Theory on Cuban pricing

[vladdraq]

If they don't have enough supply why the heck would they lower the prices? I think HSA was wrong about the prices for years and we were lucky to get the best cigars in the world for cheap. 

[NSXCIGAR]

10 hours ago, Bigkahuna said:

Psst. Look at the automobile industry, real estate market and others. Have you attempted to place an order for an “exclusive” car lately ? Taken a domestic plane flight ? Reduce supply raise prices. It’s going on everywhere now. Sure inflation is acting as the nuclear moderator but the low supply price raising is occurring in nearly every industry. Heck, buy a smaller box of cereal and pay the increased price. In the end only time will tell. 

Not arguing reduced supply results in higher prices but you suggested prices are going to continue to rise implying further reduced supply, which would mean you believe 40% production isn't the floor. I would consider that to be unlikely at this point. 

10 hours ago, El Presidente said:

If they are in Cuba and they are not selling then it is a case of product being in the wrong market and not distributor hesitancy to purchase

If the distributors want them why would they keep them in Cuba? 

 

9 hours ago, vladdraq said:

If they don't have enough supply why the heck would they lower the prices? I think HSA was wrong about the prices for years and we were lucky to get the best cigars in the world for cheap. 

At 40% production they don't have to lower prices. That will change at some point in the near future. 40% won't always be the case. 

Also average prices for Cohiba have come down about 20% from June. In mid-June CoRo was $1500. Now it's down to around $1200. 

 

[El Presidente]

5 hours ago, NSXCIGAR said:

If the distributors want them why would they keep them in Cuba? 

 Cuba is treated as a market.

It is too early to determine required supply levels to that market. Too many changes in too short of a time frame. They are running at pre change numbers for now.

It will/should change as global market needs become apparent. Months away from that happening. 

My point is that siglo VI on Cuban shelves is due to  current distribution inefficiencies as opposed to distributors not wanting to take them.

UK/ME/Asia/China B&M would take every stick of Cuban Siglo VI based supply in a heartbeat if offered 

[vladdraq]

5 hours ago, NSXCIGAR said:

At 40% production they don't have to lower prices. That will change at some point in the near future. 40% won't always be the case. 

Also average prices for Cohiba have come down about 20% from June. In mid-June CoRo was $1500. Now it's down to around $1200. 

Maybe. 

But, in what I'm reading Cuba is on the brink of economic collapse. That might bring huge changes in their approach to the US. Some valid points above regarding the global economy, but I can't see HSA changing strategy just because Bitcoin is crashing, or Powell speaking (historically the SP500 is crashing when he's opening his mouth)

"Sin" sectors (alcohol, tobacco, games etc) perform well in recession. They might not move a lot of Cohibas, but the rest will sell. If I'm HSA I would continue to spin out very high end luxury products at high prices, feeding the "event" making needs and yes I would offer for the "common" people the usual. Also i would dramatically increase quality control.

[SCgarman]

2 hours ago, vladdraq said:

Maybe. 

But, in what I'm reading Cuba is on the brink of economic collapse. That might bring huge changes in their approach to the US. Some valid points above regarding the global economy, but I can't see HSA changing strategy just because Bitcoin is crashing, or Powell speaking (historically the SP500 is crashing when he's opening his mouth)

"Sin" sectors (alcohol, tobacco, games etc) perform well in recession. They might not move a lot of Cohibas, but the rest will sell. If I'm HSA I would continue to spin out very high end luxury products at high prices, feeding the "event" making needs and yes I would offer for the "common" people the usual. Also i would dramatically increase quality control.

How do you increase quality control in a country like Cuba where there is no incentive or advancement if you take pride in your job and are very good at what you do? You need to watch some interviews with Hamlet Paredes, and see why he chose to escape Cuba for the US and see how his life has been changed drastically. Unless you are part of the ruling class in Cuba, every job is a dead end with no upward mobility.

