The Global Cigar Market

[PigFish]

With the manufacturer's price only being part of the cigars' retail cost, I often wonder how long it will be before cigars are priced out of existence.

The manufacturer needs to see a profit in order to stay in business. Governments local to the consumer see the 'sin' of cigar smoking as a mean of making money as well with little regard (intentional of course) for the manufacturer or the consumers. With H SA looking to cut their own throats with a push for higher profits, and governments looking to cut everyones' throat with higher taxes especially on those items off the political correctness list, you have to ask; how long will the cigar survive?

Will sales to eastern Europe and Asia be enough to float Habanos until the era of sin taxation is halted?

If I were H SA I would not stockpile cigars or tobacco. The trend can only get worse. The cigar today is likely going to be taxed double tomorrow again narrowing the market.

With the trend of larger cigars I would keep my prices high on those as many consumers of these cigars are ostensibly duped by their appearance related to performance. This is very convenient for me; I don't smoke them donkey dongs anyway! I would highly reduce cigars in the coronas and under sizes and get my tobacco off the shelf and into the hands of the poor bloke that is feeding his family, is taxed too much already, and would like to enjoy a cigar with his ale.

Instead of the Monte Open, a pansy assed weak kneed cigar for a man in knickers they should consider full bodied, well blended smaller cigars for the man in shorts in his backyard staffing the barbie! Joe-Q should be slow smoking his brisket while enjoying a good brew and an equally good, or better cigar.

With the economy strained even snack food giants are adding net weight to their product lines without raising the prices. Luxury items will likely suffer too. I can pinpoint the cause but I have no crystal ball for the cure! All I can tell you is that if that was my tobacco sitting on the shelves I would be looking to move it to my consumer before I get another harvest. Storing a currently profitable product in search of a higher profit is a looser! Thanks for reading. -Piggy

[Tampa1257]

Piggy,

I concur with your assessment. H SA is digging a deep hole in search of higher profits in a mannor that is 180 degrees away from what the world wide market is heading. Ill conceived new products that are not even a half assed effort that have no market research, no market just riding on the shirt tail of a known Brand is about as fool hearty as General Motors introducing another fuel gussler SUV. The Monte Open is just another Loser.

[zuma]

Hmm... it is fascinating that smoking bans are phenomenon that has flourished primarily in democratic countries, where freedom of choice is supposed to be paramount and where, unfortunately, the hosts of "the righteous" will manipulate opinion and the government to get what they want above the wishes of the free man (and subtly undermine the very foundation of democracy)...

Similarly fascinating, is that many so-called capitalists forget that higher aggregate profits are generated by using relatively modest margins AND moving merchandise quickly (rather than by huge margins and low volumes)... good quality and modest prices will ensure that there is always a good market. However, HSA seems to be blinded by the fact that they have a monopoly, and do not see that high price goods and low volumes will slowly kill their market...

IMHO, If HSA stop acting contemptuously towards the cigar populace, they will survive the smoking bans even if imposed everywhere; in the mid term (and provided they don't do something stupid) Europe and Asia can keep'em afloat...

Don Piggy... I enjoy reading your ramblings (i.e., thanks for sharing your thoughts)

[PigFish]

Hmm... it is fascinating that smoking bans are phenomenon that has flourished primarily in democratic countries, where freedom of choice is supposed to be paramount and where, unfortunately, the hosts of "the righteous" will manipulate opinion and the government to get what they want above the wishes of the free man (and subtly undermine the very foundation of democracy)...

Similarly fascinating, is that many so-called capitalists forget that higher aggregate profits are generated by using relatively modest margins AND moving merchandise quickly (rather than by huge margins and low volumes)... good quality and modest prices will ensure that there is always a good market. However, HSA seems to be blinded by the fact that they have a monopoly, and do not see that high price goods and low volumes will slowly kill their market...

IMHO, If HSA stop acting contemptuously towards the cigar populace, they will survive the smoking bans even if imposed everywhere; in the mid term (and provided they don't do something stupid) Europe and Asia can keep'em afloat...

Don Piggy... I enjoy reading your ramblings (i.e., thanks for sharing your thoughts)

Compliment returned, I enjoyed your above assessment. Any friend of General Jack D. Ripper is a friend of mine! -LOL

[Colt45]

Well......

In a global cigar market, to be fair, NC producers aren't exactly slashing prices. But when comparing size to size, quality of construction to

quality of construction, they are still much less expensive than their Cuban counterparts.

And I do agree that if the powers that be in the Cuban cigar industry really cared about what is said or written about the direction they have

taken, that they would pause and reevaluate that direction. Otherwise, we've simply been asked to toe the party line.

Speaking for myself, that's not going to happen.

Trying my best not to sound like I'm having a whinge, like I imagine many others are, I'm getting closer and closer to being priced out of the game.

