Draft discussion paper

[El Presidente]

For lovers of thin gauge Habanos cigars, below is a DRAFT discussion paper to be discussed and dwelled upon at series of meetings next week. For those FOH members that would like to voice their thoughts, I will certainly discuss and take their viewpoints on-board before finalising the paper Friday.

Please do not copy and post this paper to another forum. It is a discussion paper currently. Once finalised I will re-post it and then you can certainly do so if you feel it appropriate.

__________________________________________________________

Discussion Paper

The loss of connection between Habanos s.a and the Habanos connoisseur community.

By Robert Ayala

Monday, October 02, 2006

There is disenchantment amongst the Habanos Connoisseur market. The rumblings of concern have reached a crescendo of angst and confusion.

You may well ask who are these people? So let me take the opportunity to categorise them.

The connoisseur is the Habanos purchaser who for many years has purchased premium Habanos through good times and bad. He was there through the blend changes of 1996, through the construction disasters of 1999/2000, through the release of the Edicion Limitada series from 2000 and the launch after launch of thick gauge cigar. He has seen the successful strategies of the new Habanos s.a monolith while despairing at the discontinuation of classic cigars such as the Punch Super Seleccion No 2, H.Upmann Super Corona and the continued corporate indifference to his passion for thin guage cigars. Gone are the Por Larranaga Lonsdales along with Rafael Gonzalez Lonsdales and St Luis Rey Lonsdales. He despairs at the future of the thinner gauge cigar and his importance to the thought processes of Habanos s.a marketing.

Yet, these connoisseur gentlemen are the cornerstone of the online Habanos community which totals some 55,000 members worldwide. They are the forum moderators, the custodians of Habanos history and culture. Today they are raising serious questions as to the importance of the Habanos tradition to Habanos sa itself.

Balancing Current Economic Imperatives and Habanos Tradition.

It is without question that thick gauge cigars sell. They are the cornerstone of modern trend. However, thin gauge cigars (

No-one begrudges the fact that Habanos s.a develops cigars to meet the changing market trends. What is being questioned is the turning it’s back on Habanos history though the elimination of so many great vitola’s from historical marques.

From the periphery, few connoisseurs can understand the “dumbing down” of the Habanos s.a. range. Yes, they do understand the financial imperatives driving the incessant development of bigger ring gauge cigars, but the connoisseur feels alienated from the new Habanos s.a. focus. This is a dangerous development because it risks disenfranchising a core market which in the main are Habanos zealots.

One of the core assets of Habanos s.a. is its link to the history of the Cuban puro. Its brands and its blends are an intrinsic link to its rich heritage and importantly to its hard core consumer. Through an intentional or unintentional watering down of this historical link, Habanos s.a. risks losing a vital emotional connection to a core group of consumers who are important opinion makers in the world of Habanos.

Let me at this point address some of the reasons why thinner gauge cigars have fallen out of favour with modern Habanos purchasers.

• Poor Construction. The reality is that since 1998 thinner gauge cigars suffered disproportionately from poor construction leading to poor draws. Many consumers simply gave up. If the rate of poor drawing cigars from say a Lonsdale or laguito No 1 vitola was 20% and from a Robusto 5%, where was the incentive for the consumer to explore the world of the thinner gauge cigar?

• Poor Marketing. Since the Trinidad Fundadores no new thinner gauge cigar has been launched to the international market. The Trinidad Fundadores is certainly a successful release. Prior to the Fundadores, the last major release in this format has been the Cohiba Lancero. One must agree that these two cigars are aimed at the connoisseur/aficionado market. Since the Fundadores release, the world has seen nothing.

• Poor Packaging. Habanos s.a has done nothing to promote the decadent flavour intensity and complexity of the thinner gauge cigar. No special releases, no reinforcement of the rich connoisseur history, no attention at all to the altruistic joy of learning the requisite skills to enjoy the multi dimensional flavours of these fantastic vitolas.

In the opinion of many, the time has come for Habanos s.a. to demonstrate it’s understanding of the need to honour it’s rich history by enacting a strategy to re-vitalise the appeal of the thinner gauge cigar.

