International pricing policy by Habanos SA

[Bijan]

10 minutes ago, BrightonCorgi said:

It baffles me how Habanos could stick the the LCDH franchise owners so hard.  I'd be livid if I owned one and was put into this situation with lack of supply and prices.

As to supply, if Cuba wasn't imploding supply might still be good.

But given the crappy supply LCDH owners probably want the price increases, since shelves were bare at old prices.

Edit: (well the LCDH owners in low duty, high sales markets, unclear what will happen to the ones in high duty markets, they'll probably be out of luck...)

[dangolf18]

As to supply, if Cuba wasn't imploding supply might still be good.
But given the crappy supply LCDH owners probably want the price increases, since shelves were bare at old prices.

You’re assuming their margins are going to increase for new stock though…doubtful


Sent from my iPhone using Tapatalk

[Bijan]

1 minute ago, dangolf18 said:

You’re assuming their margins are going to increase for new stock though…doubtful


Sent from my iPhone using Tapatalk

Maybe not as a percentage. But they sell a $2,000 box of Cohibas, you have to assume they take in more money than for the same box at $1,000.

[El Presidente]

3 hours ago, Bijan said:

Maybe not as a percentage. But they sell a $2,000 box of Cohibas, you have to assume they take in more money than for the same box at $1,000.

They will also need a bigger cashflow to afford to hold the stock 

.....there are two sides to every coin 

[ChicagoRob]

They will also need a bigger cashflow to afford to hold the stock 
.....there are two sides to every coin 

I can’t imagine waking up to find out my cost of goods just increased 200% on the most desirable products I have to sell….

I imagine some sellers are more inclined to close up shop (or pivot strongly to NCs) just to remain solvent.

[Bijan]

2 hours ago, El Presidente said:

They will also need a bigger cashflow to afford to hold the stock 

.....there are two sides to every coin 

Well the amount of such ciagrs they can get is way less than before so that balanaces out (a third the Cohibas, at triple the price 1/3 * 3 = 1) 🤣

Except for those that have to bear the duties... 😪

[Chas.Alpha]

Still waiting for Fearless Leader to tell us how PCC in particular has been given their marching orders. HK= standard for Cohiba and Trinidad. PCC also supplies CCzar. Taxes massively higher in HK. HSA either believes Rob gets to keep the windfall (🤣) or they expect PCC to adjust each market prices wholesale to establish a uniform retail price. I’d love to see how that works out... 😳

[El Presidente]

10 hours ago, Chas.Alpha said:

Still waiting for Fearless Leader to tell us how PCC in particular has been given their marching orders. HK= standard for Cohiba and Trinidad. PCC also supplies CCzar. Taxes massively higher in HK. HSA either believes Rob gets to keep the windfall (🤣) or they expect PCC to adjust each market prices wholesale to establish a uniform retail price. I’d love to see how that works out... 😳

I still don't know. 

.....I suspect they are still working it out. 

[Chas.Alpha]

10 hours ago, El Presidente said:

I still don't know. 

.....I suspect they are still working it out. 

I, as well as every member of FOH hopes that they will just allow you to keep a massive windfall! Of course, we also believe in fairy dust and magic spells... 🙄

[El Presidente]

50 minutes ago, Chas.Alpha said:

Still waiting for Fearless Leader to tell us how PCC in particular has been given their marching orders. HK= standard for Cohiba and Trinidad. PCC also supplies CCzar. Taxes massively higher in HK. HSA either believes Rob gets to keep the windfall (🤣) or they expect PCC to adjust each market prices wholesale to establish a uniform retail price. I’d love to see how that works out... 😳

To clarify

Oz taxes are higher than HK. 

I have only been given "preliminary" pricing subject to review between now and the 20th. 

They would need a team of forensic accountants to work out a cohesive policy that treads the middle line between windfall and bankruptcy.  

I have full faith in their abilities. 

 

[Chas.Alpha]

All of the forensic accountants have left the island...