Putting that aside, if I truly don't like the current state of things, the one thing I can do is to vote with my wallet and stop buying.

As to politics and taxation....... no comment.

[anacostiakat]

Yes there is a mystical reverse logic being followed here. But that is against our sound logic and of course we know best.

Seriously, it is obvious that with the bizarro world entry of the Monte Open this does not bode well for the path being taken. This in addition to the whole fatty and short fatty size issue.

I firmly believe that we vote every time we smoke a cigar. Sales are a direct correlation to what we acquire.

That is our weapon. Really only one of two that we have. The other being this forum and ones like it.

[Colt45]

Just to add, it's not lost on me that to a degree, we're also talking about the livelihoods of friends.

[El Presidente]

The market will decide.

We can rail as much as we wish but in the end the Market will decide. Is the Monte Open a massive marketing failure or a moderate success?....perhaps even a great success? The answer will be know by January 2010 ie The Market will decide. HSA will either be encouraged for more of the same or will learn a valuable lesson. The dice are still rolling on this one.

What form/direction will HSA take in the future? With the global changes to smoking regulations and likely loss of Duty free tobacco globally over the next 8 years....the marketing, distribution, production mix will likely be very different in 2015 compared to 2009. The Market will dictate what changes need to be made.

The "Market" is a mix of the consumer, retailer, distributor, manufacturer, grower/infrastructure, government/legislation, economy and social norms. This is a volatile mix to navigate correctly in a product category so under attack. It takes razor sharp minds/management and a flexible effective organization to tease its way through to develop a sound medium term vision and execution. An organization which is a JV with one bankrupt partner constantlyscreaming for hard currency return is not going to able to meet these challenges effectively.

If I was Manuel Garcia answering Piggy I would say.

Thankyou Senor Piggy.

You may have recently seen on this trouble making forum that Jose Piedra and Quintero are in out top 8 selling marques. We do indeed have "yard cigars" for our consumers and given the numbers they are being sold in, we can say they are well accepted as such.

The Montecristo Open is a large step for us. Montecristo is our largest selling Marque with 22 million cigars sold annually. We felt there was an opportunity to expand this famous line in a way which could attract a new generation to the world of Habanos. We think we have got it right, we may have got it wrong, we will not know for some time.

Pricing is a sensitive issue world wide. We accept that many of our loyal consumers are under attack economically and legislatively. Yet Senor Piggy there have been major cost increases in all forms of production. We are currently refurbishing factories and building hundreds of hurricane proof drying / storage facilities in Pinar and elsewhere. This all takes dinero. We too are suffering from the global economic downturn and are doing our best to find the balance between investment and still achieving an economic return. Our price increases this year of 10% reflect in part these factors as well as price increases for water, power, transport and finance. I am sure our loyal members around the world have also noticed how the cost of their basic utilities has increased astronomically.

I am at a loss as to your veiled criticism regarding our production of large guage (specialties) cigars? A continuing trend has been the remarkable acceptance by the market of Regional Release and Limited Edition Cigars. We are simply producing what the market are voting for with their wallet? Yes, we have discontinued many cigars including thin guage however they were discontinued for one reason only....they weren't selling.

From what I am reading we are in a no win situation. We are atacked for not producing cigars which the Habanos lover wants and attacked for producing cigars which are amongst our most demanded?

We are not an unreasonable organization. We need any cigar in our lineup as a minimum to sell 150,000 units per annum to justify resources. That is not unreasonable in a 160 million unit production. I can tell you Senor Piggy that we are carrying many thin guage cigars that do not meet that benchmark. Yet we release a Short Robusto in a Montecristo or Hoyo du Monterrey and they outsell all thin guage cigars combined. I suspect we will sell this year more Monteristo Open than all sub 38 guage cigars combined as well. Are you saying the consumer is wrong? Are we to be blamed now for meeting the market?

The world of the Habano has always been one of controversy. This is a good thing because it reflects the passion the people hold for the product.

We will continue to do our best for all our loyal consumers.

MG

[mkz]

I have nothing to to add for this discussion...

But I must say that I simply love reading these posts between Senior Piggy and El "Dofus" Presidente!!

[Stalebread]

In a global cigar market, to be fair, NC producers aren't exactly slashing prices . . .

True. But, for what it's worth (both literally and figuratively) some have not passed along SCHIP related taxes. If nothing else, it's gesture, a slick bit of PR, that NC cigar smokers can appreciate.

[Stalebread]

Seems to me that Rob "MG" Ayala presents a reasonable case.

[aavkk]

haha, bravo reply Rob. It actually makes sense what you say on behalf of Manuel Garcia, even though I do feel similar to Piggy. Basically, I hear ya but I dont like it one bit. I personally take responsibility to show anyone I run into unfamiliar with Habanos the greatness of the thin ring gauge lineup. Just last week I met a guy that was going to "pick up another box of Petit Edmundos" and after 15 minutes I had him sold on Party Connie 3's instead. I do what I can.