Marketing Proposal for re-launching and promoting the thinner gauge cigar and re-connecting to Cuban puro history.

I will break this proposal into two separate sections. The proposals aim to balance financial success while adding value to the Habanos s.a. brand through a re-connection with its past.

1. Successfully promoting thinner gauge cigars.

2. Maintaining a historical link with the past.

Successfully promoting thinner gauge cigars:

Step 1 : The Launch of the “Habanos Connoisseur Series.”

The Habanos Connoisseur Series celebrates the world of the connoisseur….the lover of Habano finesse and flavour integrity. The special release resembles the Cohiba Selection Reserva in that it contains 30 cigars in its own humidor:

• 5 x Trinidad Fundadores

• 5 x Cohiba Lancero

• 5 x Partagas Serie De Connoisseur No 1

• 5 x La Gloria Cubana Medaille D’Or No 1

• And introducing 10 x Por Larranaga Laguito No 1

This pack, with the re-release of the Por Larranaga Laguito No 1 will be an immediate success and can be followed 12 months later by The Habanos Connoisseur Series Lonsdale Release and then the The Habanos Connoisseur Series Panetela release etc etc. In each instance the cornerstone of the “Connoisseur Series Release” is the introduction of one cigar which was previously discontinued or newly developed….but highly anticipated. At least initially, the new cigar developed is not available by separate sale.

The whole intention of the “Connoisseur Series Release” is to “celebrate the world of the Habanos Connoisseur.”

This whole idea can be developed over time with the gradual release of new packs maintaining the integrity of the program.

Step 2: Maintaining a historical links with the past.

Separate to the highly successful “Edicion Limitada” and “Regional Release”. Habanos s.a. launches it’s “Habanos Heritage Release”program. Each year, two cigars which are now historical relics are re-introduced to the market for a 12 month period. The sales success of a cigar such as Por Larranaga Magnum is unquestioned guaranteeing financial return and more importantly reinforcing the historical link between Habanos s.a and its rich tradition.

The proposed “Habanos Heritage Release Program” is a bridge between the present and the past. It celebrates all that is great between current day Habanos cigars and those of its heritage. The program will reinforce to the worldwide market that Habanos s.a. will succeed into the future because it understands the balance between developing its future while honouring its past.

Summary.

One can only applaud Habanos s.a for the changes it has overseen to the improvement in quality of its blends in 2006 which has been a six year struggle. I am a supporter of the Edicion Limitada and regional release concept as well as to the release of well crafted and commercially successful new cigars such as the Cohiba Siglo VI. Partagas P2 and Montecristo Edmundo.

I am a fervent believer however in that a re-connection with it’s past is both financially beneficial and a marketing masterstroke.

Brand loyalty is an intrinsic, multidimensional relationship between manufacture and purchaser. What I respectfully warn against is that increased sales and market domination is not used solely as the gauge of success. Take the time to honour and pay homage to the Habanos connoisseur which flies the flag for the essential character which is the Habano cigar.

[JMH]

Looking good so far mate. I especially like the idea of a "Habanos Heritage Release" program.

I would suggest however, that you change your name to Bobby Ayala. I think it has a more imposing business-like feel to it ;-)

Hope it all goes well.

[Sir Diggamus]

A well thought out idea Pres!

And a success it would be if broght to fruition!

[n2advnture]

Rob Ayala - The NEW Marketing Machine! :-D

Very well written and EXACTLY what I have been feeling for quite some time.

My only concern would be perpetuating the marketing machine in the form of a limited edition humidor.

It kind of goes against the "theme" expressed in the paper.

I think a "refocus" on the thinner ring gauges as a whole is what is needed and not just on 5 sticks going into a humidor but that's just me.

Cervantes

Delicados

Delicados Extra

Dalia

Laguito No. 1

Laguito Especial

I'd even bump it up to 44 ring gauge to include vitolas such as the Cazadores

And how about a decent thin ring gauged smoked out of the HdM or even VR (the recent versions of the clasico is ok but could be better)

Just some thoughts

~Mark

[anacostiakat]

Yes very well thought out and written indeed.

Nice balancing act. Great logic as well. Thanks Rob!