[Rhinoww]

Might soon start selling my cohibas. I’ve got about 150, mostly to see how the aged. Now I could buy a used car if I sell my humble Cohiba collection.  Nuts, but I might start trading them in a few years if things stay on the current path to stretch things. Seems wrong to sell to me at least right now. Can’t say why though other than this is a hobby. 

@El Presidente thank you for the transparency re pricing. You continue to earn a loyal following for a reason. 

[Chas.Alpha]

Ah, so the HK prices are due to storefront leases/rents? This seems like the most hair-brained scheme the Cuban government has come up with since the revolution.

[BrightonCorgi]

17 hours ago, dangolf18 said:

You’re assuming their margins are going to increase for new stock though…doubtful

There is also somewhat of an assumption LCDH's were profitable before all of this.  I don't think most are or have been in some time.  I wonder what franchise agreements are?  If Habanos cannot supply stock, are there any "out's or clauses" for business?

Many markets, the gov't sets the retail pricing on cigars.

[havanaclub]

If they're greedy $500--yes--$500 boxes of Reyes (current world price is ~$240 and this suggests a 203% increase) isn't going to enrich them. Everyone's greedy. The market determines how much anyone can charge for their product. $500 Reyes won't sell, period, end of story. It's too stupid--even for HSA. I'm going to have to see that before I believe it. If they're insane enough to try it it wouldn't last long. 
I'd also speculate the reason revenue is in the toilet is because prices have risen 40% in the last 18 mos. I think they've already exceeded the market-clearing price. Unfortunately, production has been so limited stock isn't piling up yet. Just wait a few months. 

Lol this didn’t age well they sold out in minutes at 575. You can believe it now.


Sent from my iPhone using Tapatalk

[NSXCIGAR]

1 hour ago, havanaclub said:

Lol this didn’t age well they sold out in minutes at 575. You can believe it now.

Well, many minutes. Looked like a few hours to me. I thought they weren't gonna go but I guess the masses are flooded with cash.  

Update in Havana: no price changes yet and Reyes piled floor to ceiling.

And I've never felt like I'm stealing more than buying Esplendidos and Lanceros singles for $23 and $33 each. And no, I still can't bring myself to buy Exquisitos for $277. 

[havanaclub]

Well, many minutes. Looked like a few hours to me. I thought they weren't gonna go but I guess the masses are flooded with cash.  
Update in Havana: no price changes yet and Reyes piled floor to ceiling.
And I've never felt like I'm stealing more than buying Esplendidos and Lanceros singles for $23 and $33 each. And no, I still can't bring myself to buy Exquisitos for $277. 

Hey I hear ya. Let alone 500 plus.
I would take Reyes all day at the Cuba prices (before an eventual hike).


Sent from my iPhone using Tapatalk

[MrBirdman]

2 hours ago, havanaclub said:

Lol this didn’t age well they sold out in minutes at 575. You can believe it now.


Sent from my iPhone using Tapatalk

I really don’t think 24:24 is an accurate index of how the global market is bearing prices now and moving forward. Availability is incredibly tight, Rob’s prices are among the lowest if not the lowest, and the incentive for smokers in high tax countries to throw in the towel and buy offshore has never been greater. In other words, the combination of availability and price at FOH is unparalleled among online sellers that I have seen. So 24:24 is one of the last places I would expect demand to slacken.

Boxes will start accumulating on shelves in Canada, the UK, etc. long before they start sitting around here. 

[El Presidente]

6 minutes ago, MrBirdman said:

I really don’t think 24:24 is an accurate index of how the global market is bearing prices now and moving forward. Availability is incredibly tight, Rob’s prices are among the lowest if not the lowest, and the incentive for smokers in high tax countries to throw in the towel and buy offshore has never been greater. In other words, the combination of availability and price at FOH is unparalleled among online sellers that I have seen. So 24:24 is one of the last places I would expect demand to slacken. Boxes will start accumulating on shelves in Canada, the UK, etc. long before they start sitting around here. 

