International pricing policy by Habanos SA

[MrBirdman]

52 minutes ago, LordAnubis said:

Just wondering. If Cuba wil reduce ultra premium volume. More tobacco will go to regular stuff right? So Monte 4s and JLPs with  cohiba quality tobacco in em. Seems like wins all round for us regular folk. 😂
 

Not if they are just selling the excess stuff out the back like @JohnnyO said! 

[Cairo]

7 hours ago, NSXCIGAR said:

the gray market tells us there has been downward pressure on prices forever.

Excellent point.

The gray market is also telling us that the supply is ridiculously low.

I am confident that when the supply gets back to normal (who knows when that will be) the gray market pricing will adjust, regardless of "official" prices elsewhere.

[Lunettesman]

Reyes at 500usd a box? I wouldn't be surprised. When I see Sig 2 boxes at that price nowadays... What surprises me is how in the world can they sell all their boxes when they are always available. 

 

According to a trustful source, Intertabak will announce the new prices next week and rumours go that CoRo will be in the 1500usd range a box. 

 

Random thought. Will we see Cubans being sold in the US within a year? Therefore explaining a price hike. Demand would increase drastically. 

[rckymtn22]

11 minutes ago, Lunettesman said:

Random thought. Will we see Cubans being sold in the US within a year? Therefore explaining a price hike. Demand would increase drastically. 

Not going to happen unless there is a giant policy shift by either government.

[SCgarman]

30 minutes ago, Lunettesman said:

Random thought. Will we see Cubans being sold in the US within a year? Therefore explaining a price hike. Demand would increase drastically. 

Nope. Takes an act of congress. This is an election year. No congressperson fighting for their job has any interest in the Cuban embargo nor Cuba in general.

[Nevrknow]

3 minutes ago, SCgarman said:

Nope. Takes an act of congress. This is an election year. No congressperson fighting for their job has any interest in the Cuban embargo nor Cuba in general.

Especially when they have nothing positive to run on to begin with.

" Oh hell no. Not touching that issue! "

[Cigarsmoker81]

Imho I think premium cigars will sell out as supply is constraint and when/if supply increases grey market will adjust prices as a discount to the headline price to move products but it will be well north of where it is today. Ie If a box of Coro is 1500 it will go for well north of a 1000 and many will go for it as they see it as a discount to their b&m.

The only scenario I can see to derail that  demand falls a cliff either because economy is tanking or consumer starts to spend more on other services or products ( traveling, Etc) then hsa will be forced to heavily discount to move cigars.

 

As far as other brands it becomes a relative value as well, for people who are able to pay then psd4 for a third of the price of Coro will eventually seems  reasonable and something they will learn to accept 

I wouldn’t be too surprised if nc cigars will eventually increase their prices as global demand increases from outside of the US ( it could also mean they will produce more to meet demand I’m Not sure of how much they can scale production when/ if demands increase)

 

on a personal level I would like to thank rob and the foh team for giving me the opportunity to buy several years worth of cigars during the pandemic! It’s definitely a better investment than the stock market ! 

 

 

[Chas.Alpha]

4 hours ago, Nevrknow said:

Especially when they have nothing positive to run on to begin with.

" Oh hell no. Not touching that issue! "

Yep...

[NSXCIGAR]

15 hours ago, Cairo said:

Excellent point.

The gray market is also telling us that the supply is ridiculously low.

I am confident that when the supply gets back to normal (who knows when that will be) the gray market pricing will adjust, regardless of "official" prices elsewhere.

Yes, there's no doubt world supply is very low. Gray markets are totally tapped out (except for duty free crap) which has never happened in 20+ years. Price increases are not going to increase revenue. For every $2,000 box of Espendidos that sells there's a $1,200 box of CoRo that doesn't. Maybe they're trying to build up some stock at the distributors? Either way, prices can only remain high is supply if as low as it is now. I would bank on 20+ years of historical trends over 18 months of pandemic-based turbulence. 

[dangolf18]

Not really basing this off much, but I've always thought CCs were pretty grossly underpriced. The value was always there in my opinion as quality control has gotten better over the years and the taste of cubans is just unrivaled compared to the majority of NCs. Fair prices in my opinion would be $15 for standard robustos (e.g. HdM E2, PSD4, RASS,), $20-$30 for larger format cigars, and $20-$60 for the Cohiba range.

