“Elevate Our Customer” FAILS - a plea to hear us (LONG READ)

[zeedubbya]

Ok so I had to put this down.  Couldn’t wait any longer.  Mods, please delete if not appropriate.  

TL:DR— Culture Flight is a real thing, and HSA is going to sink this ship on the continued trajectory. “Elevating our consumer”  DOES NOT work!  

Have been collecting and smoking cigars for about 20 years, 10 seriously. This is going to be controversial and has been discussed a lot I’m sure, but I’m coming from a point of passion, previous experience and close analysis based on economic fact and not just pulling from my arse. I felt like this specific plea needed made, or maybe I just needed to get it out.  

It’s very simple to see how massively the price of Cuban cigars has increased over the past few years, but what may not have been discussed much is the anticipated impact this is going to have on the market (our love and hobby) long-term.  This is how I see it— this is my opinion alone, and no one else.

I have seen two medium/large businesses massively harmed due to what’s happening in the Cuban cigar market right now.  I call this “Culture Flight.”  And here’s how it goes…

On the backside of world-wide economic downturns is a recovery.  A recovery to normalcy.  With this comes a small bubble in which there’s more money in the system than supply and near-sighted corporate “brains” see an opportunity.  An opportunity to raise the “quality of their customer”—a term which makes me feel VERY queasy. In meeting rooms all over the world it goes something like this.  

“The general public is willing to pay more for our product than we can produce so why aren’t we increasing our prices to match this? They all look around at each other and say - “Yeah, why shouldn’t we be reaping the benefits of these prices instead of our [vendors, franchisees etc.,]. They all look around and say, “We shouldn’t” so they push up the prices and high five each other for their brilliant idea. An idea which has been around for centuries. For about a year it works, and they look genius. Then, what happens? The middle to low level  consumers who carry a torch for the businesses culture flee faster than rats from a fire.They come back to the boardroom and say, “What should we do?” And then comes, “We have always wanted to have an elevated customer base right?” Let’s keep them right where they are, and then we will have a loyal base of customers who are more well off financially, educated and influential than before and they’ll most certainly pick up the slack of our lost lower-tier customers. Our wealthy customers are loyal and would never abandon us, and we didn’t want those “poor people” as our consumers anyway. In fact, let’s raise the prices even more-let’s push it. Let’s elevate our product to the status it deserves. It’s apparent people will pay for it and we can’t be wrong about this. We have been making record profits the last few years, we couldn’t have done anything wrong. So they raise prices further. One day when all the confetti is being swept up someone says, “what happened?” and they all sit around and say “It was the market, it got us, these things are cyclical, we just have to push on and it’ll be ok on the other side, once the wave comes roaring back up again, we have to ride it out.” And then when the wave doesn’t come back, they begin to point fingers at their franchise owners and or vendors and say - step up, build a new business, a new business model, a new staff, new facilities, get with it - we’re elevating our customer and YOU are chasing them off. Finally, the collapse happens, and they’re out on the street to wonder “what happened, but, but…we made record profits in 2024!” 

Sorry so long— so how does this relate to Cuban cigar sales. It’s happening right now of course. We are seeing the “elevate our customer” phase and we are watching the bulk of the buyers flee the market-the people who actually buy these CONSUMABLE products. We are seeing vendors jump ship because these are where the intelligent businessmen and women are positioned. They find other opportunities, and make other businesses. Slowly, stealthily they creep away from the one which is pushing them to “elevate the customer base, you bums!” And so, how does it end?  

The first time a massive influx of supply gets passed on by consumers they can manage. The second time is where it breaks. But it’s too late. The culture is dead, loyalists have moved on and the wealthy are out chasing the next shiny, popular thing. Vendors and franchisees have moved on and washed their hands of it. And there’s a HUGE problem. The cost to hold the inventory is too high, people get let go (because this is the easy solution), budgets get slashed and finally, someone else buys it out. And we start all over again with an inferior product due to inevitable cuts, and new people working to find a way to move off of depressed/unwanted supply. IF the new owners can find a way to bring back the culture they had, they may be able to save the business but it’s unlikely. The damage is done, and it’s permanent. Maybe a junk business buyer picks it up and liquidates what they can to salvage a small profit, but the business goes up in smoke. G O N E
 

