Third Quarter 2024 Report Card.

[El Presidente]

 

The year is getting away from us as another season changes. It is a good time to give a 2024 update 

 

Supply

 

Stock has steadily increased throughout 2024. From February to late August 2024, we have seen a 19% increase in overall stock numbers with the needle really moving over the past 12 weeks. You have seen increased stock numbers and stock breadth on 2024 as a result. 

We have been advised to see a similar % increase again as we move into 2025. 

On the surface that is good news. What we really need however is a greater increase in stock breadth in cigars that have been hard to find over the past 4 years. Punch DC/Partagas 898 etal are still off radar. HDM DC/Sancho Belicoso etc are dribbling through on small quantities. Habanos still hasn't managed to persuade Tabacuba to produce a consistent product mix to meet existing market needs. Sure there are plenty of Monte 2 / D4/ Epi 2 but the market can't survive on salad alone, be it good salad. I am hopeful things will improve slightly over the coming months but 2025 will be the acid test for Habanos. 

 

Cohiba/Trinidad 

The needle has moved somewhat for Trinidad. The London Trinidad event indeed was a success particularly introducing new markets to premium Trinidad. Casilda has been an absolute winner for HSA on two fronts. One: a sales gargantuan. Two: Positioning Trinidad as a serious premium brand  in markets previously largely uninterested in the marque. 

The bycatch has been a marginal but measurable increase in sales of other Trinidad. The catch is that they are not seeking to convince old Trinidad buyers. They are seeking new "moneyed" Trinidad buyers/markets. 

Cohiba (existing lines) have had a tough run in 2024. The market is still adjusting to the new price normal. It will be interesting to see how Habanos manages the demand/supply equation. 

Specialties 

Generally, they continue to boom as long as they are large, expensive and with perceived scarcity. Cohiba Siglo Oro is an example of what occurs when a release is poorly conceived. Lessons learned I suspect. 

 

Markets

There has been some softening of the mainland Chinese market but let's not fool ourselves, it is still a monolith. Domestic economic softening accompanied by price pushback has seen a plateau over the past six months. Middle Eastern market continues to fire as does the London.  London stores have never been busier. Most other major European markets are climbing back albeit at a slower pace. Stock supply is still an issue in many of those markets but they are also still road mapping a product mix (CC/NC) that enables them to engage and meet the needs of their unique client mix. Each market is different. Each store within that market is different. Challenges a plenty. 

The US market continues to pump along. It is not what it once was in terms of unit volume but largely the same in terms of dollar volume. This is to be expected as the US was once the beneficiary of the cheapest Cuban cigars outside of Cuba. Global price standardisation (largely) has taken care of the anomaly. 

Non Cuban (Internationally)

Mixed bag. Those that do it well, (Oliva/Fuente/Drew Estate/Plasencia etc) AND who have production capacity to meet those markets are finding the going good. Boutique brands are struggling. Even larger and well known manufacturers who don't have capacity are finding the going challenging. Many are also finding that Asian and European tastes are not suited to their blends and size offerings. Some have gone back to the drawing board and are making a concerted effort to redesign their European/Asian mix. Others are looking at their US hold/volume and are wondering, "why bother". 

Our own BR Petit 109 Linea D number 6 has hit the ground running. We (Fabrica 5) are now making cigars for the Japanese/Malaysian/UK markets with a 2025 order book for Canada/Middle East/Hong Kong.  Our blends are well tailored for the traditional Cuban palate. That shouldn't come as a surprise as that is our background. 

 

Well that brings you up to date. Overall things are better but as always in this industry, you are only one asteroid  away (likely Cuba) from the situation turning upon its head once again. 

 

Overall Grade:   C +  

 

[Marco_011t556]

Congrats on success of Fabrica 5! As big fans of Partagas, hopefully we can see more Lusi, 898, E2, and Salomon !

[gormag38]

Thanks for the update prez. It certainly has seemed like we've seen an uptick in stock the last quarter or so. The 2424 offerings have been tremendous imo. I've even started to see some 898 being rolled again, yet in very small quantities I'm sure. (much like the mdo4s earlier in the year). 

The big thing that I have noticed (in the last quarter or so) is that stock seems to be sitting longer than what it once did. For instance, right now I could go on a few different grey market sites and find winnies or punch dc. I wonder if the appetite for cc's is fading or are people just finally getting tired of being bent over the barrel? Have you and your team noticed a decline in the number of sales you've been having? 

[Bobby237]

Great update Prez! 

[El Presidente]

9 hours ago, gormag38 said:

Have you and your team noticed a decline in the number of sales you've been having? 

Overall no. Geographic distribution of those sales certainly. 

US has dropped off but are approx 75% of our Fab 5 (Nudie/MOFOH) sales.

Asia and ME have largely taken that US CC share. Those two markets are traditionally wary of grey market. 

[Jaks93]

Appreciate the detailed write-up @El Presidente! Unlike the BBC, I'm already looking forward to see what the next bulletin entails. It's nice to finally see some green shoots emerging since the COVID madness albeit prices have skyrocketed since. Not good news for my bank balance of course! 😅

 

[ThePolskiOgorki]

Thanks to @El Presidente for the report.

Has anyone been to Havana or elsewhere on the island recently? Any signs of missing in action sticks, mainly the DC sizes or is it likely that what is being made is getting sent to the big markets?