[12stones]

Well written and it definitely gauges the attitude of many habano lovers.

I sent you an email, Rob.

[kjellfrick]

I agree that this is a very well stated proposal. Your text captures the general feeling well, which includes taking a firm view on matters of cutting down on the smaller sizes. Also, brilliant ideas on the heritage program. A good mix of critisism and constructive thnking, Rob.

If they don't buy at least some of these ideas they will lose so much good-will. But then, economy is not a field that abounds with altruists. We as cigar consumers will have to buy the products and I for one will do my part.

Kjell

[Colt45]

Well done:clap:

I have to admit that I am a bit skeptical, though I don't know the relationship

between Altadis/Habanos/Cubatobacco (you've briefed us before).

Kind of like BMW owning Rolls Royce

[cigardawg]

Very well written proposal.

I do, however, mirror some of Mark's thoughts about releasing the series in a limited edition humidor. I would like to see a refocus on the connoisseur sizes as a whole.

Good stuff El Prez. Good luck with the presentation of this.

[pnutbutrsangwich]

That looks great, Rob. You have brought up some great points and those ideas that are suggested would make for a very exciting time coming up for us. I have to agree with Mark about not marketing that thing guage 30ct box as something limited. If you're trying to put something through to the market that has niche demand, making it limited and more expensive is not going to widen the market and make it easy for further releases. I think the goal should be to try and create interest in these classic vitolas, not necressarily to try and sneak some in to the market for the guys who really like the, but that might not necessarily be possible and it's just my opinion.

[jseeds]

Good job Rob - Very well written, containing some compelling ideas. I agree that the 30ct humidor would be expensive and may not drive trial of smaller guages as much as say, offering them as 5- or 10-packs (maybe a special selection?).

In any case the classic connoisseur sizes are something totally ownable by Habanos, and your argument shows how they can take advantage of that. Good luck!

[greenpimp]

I think it's excellent and I'm glad you're doing it. And I also echo the deserved praise on overall quality recently.

I would add to what your letter expressed that Habanos SA is STILL in a position to be a leader and maker of trends, rather than a follower. The opening markets (US, obviously) will smoke a Cuban because it's a Cuban, not because it's a 7x60 behemoth just like the non-Cubans they already smoke. That are insipid and mild and uninteresting to the seasoned smoker.

For myself and the many serious smokers I have come to know, the experience and development of the palate leads one naturally to the "smaller" ring vitolas, many of which are now my favorite. Due to their intensity and purity of flavor, they become more appreciated and desired the more one smokes them.

Also the connoiseur market, while smaller woldwide, spend a significant amount of money on cigars. 50,000 people times--- how much a year do the serious smokers spend a year? At LEAST a box a month, which would make the yearly purchases around at least 100 million dollars a year, no? More likely double or triple that.

That's a pretty significant financial group, and one that I hope they listen to.

Again, thanks for doing this Rob.

[Mel]

Good luck mate. Well done and logical but that stuff does not always win out. Lust, greed and power will trump the altruistic idealism. Some one needs to speak to the issue of the dying classics and you speak well so press on.

BTW do you sell alot of the skinny stuff?? 50% of the volume? Probably more like 10%, right? One more point to make please comunicate that the minority needs more protection than the majority.

[Tom Bolivar]

Well done, Rob. Great ideas! I'm wishing you (and all of us) good luck!

Regards,

Tom

[shrink]

Well crafted and persuasive document, Rob. Good luck. See minor suggestions:

» For lovers of thin gauge Habanos cigars, below is a DRAFT discussion

» paper to be discussed and dwelled upon at series of meetings next week. For

» those FOH members that would like to voice their thoughts, I will certainly

» discuss and take their viewpoints on-board before finalising the paper

» Friday.

»

» Please do not copy and post this paper to another forum. It is a

» discussion paper currently. Once finalised I will re-post it and then you

» can certainly do so if you feel it appropriate.

»

»

» __________________________________________________________

» Discussion Paper

» The loss of connection between Habanos s.a and the Habanos connoisseur

» community.