Friends, I think this is possible, even probable. With the terrible humanitarian crisis in Cuba plus this insane price increase it’s bound to happen. It makes me extremely sad. Saddened someone didn’t jump in and say - “Let’s save this because it’s worth saving.” THE culture is worth millions, possibly billions, BUT I really think it’s too late. In my opinion the ONLY hope we have is IF there’s no supply shock. IF supplies truly do stay low and remain in line with these insane prices. If they don’t, I really do fear it’s lights out within 10 years. Sadly. I’m not sure this storm can be weathered by a fragile economy already. I think HSA will be defunct by 2035 if they do not get a grasp of what’s really going on in the world and excercise some easing. Realizing, their average consumer is not what they think. Vendors, if you are reading this, please please, while you protect your business also try and help to save this hobby we all love so much. You too have reaped huge financial rewards from us over the years and we want to stay.  We are being offered no choice though. THINK— those boxes of Trinidad aren’t flying off the shelves, they’re sitting. These absurd regionals and special releases are not being snatched up like before. Most telling, reg production 10 count boxes of Robustos are not moving. The writing is there on the wall. You are losing this battle, and you will lose this war. We aren’t asking you to shutter your doors, and in fact we have supported you in your efforts to make something available for your buyers. Here’s a dose of truth. All over the world are people who collected cigars prior to 2022 and they are under cutting your stock with already aged product. 

The PCC regional put up today is an exciting release for us who have been doing this for a while. Julieta 2 LFDC should be gone! LFDC Diadema are exciting, thrilling even, but they aren’t at the price I can buy a box of 5-10 year old Winnie’s or Espys. We are not in a global pandemic any more, the money has been spent, inflation is taking hold, markets are pulling back. It’s right in front of you!  We are looking squarely at you because we don’t have any other advocates. There’s no future here… none. The people HSA hopes will save them aren’t going to stay—I assure you.  

Thanks for reading if you made it this far, I sincerely, truly, genuinely hope I am wrong. I told you so would be the best thing which could be told to me in 10 years! PLEASE DO NOT LET THIS “Culture Flight” continue, we all desperately want to stay, but we are being given no choice.  ZW

[Puros Y Vino]

As a mod, there is nothing wrong with your post.  It comes across as a bit frenetic, like you were trying to smoke a DC in 20 minutes while typing it. 😛

The world we live in, is seeing an increase of wealth moving upwards towards the few. Those few, apparently like luxury products like wine, spirits, cars, watches etc and cigars. So, Habanos sees this as their new target market. Increase all prices, especially on premier brands, make fancier releases in pretty boxes, with less cigars to boot. It's somewhat galling that a nation founded on Socialist/communist revolution is catering to the Capitalist class. Follow the money I guess? Each ideology has exploitation of labour as it's one common thread.  😒  With that said, I do think there are some real pressures Habanos is reacting to. First off, dwindling tobacco crops due to inclement weather or other factors. So less leaf overall. Any quality leaf is best used in premium product with higher profit margins. Another pressure is that many of their markets, there is an increase in anti-smoking sentiment. As a Canadian, we have high tobacco taxes and nowhere to smoke indoors socially, besides our homes and even most public places are hit with by-laws prohibiting smoking. Habanos reacted to our market forces by stopping the production of Canadian Regionals and possibly relegating us to receiving less product overall. Scarcity of CC's worldwide is real. But what little you have is best sent to places where there is higher disposable income and favourable smoking conditions? Probably a sound business decision by Habanos (yes, that's rare) but it comes across as personal to many of us here that have been consuming their products for years and just cannot just ship to the NC world. It's like having to switch from your favourite wine to drinking Budweiser when you feel like imbibing. While Habanos chases the despot class with shiny boxes and extra bands, they IMO have given the NC makers a gift to fill the void. But many of them are tripping over themselves by upping their prices to appear that they are on par with CC offerings vs trying to lure disillusioned CC smokers over to their wares. Personally, I think this is never going to bounce back. Once you've placed your product lines in the upper echelons, you can't lower your prices should your sales falter. You're stuck marketing to the segment you chose to sell to. You don't' see exotic car producers lowering prices during the last few economic dips we've had. If anything, they too are also putting out higher tier products to their even wealthier clients. Very limited runs or even 1 of 1 cars, specially ordered. They're even at the point where if you want to buy these premium products, you must have X amount of their cars purchased as a minimum to apply to buy them. I bet that's next up for Habanos too. Want a Cohiba 60th humidor? Let's see how much you've already spent with us first. 

