxes that make one region or country more expensive than another.  All should have relatively the same pre-tax wholesale cost.  I get some distributors may get better pricing for many reasons, but not in any grand sense.

I get Habanos raising their prices.  If the supply is that short, why not?  Cigars are a shrinking market in the long run and they want to really be a luxury commodity.  They need to be priced more than NC's. 

Like when car marques go down market, it ends up hurting their prestige and takes a long time if they are ever able to recover.

[SCgarman]

4 hours ago, MrBirdman said:

Nice knowing you guys! It’ll take a few years but once my present stock is depleted I will be done with this hobby for good. I really like cigars, but not that much. I can get my occasional fix from non-Cubans if necessary. It’s not that I can’t afford cigars at that price, but that I’d never spend so much money on them. 

Kinda saps the joy from smoking now though knowing I’m doing so on borrowed time. I feel for the retailers out there who will have to close their doors.

I'm right there with you. I have seen a box of Robustos in the last two years go from +- 200/box to $270 to $350 and climbing towards the $400 mark. PC's like Monte 4 closing in on the $250/box mark. Total ridiculous bullsh*t. I am also being priced out of the market. I love cigars, but have to draw a red line between "expensive" and "utter stupidity". And prices are somewhere in between those words at the moment. I have enough inventory to get through several years, but I am willing to completely exit the hobby altogether. I have plenty of other things hobby wise that give me enjoyment, and a cigar free life one day is becoming more of a reality. 

[Lfhard]

20 minutes ago, Edicion said:

Not sure if 60 USD per stick of COROs will be of interest to many because that's today's going rate in HK shops if there's any stock. This has been the case for a long time already.

Damn!!! For a CoRo?!? Well I’m glad I have a few boxes of those. No way they are worth $60 a stick. At least not in my eyes. 

[tjkoala]

I think HSA knows the only way to flood the Pacific region with more Cohiba and Trini is to do a price increase. I'd bet they have contractual agreements with regional distributors in place to sell X master cases of Cohiba and Trini if they sell Y master cases of more "non-premium" brands. Rather than be held to this, its easier to just increase the price of Cohiba and Trini to kill off demand in Europe, North/South America, Phonesia, etc. knowing that buyers in HK, China, and the sorts are already paying the premium and cant hold inventory. It's clever but also kind of short sided if the Pacific region loses interest for another vice in 5-10-15 years. 

[djrey]

1 hour ago, SCgarman said:

I'm right there with you. I have seen a box of Robustos in the last two years go from +- 200/box to $270 to $350 and climbing towards the $400 mark. PC's like Monte 4 closing in on the $250/box mark. Total ridiculous bullsh*t. I am also being priced out of the market. I love cigars, but have to draw a red line between "expensive" and "utter stupidity". And prices are somewhere in between those words at the moment. I have enough inventory to get through several years, but I am willing to completely exit the hobby altogether. I have plenty of other things hobby wise that give me enjoyment, and a cigar free life one day is becoming more of a reality. 

Seriously, the jumps are wild. Look into things like Partagas shorts and the like. Can still be found at good prices and should give you your fix. Worst case just jump to the NC train. No need to exit the hobby