[thechenman]

What else can I say...a very well thought out argument Mr. Prez.

Just to throw in my $0.02 after reading Piggy's commentary as well. While I do agree with many of the comments Piggy made from a consumer standpoint, from a business standpoint (which is where H SA) is coming from, what they are doing makes perfect sense. Of course, that does not mean that everyone approves, or likes it.

While cigars over time have graviatated from a luxury reserved for royalty to a vice for the common man, Cuban Cigars still enjoy a mystique...not solely in the U.S. because of their relative unavailability here, but globally, even in countries where they are legally sold. These days I believe a good Cuban Cigar, or pretty much any Cuban Cigar for some Americans, is viewed by a great many as being a luxury item - despite there being a group of individuals who smoke Cuban Cigars as an everyday smoke. I think that Habanos SA realizes this, and therefore charges a premium for its product. That is the norm...all luxury goods that I can think of off the top of my head carry a significant markup, whether it be chocolate or a yacht.

I know that Piggy pointed out lower profit margins would spur more sales, thereby increasing gross revenue. That is very much true in general, esepcially when it comes to mass production. However, maybe Habanos SA isn't as concerned with selling out of each years production as they are about possibly diluting/cheapening their brand. They don't want their cigars to be seen as a mass prodcuced consumer product. They want you to see the Cuban Cigar as a work of art. A living, breathing product prodcued through back breaking manual labor, lovingly crafted by hand for your leisurely enjoyment. Lower sales generating higher profit margins can produce the same level of gross revenue. Higher prices also place the Cuban Cigar in a category where it is perceived to be better. Maybe not to all connoisseurs, but to enough people to make the perception a reality.

So you ask then, what about the consumer, what about the people buying Cuban Cigars? True...many are hurt by this, and many may stop smoking cigars from Cuba and instead smoke cigars from other countries. This is a very real possibility. However, there will always be those willing the spend their hard earned money on Cuban Cigars despite the cost. Maybe it is a situation where Cuban Cigars go from being affordable for the everyman, to only being affordable for the well-to-do. As sad as that is, this too could be a possibility.

But why raise prices in this type of global recession? I believe Rob is right when he says extraneous production costs have risen, and we have seen this as commodity prices have risen for all globally. But is this the real reason? Well, it could be becasue of the need to recoup their production costs and finance next years crop, or more simply, it could just be because they can. That too is part of business, and while many will argue that it is not right on a moral basis, maybe on a commercial basis it is the right thing to do.

While I will not argue that Cuban Cigars are expensive (as Colt pointed out, quality vs. quality and size vs. size, Cuban Cigars tend to exhibit the higher price) I choose to view things in a slightly different light. The trade Embargo on Cuba will not last forever. I would hazard a guess that it is likely that most of us on this forum will see an end to the Embargo well within our lifetimes. When this eventually comes to pass we will see the prices for Cuban Cigars skyrocket, as the Cubans will not only be exporting their cigars to the U.S., but likely tobacco as well to other manufacturers to blend in their cigars. So stock up while you can. While Cuban Cigars may one day reach the point of becoming unaffordable to me as an everyday smoke, I will enjoy them while I can as a daily smoke, and eventually as an occassional smoke if the prices move to that point. But there will always be Cuban Cigars in my humidor. I think that will be true for most.

[Colt45]

True. But, for what it's worth (both literally and figuratively) some have not passed along SCHIP related taxes. If nothing else, it's gesture, a slick bit of PR, that NC cigar smokers can appreciate.

No doubt, they seem to have a more realistic approach to the current conditions. As has been mentioned many times, Habanos produces what sells.

That may sound simplistic, but I don't know how much simpler it can be. We can plead our case and hope someone is willing to listen, but shake

it more than a couple of times, and we're playing with it.

[Wiley]

(Not this argument again!)

I wonder... if Habanos considers their bread and butter to be the kind of customer who buys a really expensive box of large cigars, but infrequently, and prices out many of their customers who buy cigars regularly, but trend towards less expensive cigars... what happens if the "fashion" of the occasional "vacation" buyer is cyclical? They'll be screwed.

As far as pricing goes, Rob, why would their costs of production be so much higher in a communist country than producers outside Cuba?