[zeedubbya]

5 hours ago, Puros Y Vino said:

 

As a mod, there is nothing wrong with your post.  It comes across as a bit frenetic, like you were trying to smoke a DC in 20 minutes while typing it. 😛

The world we live in, is seeing an increase of wealth moving upwards towards the few. Those few, apparently like luxury products like wine, spirits, cars, watches etc and cigars. So, Habanos sees this as their new target market. Increase all prices, especially on premier brands, make fancier releases in pretty boxes, with less cigars to boot. It's somewhat galling that a nation founded on Socialist/communist revolution is catering to the Capitalist class. Follow the money I guess? Each ideology has exploitation of labour as it's one common thread.  😒  With that said, I do think there are some real pressures Habanos is reacting to. First off, dwindling tobacco crops due to inclement weather or other factors. So less leaf overall. Any quality leaf is best used in premium product with higher profit margins. Another pressure is that many of their markets, there is an increase in anti-smoking sentiment. As a Canadian, we have high tobacco taxes and nowhere to smoke indoors socially, besides our homes and even most public places are hit with by-laws prohibiting smoking. Habanos reacted to our market forces by stopping the production of Canadian Regionals and possibly relegating us to receiving less product overall. Scarcity of CC's worldwide is real. But what little you have is best sent to places where there is higher disposable income and favourable smoking conditions? Probably a sound business decision by Habanos (yes, that's rare) but it comes across as personal to many of us here that have been consuming their products for years and just cannot just ship to the NC world. It's like having to switch from your favourite wine to drinking Budweiser when you feel like imbibing. While Habanos chases the despot class with shiny boxes and extra bands, they IMO have given the NC makers a gift to fill the void. But many of them are tripping over themselves by upping their prices to appear that they are on par with CC offerings vs trying to lure disillusioned CC smokers over to their wares. Personally, I think this is never going to bounce back. Once you've placed your product lines in the upper echelons, you can't lower your prices should your sales falter. You're stuck marketing to the segment you chose to sell to. You don't' see exotic car producers lowering prices during the last few economic dips we've had. If anything, they too are also putting out higher tier products to their even wealthier clients. Very limited runs or even 1 of 1 cars, specially ordered. They're even at the point where if you want to buy these premium products, you must have X amount of their cars purchased as a minimum to apply to buy them. I bet that's next up for Habanos too. Want a Cohiba 60th humidor? Let's see how much you've already spent with us first.

It took me 2 days of editing and thinking about what to write on this, and I avoided using AI even though I wanted to so badly. The frenetic tone of it is on purpose - I wanted it to be taken as “afraid”, so I am happy this came across.

I agree with your entire sentiment as well and I think you have added to my point and I appreciate it quite a lot. I sincerely appreciate you saying “once you market to this segment, there’s no going back” it’s true, and I have seen it first hand. I will give an example. Ford stopped making cars for the US market. They don’t have the Focus, Fusion, Fiesta or a full size car any more. While they are seeing slightly “better” overall profits, their sales numbers are declining dramatically and continue to, because they have chosen to sell to an “elevated consumer.” What they cut off was older people on retirement income, and young, new to the market buyers. Which clearly will crush long-term sales as more of these people are forced to move to Kia, Hyundai, Honda, and Toyota to be able to afford a new car, and they tell their friends and family about buying a brand which isn’t Ford.  Same effect here. A very unfortunate culture flight. Which is also the complete opposite of Henry Fords vision for the company.  

Companies like Ford and Habanos probably won’t totally fail in the long-term but I am certain, this isn’t the way forward. Diversifying your product line IS the way. One thing the wealthy are VERY bad at is brand loyalty and culture creation (have seen it first hand). I imagine a micro segment of people buying Linea [insert whatever Marca here] and actually smoking them and saying— I’d like to buy 20 boxes of these to age. This image is totally laughable!  