» By Robert Ayala

» Monday, October 02, 2006

»

»

» There is disenchantment amongst the Habanos Connoisseur market. The

» rumblings of concern have reached a crescendo of angst and confusion.

» You may well ask who are these people? So let me take the opportunity to

» categorise them.

»

» The connoisseur is the Habanos purchaser who for many years has purchased

» premium Habanos through good times and bad. He was there through the blend

» changes of 1996, through the construction disasters of 1999/2000, through

» the release of the Edicion Limitada series from 2000 and the launch after

» launch of thick gauge cigar. He has seen the successful strategies of the

» new Habanos s.a monolith while despairing at the discontinuation of

» classic cigars such as the Punch Super Seleccion No 2, H.Upmann Super

» Corona and the continued corporate indifference to his passion for thin

» guage cigars. Gone are the Por Larranaga Lonsdales along with Rafael

» Gonzalez Lonsdales and St Luis Rey Lonsdales. He despairs at the future of

» the thinner gauge cigar and his importance to the thought processes of

» Habanos s.a marketing.

»

» Yet, these connoisseur gentlemen are the cornerstone of the online Habanos

» community which totals some 55,000 members worldwide. They are the forum

» moderators, the custodians of Habanos history and culture. They play a critical role in introducing newcomers to the world of Habanos, and significantly impact their purchasing decisions. Today they are

» raising serious questions as to the importance of the Habanos tradition to

» Habanos sa itself.

»

» Balancing Current Economic Imperatives and Habanos Tradition.

»

» It is without question that thick gauge cigars sell. They are the

» cornerstone of modern trend. However, thin gauge cigars (<42 gauge) have

» an important role in the rich tapestry that is Habanos.

» No-one begrudges the fact that Habanos s.a develops cigars to meet the

» changing market trends. What is being questioned is the turning it’s back

» on Habanos history though the elimination of so many great vitola’s from

» historical marques.

» From the periphery, few connoisseurs can understand the “dumbing down” of

» the Habanos s.a. range. Yes, they do understand the financial imperatives

» driving the incessant development of bigger ring gauge cigars, but the

» connoisseur feels alienated from the new Habanos s.a. focus. This is a

» dangerous development because it risks disenfranchising a core market

» which in the main are Habanos zealots.

»

» One of the core assets of Habanos s.a. is its link to the history of the

» Cuban puro. Its brands and its blends are an intrinsic link to its rich

» heritage and importantly to its hard core consumer. Through an intentional

» or unintentional watering down of this historical link, Habanos s.a. risks

» losing a vital emotional connection to a core group of consumers who are

» important opinion makers in the world of Habanos.

»

» Let me at this point address some of the reasons why thinner gauge cigars

» have fallen out of favour with modern Habanos purchasers.

»

» • Poor Construction. The reality is that since 1998 thinner gauge cigars

» suffered disproportionately from poor construction leading to poor draws.

» Many consumers simply gave up. If the rate of poor drawing cigars from say

» a Lonsdale or laguito No 1 vitola was 20% and from a Robusto 5%, where was

» the incentive for the consumer to explore the world of the thinner gauge

» cigar?

» • Poor Marketing. Since the Trinidad Fundadores no new thinner gauge cigar

» has been launched to the international market. The Trinidad Fundadores is

» certainly a successful release. Prior to the Fundadores, the last major

» release in this format has been the Cohiba Lancero. One must agree that

» these two cigars are aimed at the connoisseur/aficionado market. Since

» the Fundadores release, the world has seen nothing.

» • Poor Packaging. Habanos s.a has done nothing to promote the decadent

» flavour intensity and complexity of the thinner gauge cigar. No special

» releases, no reinforcement of the rich connoisseur history, no attention

» at all to the altruistic joy of learning the requisite skills to enjoy the

» multi dimensional flavours of these fantastic vitolas.

»

» In the opinion of many, the time has come for Habanos s.a. to demonstrate

» it’s understanding of the need to honour it’s rich history by enacting a

» strategy to re-vitalise the appeal of the thinner gauge cigar.

»

» Marketing Proposal for re-launching and promoting the thinner gauge cigar

» and re-connecting to Cuban puro history.