There's hardly any stock in most parts of the world, so it only seems natural that Habanos would try to increase prices (simple supply/demand). Might as well try until there's major pushback or they're able to substantially increase production. 

[NSXCIGAR]

17 hours ago, MrBirdman said:

Not if they are just selling the excess stuff out the back like @JohnnyO said! 

I'm very skeptical of this. Leaf is worth very little compared to the finished product. And who would it go to? Tabacuba is never going to acknowledge it. Not much good for marketing purposes. If true, it may just be getting shipped off the LCDHs. Who knows. 

 

9 hours ago, dangolf18 said:

Not really basing this off much, but I've always thought CCs were pretty grossly underpriced. The value was always there based in my opinion as quality control has gotten better over the years and the taste of cubans is just unrivaled compared to the majority of NCs. Fair prices in my opinion would be $15 for standard robustos (e.g. HdM E2, PSD4, RASS,), $20-$30 for larger format cigars, and $25-$30, and $20-$60 for the Cohiba range.

There's hardly an stock in most parts of the world, so it only seems natural that Habanos would try to increase prices (simple supply/demand).

The gray market would say otherwise. Until 2020, every cigar was available in the gray market at much lower prices than today. That means distributors weren't able to sell much of their product within their region and were wholesaling it out to the gray market, i.e. supply exceeded demand in the regional markets.

Most premium NCs are priced in the $8-12 range, or at least were before 2020. Many are even below that. You won't find a larger CC anywhere near that. If production levels return to normal a $15 Epi 2 would languish on shelves for years. I know this because $10 Epi 2 languished on shelves for years.

I totally agree, prices should rise during shortages. No issue there. The problem arises when supply recovers. Prices will have to come down. This news seems to suggest they are not planning on that, and that would be flat out idiotic if so.

[MrBirdman]

9 hours ago, NSXCIGAR said:

I'm very skeptical of this. Leaf is worth very little compared to the finished product. And who would it go to? Tabacuba is never going to acknowledge it. Not much good for marketing purposes. If true, it may just be getting shipped off the LCDHs. Who knows. 

It seemed strange to me too. My imagination got away from me and I began to wonder whether the "asian drivers" he reported were picking up bales of Cohiba leaf for specially culled rollers to roll Cohiba offshore for personal consumption. Maybe sent by the mysterious new owner of half of HSA? Or another elite with connections? Of course you'd need a blender as well. As I said this was the most interesting explanation I could come up with. 

If this is happening outside an isolated incident I would suspect you're right, it's bound for LCDH's, many of whom are no doubt facing oblivion moving forward.

12 hours ago, Cigarsmoker81 said:

I wouldn’t be too surprised if nc cigars will eventually increase their prices as global demand increases from outside of the US ( it could also mean they will produce more to meet demand I’m Not sure of how much they can scale production when/ if demands increase)

They are implementing price increases, but in line with inflation. NC market is much more price sensitive because there's actually competition and most of their sales are from the US, where they aren't really competing with Habanos. 

[Ryan]

Habanos wants to keep the income that parallel and secondary sellers are currently making. That's all.

They've done that before. 

The launch price of the 40th Anniversary Cohiba Behike was 375 euro per cigar, RRP. Within a few years prices doubled, quadrupled, eventually going to 15 times launch price on the secondary market. Habanos got none of that but they watched it happen.

Then they launched the 50th anniversary Cohiba Grandioso at 4,000 euro per cigar.

 

 

 

[MrBirdman]

9 minutes ago, Ryan said:

Habanos wants to keep the income that parallel and secondary sellers are currently making. That's all.

That I understand with respect to the Hong Kong especially while supply is so low. But it’s one thing to add extra zeros to highly limited premium products like you cited - it’s another to seek to reposition regular production onto another planet too. Especially if they plan to keep the current volume breakdown across regions, or try to return production levels to pre-COVID.

[Ryan]

2 minutes ago, MrBirdman said:

.. Especially if they plan to keep the current volume breakdown across regions. 

Habanos knows that people with the money to spend on Cohibas will travel to where they are available, or have someone travel for them. As they already are.

Volumes of Cohiba and Trinidad are low enough that they will all sell, regardless of price and the fact that they will be out of the price range of most current Cohiba and Trinidad smokers. There are enough big buyers.