[vladdraq]

Sounds like a rhetorical question. I'm no expert, but i'll start with education. The deeper problem created in communist countries  is that the work ethic is non existent. 

 

[PigFish]

Time to replace the market makers! Imagine if two odd bedfellows, a nutty ozzy and a famous Cuban roller came together and made great cigars in classic sizes and tossed out the high cost of boxing and banding.

Could they not make a killing? 

[SCgarman]

1 hour ago, PigFish said:

Time to replace the market makers! Imagine if two odd bedfellows, a nutty ozzy and a famous Cuban roller came together and made great cigars in classic sizes and tossed out the high cost of boxing and banding.

Could they not make a killing? 

I fired up a second one last night. It is a great stick, size wise and flavor wise. And perfect draw and burn, unlike some Habanos which are all over the map.

[cigaraholic]

Finally getting to travel...Italy...UK...Spain..and now back to Italy, only seen boxes of 1 brand stacked on shelves....it starts with a T

[Nevrknow]

7 hours ago, cigaraholic said:

Finally getting to travel...Italy...UK...Spain..and now back to Italy, only seen boxes of 1 brand stacked on shelves....it starts with a T

Twisher Sweets?

 

🤣🤣

[jakebarnes]

5 hours ago, cigaraholic said:

Finally getting to travel...Italy...UK...Spain..and now back to Italy, only seen boxes of 1 brand stacked on shelves....it starts with a T

Been seeing a lot of Troyas as well

[Miguel Gracias]

Stocks are being filled, not so many of them have been sold. Esplendidos became available since two months ago and singles still available from same box.

[mprach024]

1 hour ago, Miguel Gracias said:

Stocks are being filled, not so many of them have been sold. Esplendidos became available since two months ago and singles still available from same box.

Where is this at?

[Miguel Gracias]

1 hour ago, mprach024 said:

Where is this at?

Dutch Caribbean island, one of ABCs.

[Lunettesman]

Has anyone noticed that since the price hike, people on Instagram seems to smoke more Cohiba than ever? I know it's a site where people show off but i didn't see it coming. 

[Nevrknow]

Why I only post here. We're not bragging. Moe along the lines of if we passed and I asked what you were smoking. 👍

[mprach024]

12 hours ago, Miguel Gracias said:

Dutch Caribbean island, one of ABCs.

Guessing Willemstad

[HarveyBoulevard]

3 hours ago, Lunettesman said:

Has anyone noticed that since the price hike, people on Instagram seems to smoke more Cohiba than ever? I know it's a site where people show off but i didn't see it coming. 

I think that was their goal.  I'm not on the 'gram but they wanted all the baller's to be smoking the Cohiba so maybe they won?

[Fugu]

4 hours ago, Nevrknow said:

Why I only post here. We're not bragging.

No, we’re really not, today’s smoke:

(Self-chastening for my inability to track town the cigar I really intended to smoke 😂😂😂)

[Enduin]

Toscanos are no doubt the kings of ugly, but if I gotta be honest I'd rather smoke a Toscano than a peppery NC...

[NSXCIGAR]

On 8/27/2022 at 3:42 AM, El Presidente said:

Cuba is treated as a market.

It is too early to determine required supply levels to that market. Too many changes in too short of a time frame. They are running at pre change numbers for now.

I know it's a separate market. I was assuming HSA wouldn't be stupid enough to allocate anything there right now. Who's going to Cuba and of the few who are who's buying $2,000 Siglo VI there?

They could always go around scooping the stock back up from the LCDHs. 500 boxes of Siglo VI would bring in close to a million dollars in immediate revenue if exported to those who apparently are begging for it. 

On 8/27/2022 at 7:22 AM, vladdraq said:

The deeper problem created in communist countries  is that the work ethic is non existent. 

The deepest problem is that people run for their lives from communist countries. Can't get work out of freed slaves.

10 hours ago, Lunettesman said:

Has anyone noticed that since the price hike, people on Instagram seems to smoke more Cohiba than ever? I know it's a site where people show off but i didn't see it coming. 