I think you could be right. 

Rule out London however (maybe rest of UK). 

Sales of units in London stores is up since the price rise. Go figure. 

[Bijan]

5 hours ago, MrBirdman said:

I really don’t think 24:24 is an accurate index of how the global market is bearing prices now and moving forward. Availability is incredibly tight, Rob’s prices are among the lowest if not the lowest, and the incentive for smokers in high tax countries to throw in the towel and buy offshore has never been greater. In other words, the combination of availability and price at FOH is unparalleled among online sellers that I have seen. So 24:24 is one of the last places I would expect demand to slacken. Boxes will start accumulating on shelves in Canada, the UK, etc. long before they start sitting around here. 

If Habanos SA can implement the policy the way they want, they'll either stop selling retail in Canada or keep retail prices in Canada the same. But either way they'll have every incentive to move supply to low tax jurisdictions.

The goal is to get the low-duty/duty-free/internet prices up so Habanos can take in more money there.

None of the internet retailers have much stock, and all their prices are up.

Except for the UK and HK, I don't think Habanos cares about any other high tax market's retail.

 

5 hours ago, El Presidente said:

I think you could be right. 

Rule out London however (maybe rest of UK). 

Sales of units in London stores is up since the price rise. Go figure. 

I mean that was the goal. Raise non UK/HK prices to UK/HK levels (at least for cohiba and Trinidad, though there's obvious doubts as to whether they can do it). But as they move closer towards that there's less incentive to buy outside UK/HK and brave the tax man, since the difference is shrinking.

 

5 hours ago, MrBirdman said:

Boxes will start accumulating on shelves in Canada, the UK, etc. long before they start sitting around here. 

I'll check out full retail brick and mortar this weekend. But the biggest Canadian native brick and mortar (half tax rate) is out of all cohiba except panetas 5 pack and single at $20 USD each. And Trinidad shorts at around $3 USD each.

[MrBirdman]

1 minute ago, Bijan said:

I'll check out full retail brick and mortar this weekend. But the biggest Canadian native brick and mortar (half tax rate) is out of all cohiba except panetas 5 pack and single at $20 USD each. And Trinidad shorts at around $3 USD each.

I will be interested to hear what you find, though I don’t think there has been nearly enough time for the effects of these changes to play out anywhere. 

[Bijan]

47 minutes ago, MrBirdman said:

I will be interested to hear what you find, though I don’t think there has been nearly enough time for the effects of these changes to play out anywhere. 

Just to be clear non provincially taxed Canada retail (native stores and brick and mortar stores shipping abroad) price for Cohiba and Trinidad is now currently below 24:24 level (at least for old stock). Time will tell what happens.

Edit: on the other hand I no longer trust the supply chain for cohiba (and even some other CCs) in Canadian retail. I definitely don't trust the storage for many Canadian retailers and plain packaging is an insult on top of that. But Habanos seems to be closing the gap between high duty and duty free for cohiba and Trinidad, which a lot of people doubted they could do.

[SCgarman]

10 hours ago, El Presidente said:

I think you could be right. 

Rule out London however (maybe rest of UK). 

Sales of units in London stores is up since the price rise. Go figure. 

Veblen goods effect? The higher the price, the more people want to buy it!?

[Shaunster]

Certainly for Cohiba and Trinidad it isnt worth UK buyers risking a tax hit now better to just buy in the UK.

Sent from my SM-G986B using Tapatalk

[NSXCIGAR]

On 6/8/2022 at 11:49 PM, El Presidente said:

Sales of units in London stores is up since the price rise. Go figure.

Up since when? Are they selling more units of Cohiba and Trini today than in 2020 or is it up from 2021 when there was virtually zero supply? How can more units be selling if units produced are still far below 2020 levels?

IMO everything should be compared to Q1-Q2 2020 since that was the last time of normalcy. 2021 to today should be tossed out. The factories are 1/3 full and planes aren't leaving the island.