Even if volumes do improve over the next 2-5 years. People who buy Cohiba and Trinidad will be used to the prices by then and buy the increased volume. If there is a glut of tobacco or cigars (hard to see from where we are but who knows), then Habanos can shift into higher volume vitolas, and decrease margin but increase revenue. 

Habanos knows that the way Cohiba and Trinidad prices are currently, they are leaving money on the table for parallel and secondary sellers. Habanos wants some or most of that money.

[MrBirdman]

22 minutes ago, Ryan said:

Habanos knows that the way Cohiba and Trinidad prices are currently, they are leaving money on the table for parallel and secondary sellers. Habanos wants some or most of that money.

Like I said, it makes perfect sense. We’ll have to see where things stand when the dust settles to really assess the move. There’s certainly room to increase price at current production - whether that includes tripling Trini prices remains to be seen. These “big buyers” weren’t snapping up all the Cohiba two years ago when nearly every vitola was available at lower prices than even 2022. 

If they are planning to keep production where it is and not increase it for the premium brands, major hikes are sustainable. That may very well be the plan. 

Also, as I mentioned earlier in this thread, if Habanos is eventually able to create a more reliable supply of their non-premium cigars than they were, this may prove an acceptable trade off. 

[benfica_77]

Been in this hobby for 10 years and this is definitely the lowest point for the community i have seen. 

I will say it on behalf of all of us when I say F$C%!!! Me!

Let's hope things turn around. 

[tjkoala]

1 hour ago, benfica_77 said:

Let's hope things turn around. 

Part of me thinks that this might be some foreshadowing by HSA on the current state of recently harvested crops. 
 

There was a post a few months back that linked to an article citing a few important notes. 1. Fertilizer isn’t being imported in high enough quantities 2. HSA sets the market price for tobacco 3. Farmers are switching to more profitable crops 4. The total volume of tobacco collected dropped in 2021 compared to prior years. I’d suspect the tobacco quality has probably suffered due to the same issues.

I believe what we’re seeing in the supply shortage and the HSA price increase is signaling that they know they’re far from the end of this supply issue and need to cool off the market pressure for CCs. Hopefully they’ll correct prices when things are looking better but I think they know they’re going to struggle to meet the standards expected for their super premium brands (Cohiba and Trini) and are trying to hedge for the lack of supply.  

[NSXCIGAR]

5 hours ago, tjkoala said:

There was a post a few months back that linked to an article citing a few important notes. 1. Fertilizer isn’t being imported in high enough quantities 2. HSA sets the market price for tobacco 3. Farmers are switching to more profitable crops 4. The total volume of tobacco collected dropped in 2021 compared to prior years. I’d suspect the tobacco quality has probably suffered due to the same issues.

This is only a factor for the 2022 harvest. The 21 harvest was above average and the 17-20 harvests were outstanding. The leaf to roll cigars through 2023 is plentiful. If it was true that all future harvests will be horrible raising prices now makes no sense. It's pretty clear the issues right now are a lack of rollers and transportation issues. 

Also many here have close relationships with farmers like Hector and Hirochi and would be able to confirm exactly what's going on with planting levels, fertilizer availability and the like. I also don't think there would be some kind of widespread processing issue with the leaf after it leaves the fincas. If the leaf looks good going to Tabacuba the leaf should come out good. 

[tjkoala]

7 hours ago, NSXCIGAR said:

This is only a factor for the 2022 harvest. The 21 harvest was above average and the 17-20 harvests were outstanding.

From a quality perspective, I think that’s fair and tbd on the 2022 crop. It is undeniable that volume is down and demand for CCs is undeniably high between new people getting in on cigars and panic buying. Anytime you see a 30% drop in supply you’ll have some issues meeting quota no matter how good the quality. The article linked cites below:
 

“The harvest has fallen from 32,000 tons in 2017 to 25,800 in 2020 and will likely reach only 22,000 tons this season, he said.”

[JohnnyO]

21 hours ago, MrBirdman said:

It seemed strange to me too. My imagination got away from me and I began to wonder whether the "asian drivers" he reported were picking up bales of Cohiba leaf for specially culled rollers to roll Cohiba offshore for personal consumption. Maybe sent by the mysterious new owner of half of HSA? Or another elite with connections? Of course you'd need a blender as well. As I said this was the most interesting explanation I could come up with. 