[HenryMartin]

How long will the Far East dictate the market of Cuban cigars? Together we observe whether a bubble will burst. Tick-Tock - pun intended.

[Shakey]

Spot on post. I’d just add that what HSA is trying may work, it’s not guaranteed to fail. Currently about 50% of non-essential consumer spending is done by the wealthiest 10% of consumers. Some brands (Hermes and Rolex good examples) have increased prices and production numbers while still selling everything they make by continuing to appeal to that 10%. Others (Coach and Cartier are good examples) got hammered trying to do the same and slipping downmarket. All sellers want to be the brand of choice for the price/economy insensitive top 1% of consumers but only a few brands get to do that. 

Also, it’s complete rubbish to blame “the Chinese” consumer for price increases. An Asian buyer with money in hand has the same right to buy a product as anyone else. The fact that an artificial trade barrier kept 1B consumers out of the market doesn’t make it their fault when the barrier is removed. 

[Puros Y Vino]

8 hours ago, Shakey said:

Also, it’s complete rubbish to blame “the Chinese” consumer for price increases. An Asian buyer with money in hand has the same right to buy a product as anyone else.  The fact that an artificial trade barrier kept 1B consumers out of the market doesn’t make it their fault when the barrier is removed. 

This is interesting. What few Chinese I personally know that go back and forth to China tell me the same thing. The Chinese market, while it loves Cohiba and has been paying the premium for it, is starting to get fed up and chase "lesser" brands to enjoy for themselves but are finding price hikes on those egregious. So, they're buying is slowing down. Cohiba and Trinidad is seen as the "grease" for building business relationships, so the price there, does yield benefits for them. The other brands getting more expensive, that they want to smoke, is starting to piss them off.

[zeedubbya]

8 hours ago, Shakey said:

Spot on post. I’d just add that what HSA is trying may work, it’s not guaranteed to fail. Currently about 50% of non-essential consumer spending is done by the wealthiest 10% of consumers. Some brands (Hermes and Rolex good examples) have increased prices and production numbers while still selling everything they make by continuing to appeal to that 10%. Others (Coach and Cartier are good examples) got hammered trying to do the same and slipping downmarket. All sellers want to be the brand of choice for the price/economy insensitive top 1% of consumers but only a few brands get to do that. 

Also, it’s complete rubbish to blame “the Chinese” consumer for price increases. An Asian buyer with money in hand has the same right to buy a product as anyone else.  The fact that an artificial trade barrier kept 1B consumers out of the market doesn’t make it their fault when the barrier is removed. 

The only thing I’ll add to this Shakey (and this isn’t a disagreement) is seeing cigars in the same vein as Hermes, Rolex and Dior is probably the biggest lie someone can tell themselves. These are consumable!  Even if they aren’t used in this manner, it only takes ONE box to “flex”. This WILL BE short lived. I am 100% confident in this. No way there’s enough people out there to sustain the portfolio of cigars. Rafael Gonzalez is not a flex, Sancho, even Petit Coronas at all. Which sort of brings me back to my main point. Leave those alone, run up Trini, Cohiba and other Linea lines if you wish. Who’s going to smoke 20 boxes of D5 or Punch Punch or HUHC? Not people looking for a flex. Also, the few people I know in the top 1% of wealth, they don’t do this. Maybe 10% of the top 1% would do it? Which leads me to conclude…this ship is sinking, and for some really dumbass reasons.

[LaoFan]

I can assure you that as long as supply doesn't grow 10x, the Asian market will happily take anything others are priced out of. 

The BHK gala gift was being sold left and right for 2-3x the ticket cost at NYSE speeds.

The idea that Chinese are only buying cigars to 'flex' isn't entirely accurate. While it, as anywhere, is certainly a portion of the market, the majority of my Chinese friends smoke/collect/love/have tasting notes for their cigars the same as anywhere else.

[zeedubbya]

I never specified any country at all. I believe any references are to the Chinese control over HSA. My original post has nothing to do with any culture or country at all!