When super premium NCs raise their prices in response they'll move to those. I would imagine social media is all about the high price, hence the recent uptick in Cohiba. Next year it'll be back to Gurkha or whatever $200 cigar is hot. 

On 8/27/2022 at 4:22 AM, vladdraq said:

but I can't see HSA changing strategy just because Bitcoin is crashing

They'll have to change strategy when HSA revenue plummets. Remember, the Chinese own 50%. You think they'll tolerate a 40% revenue drop due to lack of rollers? They'll pull Uyghurs out of the concentration camps to roll if needed.

On 8/27/2022 at 4:22 AM, vladdraq said:

If I'm HSA I would continue to spin out very high end luxury products at high prices, feeding the "event" making needs and yes I would offer for the "common" people the usual. Also i would dramatically increase quality control.

There's a limit to that buyer pool. The majority of CC smokers are not high-end luxury buyers. I'm not. The overwhelming majority here aren't. Most of Europe--the largest market--isn't. What you're seeing right now is essentially your suggested strategy. It's not working and it won't work.

There's a reason Porsche has had record revenue growth in the last 15 years. Starting with the Boxter and in 2003 the Cayenne they have made more, and more affordable cars without compromising the brand too much. They aren't making these record profits with 911 Turbos. Too limited of a buyer pool. Increasing production and your buyer pool is the ticket to higher revenue since the beginning of industry. Ask Henry Ford. 

As far as QC, aside from the fact that NC QC is overrated and CC underrated you're likely looking at a diminishing returns issue. The cost to implement it probably outweighs the increased revenue. At today's QC levels I don't know anyone who buys NCs instead of CCs solely because of QC. Or who buys less CCs (other than Cohiba maybe) because of it. It kind of is what it is. I have about a 10% failure rate. Getting it to 5% would be very difficult and likely not worth it.

Now, in the early 2000s when we were dealing with 30-50% failure rates it was worth the investment to bring it down. It was so bad that CC QC reputation still hasn't fully recovered 20 years on even though the problem was effectively solved by 2004. 

[dageshi]

I run a UK cigar subreddit and the majority of our users are relatively new smokers.

I've seen a trend from Cubans to NCs since the subreddit started. Gradual at first but has certainly accelerated recently. The overwhelming majority post about NCs now, in the earlier days it was a much more even split with Cubans edging out NCs.

Still as has been explained in this thread, Habanos obviously has no choice, they don't have the supply.

What I wonder is, if they lose much of their market share to NCs on the lower end, which seems inevitable to me at this point? How much of their offering no longer makes sense? Do we see a mass culling vitolas that simply make no sense in this new world?

 

 

 

[Fugu]

11 hours ago, Enduin said:

Toscanos are no doubt the kings of ugly, but if I gotta be honest I'd rather smoke a Toscano than a peppery NC...

My sentiment exactly. What I like about them: They’re totally honest about what they are.

[HawkI84]

On 8/23/2022 at 11:07 PM, AlohaStyle said:

Not so sure Cohiba and Trinidad has missed the mark...  2 days in a row I saw here of Cohiba selling at the new prices, sold out.  Same with Trinidad Esmeraldas today.  And this forum is made up of mainly regular Joe buyers... 

There's another site that's rather popular that's had a lot of the Cohiba line that would sell out in seconds (Maduros, Espys, Robustos) available for weeks, if not over a month now though. Even some BHK's took weeks to move at the new pricing. Trinidads appear to be moving pretty slowly there too.

When some of the other popular stuff that saw a hike, but not to the same extent (PSD4's, Epi 2's, Monte 2's, etc) show up those are typically gone very fast still, though.

[vladdraq]

that's my point @HawkI84, regular production will sell at new prices, even people thinking they got them for "cheap". Absolutely Cohiba and the rest of the crazy bunch will sell very slow, compared to before.