»

» I will break this proposal into two separate sections. The proposals aim

» to balance financial success while adding value to the Habanos s.a. brand

» through a re-connection with its past.

»

» 1. Successfully promoting thinner gauge cigars.

» 2. Maintaining a historical link with the past.

»

»

» Successfully promoting thinner gauge cigars:

»

» Step 1 : The Launch of the “Habanos Connoisseur Series.”

»

» The Habanos Connoisseur Series celebrates the world of the

» connoisseur….the lover of Habano finesse and flavour integrity. The

» special release resembles the Cohiba Selection Reserva in that it contains

» 30 cigars in its own humidor:

» • 5 x Trinidad Fundadores

» • 5 x Cohiba Lancero

» • 5 x Partagas Serie De Connoisseur No 1

» • 5 x Montecristo Especial No 1

» • 5 x La Gloria Cubana Medaille D’Or No 1

» • And introducing 5 x Por Larranaga Laguito No 1

»

» This pack, with the re-release of the Por Larranaga Laguito No 1 will be

» an immediate success and can be followed 12 months later by The Habanos

» Connoisseur Series Lonsdale Release and then the The Habanos Connoisseur

» Series Panetela release etc etc. In each instance the cornerstone of the

» “Connoisseur Series Release” is the introduction of one cigar which was

» previously discontinued or newly developed….but highly anticipated. At

» least initially, the new cigar developed is not available by separate

» sale.

»

» The whole intention of the “Connoisseur Series Release” is to “celebrate

» the world of the Habanos Connoisseur.”

»

» This whole idea can be developed over time with the gradual release of new

» packs maintaining the integrity of the program.

»

»

» Step 2: Maintaining a historical links with the past.

»

» Separate to the highly successful “Edicion Limitada” and “Regional

» Release”. Habanos s.a. launches it’s “Habanos Heritage Release”program.

» Each year, two cigars which are now historical relics are re-introduced to

» the market for a 12 month period. The sales success of a cigar such as Por

» Larranaga Magnum is unquestioned guaranteeing financial return and more

» importantly reinforcing the historical link between Habanos s.a and its

» rich tradition.

»

» The proposed “Habanos Heritage Release Program” is a bridge between the

» present and the past. It celebrates all that is great between current day

» Habanos cigars and those of its heritage. The program will reinforce to

» the worldwide market that Habanos s.a. will succeed into the future

» because it understands the balance between developing its future while

» honouring its past.

»

» Summary.

»

» One can only applaud Habanos s.a for the changes it has overseen to the

» improvement in quality of its blends in 2006 which has been a six year

» struggle. I am a supporter of the Edicion Limitada and regional release

» concept as well as to the release of well crafted and commercially

» successful new cigars such as the Cohiba Siglo VI. Partagas P2 and

» Montecristo Edmundo.

» I am a fervent believer however in that a re-connection with it’s past is

» both financially beneficial and a marketing masterstroke.

» Brand loyalty is an intrinsic, multidimensional relationship between

» manufacture and purchaser. What I respectfully warn against is that

» increased sales and market domination is not used solely as the gauge of

» success. Take the time to honour and pay homage to the Habanos connoisseur

» which flies the flag for the essential character which is the Habano cigar.

[Trevor2118]

» 30 cigars in its own humidor:

» • 5 x Trinidad Fundadores

» • 5 x Cohiba Lancero

» • 5 x Partagas Serie De Connoisseur No 1

» • 5 x La Gloria Cubana Medaille D’Or No 1

» • And introducing 10 x Por Larranaga Laguito No 1

In favour except for above humidor. From what I have seen, the special humidors are too expensive!....Why not just a good SBN or BN box of 25?.....Cardboard packs probabily not the answer for such a series. Regards.

[korryp]

A very well written paper. I like it. Maybe the time and has and they will listen.

Good luck.

[Wiley]

Awesome!

[El Presidente]

» Rob Ayala - The NEW Marketing Machine! :-D

»

» Very well written and EXACTLY what I have been feeling for quite some

» time.

»

» My only concern would be perpetuating the marketing machine in the form of

» a limited edition humidor.

»

» It kind of goes against the "theme" expressed in the paper.