[Shakey]

6 hours ago, zeedubbya said:

The only thing I’ll add to this Shakey (and this isn’t a disagreement) is seeing cigars in the same vein as Hermes, Rolex and Dior is probably the biggest lie someone can tell themselves. These are consumable!  Even if they aren’t used in this manner, it only takes ONE box to “flex”. This WILL BE short lived. I am 100% confident in this. No way there’s enough people out there to sustain the portfolio of cigars…Rafael Gonzalez is not a flex, Sancho, even Petit Coronas at all. Which sort of brings me back to my biggest point. Leave those alone, run up Trini, Cohiba and other Linea lines if you wish. Who’s going to smoke 20 boxes of D5 or Punch Punch or HUHC. Not people looking for a flex. Also, the few people I know in the top 1% of wealth, they don’t do this. Maybe 10% of the top 1% would do it.? Which leads me to conclude…this ship is sinking, and for some really dumbass reasons.Spot on post. I’d just add that what HSA is trying may work, it’s not guaranteed to fail. Currently about 50% of non-essential consumer spending is done by the wealthiest 10% of consumers. Some brands (Hermes and Rolex good examples) have increased prices and production numbers while still selling everything they make by continuing to appeal to that 10%. Others (Coach and Cartier are good examples) got hammered trying to do the same and slipping downmarket. All sellers want to be the brand of choice for the price/economy insensitive top 1% of consumers but only a few brands get to do that. 

 Very thoughtful reply, thank you. I share your hope that production increases, the hype fades, and cigars return to the humidors of people who love to smoke them. 

[HenryMartin]

No one is blaming no one because there is nothing to blame. Its market dynamics, no one is at fault. Why should/would there be? The dynamic as it is today is that the Far East buying behaviour leads the market. HSA follows suit, riding the wave while it lasts. Perhaps it will begin to saturate, perhaps not, for HSA its probably irrelevant.

[BrightonCorgi]

With all you said and add that governments around the world are trying to put tobacco businesses out of business. You'd think HSA would want to dig in deeper to hold or gain ground as a relevant product when globalists are against you.

[chasy]

I've owned several consumer businesses and have raised and lowered prices, run promotions and discounts and played around with pack sizing - all to maximize my profit while not totally throwing off my consumer. I have never, not once, been in a meeting where we discussed "elevating our customer." I'm not saying it doesn't happen, but I've never seen or done it. Typically we would increase price when our costs increased - and even then it wasn't always a 100% pass through. We would increase price when we were low on inventory (Covid era) and knew we were going to sell out of our products before we could replenish (we would also cut our marketing / advertising because, why spend money on ads when we were going to sell out of the product regardless). We would increase (and decrease) price as a reaction to what our competition was doing. And we would adjust price due to seasonality.

In short, we constantly tinker with pricing as to maximize profit (which is quantity x margin) while being mindful of the impact it might have on our consumer.

I don't love the massive increases in CCs at all, but unfortunately it seems to be working (accepted by the consumer) pretty well. I would have hoped that HSA could have figured out the production side of the equation in order to solve for increasing their profits (e.g. make more), but that seems unlikely so they have taken the margin approach with increasing prices.

I don't think most consumer management teams are conspiring to F over their legacy consumers, they just have to prioritize profits which has an impact on the consumer. As an example, Tesla has dramatically decreased the price of its vehicles to play the scale game - they could have taken price, but they solved for 10x production. So there are examples of companies going the opposite way.

[Puros Y Vino]

I've worked in once place where there as an "elevating our customer" experience. But it was more in the vein of "fire some customers". I used to manage datacentres and provide hosting services. Some of the metrics we captured were how much "support" certain clients were using. There was a sweet spot of how many tickets/calls per month that we considered normal, course of business type events. Some clients exceeded that. Especially in cases where we were not fully managing their environment. So, our management team decided to not renew contracts for certain clients paying 4 figures/month in favour of those paying greater than five figures/month. I developed good relationships with all my clients as Operations Manager. And although I wasn't the one to tell them they had to find another provider, I had to listen to their pleas. Some were hurt, some were pissed as you can imagine. Depending on the amount of equipment you have deployed, it can be a burden. We helped where we could do so at minimal cost to us. Truth be told. It kind of worked out well. Our higher paying clients were less bothersome to begin with and now with the more problematic ones gone, I could commit my resources to handling tickets and project work far better, with less demand for OT from my staff to fix major issues. With that said, we were in the service business, not widget business like Habanos is. We weren't playing with pricing vs looking for ways to run more efficiently.