If this is happening outside an isolated incident I would suspect you're right, it's bound for LCDH's, many of whom are no doubt facing oblivion moving forward.

They are implementing price increases, but in line with inflation. NC market is much more price sensitive because there's actually competition and most of their sales are from the US, where they aren't really competing with Habanos. 

If you want to be naive about the Chinese capabilities to consume/assimilate economies then have it. They have no rules, they get you when you are weak. Slowly they absorb more and more of your market, especially premium products. I saw it for my work, 20+ years ago in the Caribbean consuming and destroying small selective markets. The same 20+ years ago I saw Chinese running around Havana with lists looking for master cases. Its different now, there are 1000X players with those lists. Those are front door sales. If you know anything about Cuba, the back door is always open. The people are starving, its not rocket science. John 

[MrBirdman]

4 hours ago, JohnnyO said:

If you want to be naive about the Chinese capabilities to consume/assimilate economies then have it

I wasn’t suggesting that wasn’t the case - in fact it’s what I was implying. Except you get called a racist in this country for saying it too directly 🥶

[El Presidente]

4 hours ago, JohnnyO said:

If you want to be naive about the Chinese capabilities to consume/assimilate economies then have at it. They have no rules, they get you when you are weak. Slowly they absorb more and more of your market, especially premium products. I saw it for my work, 20+ years ago in the Caribbean consuming and destroying small selective markets. The same 20+ years ago I saw Chinese running around Havana with lists looking for master cases. Its different now, there are 1000X players with those lists. Those are front door sales. If you know anything about Cuba, the back door is always open. The people are starving, its not rocket science. John 

Except for the fact that there are no Cohiba,Behike/Fundadores in Shanghai,Beijing,Tianjin, Guangzhou, Shenzhen, Chengdu. 

If they were rolling around in boxes  of Behike etal, I would believe half of what is being portrayed. 

The system is broken at it's source. No third party "bad guys"  need to be found. 

The problem is Cuba and not China. 

[NSXCIGAR]

15 hours ago, tjkoala said:

“The harvest has fallen from 32,000 tons in 2017 to 25,800 in 2020 and will likely reach only 22,000 tons this season, he said.”

I believe the 32k tons in 17 was a record at the time and 35k in 18 set a new record. I can't find anything about 19 but by all firsthand accounts it was at or around the previous two years. It appears 2020 was down about 10-15% and 21 was obviously a mess mainly due to fertilizer and COVID. There was the warehouse fire in Feb, only 1.5 tons or so were lost. I know as of Nov the farmers were quite optimistic.

Also, this just in:

https://www.cigars-connect.com/cohiba-prices-habanos-sa-formalizes-decision/

MAY 6, 2022  BY REDACTION

Cohiba prices: Habanos SA formalizes its decision

The Cuban group confirms the homogenization of prices for Cohiba, Trinidad and a number of other vitolas with Hong Kong rates.

The information was not yet official. It had been widely rumored by the exclusive distributors who were all informed of the new pricing policy at the end of last week. This Friday, May 6, Habanos SA sent L’Amateur the statement below which formalizes the policy of “world prices” aligned with Hong Kong on a certain number of cigars.

”Like every year at this time, Habanos SA has updated its sales prices to the distribution network for its entire portfolio. This 2022 [update] has been carried out taking into account the current demanding factors that affect all sectors, including luxury and the premium tobacco market, and a new global homogenization strategy in the highest segment of the price pyramid.

Cohiba’s unquestionable leadership worldwide, the strengthening of its position with new, even more exclusive projects, and the imbalance between supply (limited by the unique characteristics of the brand) and the unstoppable demand for its vitolas, place the brand number one of Habanos not only as the most exclusive in the world of premium cigars but at the level of the most exclusive brands in all luxury sectors. Habanos, S.A. has decided to reinforce this position and place Cohiba’s prices in a homogeneous way at a global level, taking the Hong Kong PVP as a reference.

This decision applies in a similar way to the Trinidad brand, which consolidates its position in the elite of Habanos brands, becoming the Habanos boutique brand par excellence.

Other vitolas and lines of unquestionable value in brands such as Montecristo, Partagás, or Romeo y Julieta also raise the prices of some of their most exclusive references, accompanying Cohiba and Trinidad and redefining the concept of luxury in the premium cigar sector.”

[El Presidente]

full of it