»

» I think a "refocus" on the thinner ring gauges as a whole is what is

» needed and not just on 5 sticks going into a humidor but that's just me.

»

» Cervantes

» Delicados

» Delicados Extra

» Dalia

» Laguito No. 1

» Laguito Especial

»

» I'd even bump it up to 44 ring gauge to include vitolas such as the

» Cazadores

»

» And how about a decent thin ring gauged smoked out of the HdM or even VR

» (the recent versions of the clasico is ok but could be better)

»

» Just some thoughts

»

» ~Mark

Mark. I did not mean to propose a LE humidor. Just something similar to the Cohiba Seleccion Reserva 30 pack with a humidifier. The reason the humidifier is important is that the box then becomes a travel humidor and encourages the purchase of further like sized cigars.

As for focusing on thinner gauge cigars as a whole, you need to have an apex through which to stimulate interest. My suggestion would be to release a second pack within 12 (2009) months featuring:

5 x HDM Du Gourmet

5 x Partagas Serie Du Connoisseur No 3

5 x Cohiba Exquisitos

5 x Montecristo Especial No 2

and introducing 10 x Ramon Allones Ninfas.

2009 would also see the release under the Habanos Heritage Release Program of two cigars:"Por Larranaga Magnum"(runnaway success assured) and the "La Escepcion Longos" (178mm x 33). Again using the program to celebrate and educate.

Just keep in mind gentlemen. The paper is a discussion document only to be put forward before lunch and then the issues to be discussed during lunch and dinners over the following days. What we are trying to accomplish is to plant a seed and put issues on the page which right now....are nowhere on the Habanos radar.

[El Presidente]

» Well written and it definitely gauges the attitude of many habano lovers.

»

» I sent you an email, Rob.

I appreciate your help Ricky ;-)

[n2advnture]

Ok, now I totally understand.

Although my previous statement is how I feel, I'd like to retract it for the purpose of discussions of this paper :-D

I now think that it was a very thoughtout and well written way of "opening the door" to getting on the thinner ring gauge track.

Nicely done my friend!

~Mark

[Tampa1257]

Rob,

I thought you had captured the essence of the Connoisseur well and in addition to the need to link the Historic past with the future.

The idea of the 30 count box is excellent, but I would also encourage other box sizes to be considered as well. The reason why I suggest either a 10 or a 15 count box is to also make a price point available to those that are beginning to venture out into the thinner ring cigars and may just not be willing to spend the amount that a 30 count box assortment would be valued at.

I also like the Heritage program idea as well. The programs success will depend on the cigar communities Connoisseur's ability to help educate the others that have not yet learned the different skills and techniques needed to appreciate thinner ring Habanos.

Both of these programs would make me very happy and thrilled to yet again know that Habanos S.A. has the consumer in mind while displaying there resolve on continuing to be the market leader in a heavily competitive market. It would also create quite a stir because the Non-Cuban market would not have anything to compete with it, nor could they develop the rich link with history, thus Habanos S.A. leading the path for the industry with satisfied and excited customers.

[TR]

Well written Rob....I believe you will foster some great discussion with them.....good luck and fight the good fight!

[El Presidente]

»

» The idea of the 30 count box is excellent, but I would also encourage

» other box sizes to be considered as well. The reason why I suggest either

» a 10 or a 15 count box is to also make a price point available to those

» that are beginning to venture out into the thinner ring cigars and may

» just not be willing to spend the amount that a 30 count box assortment

» would be valued at.

»

Chuck.

Smaller packaging will be a hard point to push. I want to avoid the response of " LGC Medaille D'Or in boxes of 10...don't sell. Partagas 898 Varnished boxes of 10...sell poorly."

It is the reason why a Cohiba Reserva Seleccion style 30 count box introducing a whole new cigar in say the form of a PL Laguito No 1 (as part of the mix) is attractive. I am quite sure that in the vicinity of 20,000 boxes would sell through interest alone as the new cigar would not be available for seperate release....at least initially.

It really is imperative that the first release is a commercial success or I doubt there would be a second for a long time to come ;-)

[dogbreath]

Well done Rob! You hammered the point home!

Thanks!