[BrightonCorgi]

It's common in the IT business to drop some customers if they consume too much engineering/support cycles for only so much ARR.  

[chasy]

54 minutes ago, BrightonCorgi said:

It's common in the IT business to drop some customers if they consume too much engineering/support cycles for only so much ARR.  

For sure, in services businesses there are bad customers and even unprofitable ones. In my world of consumer we didn't really have it - maybe someone who always claims a product is damaged and requests a refund - but even then, when you're selling a $20 product, you just give the refund. We never had to fire a customer.

[zeedubbya]

On 3/14/2025 at 11:20 PM, BrightonCorgi said:

With all you said and add that governments around the world are trying to put tobacco businesses out of business. You'd think HSA would want to dig in deeper to hold or gain ground as a relevant product when globalists are against you.

Love this add on, very well put.  

On 3/15/2025 at 12:35 AM, chasy said:

I've owned several consumer businesses and have raised and lowered prices, run promotions and discounts and played around with pack sizing - all to maximize my profit while not totally throwing off my consumer. I have never, not once, been in a meeting where we discussed "elevating our customer." I'm not saying it doesn't happen, but I've never seen or done it. Typically we would increase price when our costs increased - and even then it wasn't always a 100% pass through. We would increase price when we were low on inventory (Covid era) and knew we were going to sell out of our products before we could replenish (we would also cut our marketing / advertising because, why spend money on ads when we were going to sell out of the product regardless). We would increase (and decrease) price as a reaction to what our competition was doing. And we would adjust price due to seasonality.

In short, we constantly tinker with pricing as to maximize profit (which is quantity x margin) while being mindful of the impact it might have on our consumer.

I don't love the massive increases in CCs at all, but unfortunately it seems to be working (accepted by the consumer) pretty well. I would have hoped that HSA could have figured out the production side of the equation in order to solve for increasing their profits (e.g. make more), but that seems unlikely so they have taken the margin approach with increasing prices.

I don't think most consumer management teams are conspiring to F over their legacy consumers, they just have to prioritize profits which has an impact on the consumer. As an example, Tesla has dramatically decreased the price of its vehicles to play the scale game - they could have taken price, but they solved for 10x production. So there are examples of companies going the opposite way.

Appreciate your input, and I have massive respect for your business not doing this and going about it the right way, but it’s being done in a lot of business, and yes it works for some.

Sometimes it’s a side effect of not understanding pricing dynamics. Price is simply determined by scarcity and demand and is usually rearward looking. Companies have a difficult time gauging future scarcity and demand. It takes a true expert team, as in Teslas case, to figure this out (great example). I would be more likely to believe HSA is trying to match up scarcity and demand IF Cohiba, Trinidad and other product wasn’t sitting on the shelves. I believe they are doing what they always do, and being reactionary to a market which has quieted down for 2 years plus. The pandemic created a unique situation for retail to react rapidly to scarcity with prices higher than what the market would demand. This was due to a massive inflow of unearned capital to drive the demand. People who normally didn’t have money suddenly had it. Since they didn’t raise prices at the opportune time, they are playing catch up. Looking way back and saying, we can demand insane prices for our product.

The key part they have missed is the flight of their core buyers. People who normally would buy 5-7 boxes of D4 or BBF are not doing so. A lot of these people were leaving. So they reacted by increasing prices even more and put pressure on their vendors to join them. The raising of prices further demonstrates their willingness to potentially say goodbye to a segment of consumers forever. Which is most assuredly an attempt to elevate their consumer and leave behind a large portion of their market.

Yes, maybe it works, but I don’t see it. We shall see. If they wish to make this work they will most definitely have to raise their quality and consistency immensely-which is almost laughable. The consumer who spends 2500 USD on a box of cigars will not repeat the process unless they receive a near perfect product in return. I assure you, the top 1% will not just say “It’s Cuba being Cuba” when having a dinner party with expensive wine and food (also consumables) and out comes a box of Siglo VI which are poorly rolled, inconsistent and tastes bad.  

I would love to hear @Ken Gargett speak to how the high end winemakers have handled this. I have a burning curiosity to know what Margaux, DRC, Penfolds and others have done in similar situations over the years? Clearly they have raised prices to massive levels, but they still are making it work- how did they go about this?  

**I'm enjoying this discussion, PLEASE PLEASE feel free to disagree with me if you believe I am wrong, I would enjoy hearing from all sides— I am passionate about this, as you can maybe tell. 

[ha_banos]

Regarding production. Another nationwide blackout hit Cuba last night.

[SirVantes]

16 hours ago, zeedubbya said:

I would love to hear @Ken Gargett speak to how the high end winemakers have handled this. I have a burning curiosity to know what Margaux, DRC, Penfolds and others have done in similar situations over the years?  Clearly they have raised prices to massive levels, but they still are making it work- how did they get the ability to do this?  

I’d be interested in Ken’s thoughts too. Especially now that the fine wine market appears to be softening. I think a closer parallel may be the single malt whisky market. Doldrums for years, during which a loyal enthusiast clientele kept faith, then the world discovers that it is very under-priced for the quality and the makers upped the prices by multiples and premium-'ized' their brands overnight, alienating those loyal customers (like me). I personally see massive problems ahead for the distillers  - e.g. Waterford just went into administration. 

[Hookmaker]

Great post and I would really like to chip in with a 10000 word essay but I’m simply lacking the mental strength to do so.

3 things that come to mind:

1. I'm definitely not in the top consumer class, and I’m not complaining that I can’t afford the top brands in my everyday life. When something like wine, cigars etc suddenly rise beyond reach, I’m sad but I shrug and move along. Markets move and I don’t dwell on it.
2. This happened with Bordeaux Claret in the mid eighties. I used to buy a lot en primeur, then interest exploded (Asian buyers BUT it could’ve been anyone else) and the big and mid size chateaux decided basically to abandon “old world clients” in favour of the nouveau riche.

Now - 20 years later interest has faded and Bordeaux is crying, - will the old customers come back? I won’t and I don’t care because I left that game the day they decided to jump on the hike.

      3. I’ve skied for 40 plus years. Been to St. Moritz, Switzerland a few times driving through, but never could afford to stay at one of those            fancy hotels. These hotels have had solid customer bases for almost a century, people coming back again and again through                        generations. But following the fall of the Soviet Union in the 90’es and the rise of the oligarchs, some of these hotels fell to the greedy            urge to abandon old clients for new loud mouthed clients from Russia. Now there’s hardly anyone coming out of Russia anymore, and            the old families that were abandoned are not coming back. Just another example of how to “really” treat your customers.

But hey: in the end the world moves on and so should we.

Ps! One thing I simply can’t fathom. IF the HSA strategy is to build their brands, why in the H don’t they start analysing the entire supply chain? It wouldn’t cut much out of profits to pay the average tobacco farmer even 3-4 times what they pay today for the crops. Or even simply just invest in some modern farm equipment, barns etc. Same goes for the rollers, upping their salaries 3-4 times would hardly be visible (to my understanding) and it would draw attention to become a roller, up quality etc.

Just my 2 cents.

[Hammer Smokin']

12 hours ago, Hookmaker said:

Ps! One thing I simply can’t fathom. IF the HSA strategy is to build their brands, why in the H don’t they start analysing the entire supply chain? It wouldn’t cut much out of profits to pay the average tobacco farmer even 3-4 times what they pay today for the crops. Or even simply just invest in some modern farm equipment, barns etc. Same goes for the rollers, upping their salaries 3-4 times would hardly be visible (to my understanding) and it would draw attention to become a roller, up quality etc.

Just my 2 cents.

Just like we opine on how people still buy cigars, even at their massively overpriced costs (so why decrease), HSA knows they have people willing to farm, roll, etc, even at their massively underpaid salaries (so why increase). 

Just an example of overall incompetence and lack of care towards their customer, as well as product manufacturer (the farmer). 

[Puros Y Vino]

I get the impression the Cuban tobacco farmers don't have much choice but to farm. Partly out of a love of doing it and partly of getting some money even if it's less than before. And if it came to blows, I somewhat think the Cuban govt would find some way to compel people to work those fields...😥

[Hammer Smokin']

Yes, I acknowledge "willing" was a poor choice of words on my part.