[Ken Gargett]

agree with much of what piggy has raised except one point - "until the era of sin taxation is halted". that ain't never going to happen. certainly not in the lifetime of anyone now living, or their kids.

also, i do enjoy many of the larger formats so would oppose any discrimination.

i have enjoyed many of the limited edition cigars and done properly, think it a worthwhile concept. less convinced by the regional releases. some very good ones but they now do so many each year as to make the entire thing confusing and in a way meaningless. shame as there is perhaps a good idea in there somewhere. a problem if it starts to drag good tobacco away from regular lines and weakens them.

in the end, if they alienate their core market and long term loyal supporters, then rob will be right and the market will decide and not in their favour. bring in new smokers and customers for sure, but don't lose your current ones. it is a hell of a lot easier to keep a customer than find a new one and if you have the support of current smokers, then they will do half the work of bringing in new smokers for you. they need to ensure their core followers stay loyal and then they can add the bells and whistles. these days, i wonder if the bells and whistles aren't driving the thing. and that can only last for so long.

[aavkk]

Personally, I feel that on the whole cuban cigars are an "entertainment value". You can go to a movie and spend $15 here in NYC before popcorn and drinks. I can pull out an 02 LGC #1 and be thoroughly entertained and relaxed for over 90 minutes for less than $6. I view that as a freaking deal! I personally feel that if it costs them .20 cents to produce the cigar i paid $6 for that is irrelevant, I find it to be a great deal. I hate to say it but I would pay substantially more for the cigars I smoke, although I would purchase far fewer. My involvement in this great hobby has always been about quality over quantity. The fact that they are so relatively cheap in my eyes, I have purchased quite a few of them over the past few years. But dont worry guys, I wont go screaming this to HSA from the rooftops, Im just offering a little perspective on the subject.

[Trevor2118]

(Not this argument again!)

I wonder... if Habanos considers their bread and butter to be the kind of customer who buys a really expensive box of large cigars, but infrequently, and prices out many of their customers who buy cigars regularly, but trend towards less expensive cigars... what happens if the "fashion" of the occasional "vacation" buyer is cyclical? They'll be screwed.

As far as pricing goes, Rob, why would their costs of production be so much higher in a communist country than producers outside Cuba?

As for Habanos SA increasing their prices, it would appear to me to be the dealers (such as "you know who") that are cutting their margins to keep sales up. Most on-line dealers have almost continual discounts these days, often at 15% or more.....so the consumer currently has this buffer between wholesale and retail.

I ran my own business for many years and in the previous (1990s) recession I cut my prices to keep clients. I believe that was a common and accepted response at the time, and it paid off in the long run. I believe it is only desperation that would cause someone to increase prices in a recesson......Habanas SA is probably desperate at this time and is blinkered by the Communist mentality, not appreciating and believing the free-market concepts that have been espoused in previous threads.

However, it might well be that Habanos SA takes a reasonably opposite view that it is the free-market (read the amoral banking system....lead by the US "prime market" sham) that got the world into its current mess, so maybe their decision may well pay dividends.

Remember that they do have a monopoly market position, and remember the old joke.....

"What does a 2,000 pound gorilla eat for lunch......what ever he wants"

[Trevor2118]

agree with much of what piggy has raised except one point - "until the era of sin taxation is halted". that ain't never going to happen. certainly not in the lifetime of anyone now living, or their kids.

I agree with Ken on this one. This is not prohibition......it will not be over one day.

Governments everywhere rarely reduce taxation. In Australia, there is an automatic 6 month adjustment.

There are also calls for massive increases in tax, calls to dis-enfranchise smokes from medical benefits (because they bring it on them selfs)......of course, the do-goodies will ensure the the drug uses (who invariable support their habit by crime) will continue to enjoy benefits, because they can't help themselves.

Smokers have been hunted out of pubs, clubs, and even off beaches, forced to smoke in alcoves.....we will never be let back in.

The few remaining places that have won concessions will probably eventually lose them, when an other suitable anti-smoking report gives the do-gooders another rallying point. In the meantime they chip away at advertising, tobacco placement, packaging....all in a continued effort to cure us godless smokers.

This will never be over.

[PigFish]

(Not this argument again!)

I wonder... if Habanos considers their bread and butter to be the kind of customer who buys a really expensive box of large cigars, but infrequently, and prices out many of their customers who buy cigars regularly, but trend towards less expensive cigars... what happens if the "fashion" of the occasional "vacation" buyer is cyclical? They'll be screwed.

As far as pricing goes, Rob, why would their costs of production be so much higher in a communist country than producers outside Cuba?

The genesis of the thread was several fold. I have to admit it; it was in some ways a bit of a set up.

Several of us here are pretty predictable... me included. I will often mouth off about this topic as will my Mate, Rob. Quite honestly I was expecting the company line from Rob as usual. As stated I represent the consumer, more than that I think, but I am biased. Rob represents a line which is an amalgamation of consumer, retailer, advocate, anchor man and antagonist!

Like Rob, I like to influence people, or at the very least get them to think a little about what I am writing. In many ways these are minor duels between rivals (of opinion) and Rob and I both appear somewhat competitive. I like to yank his chain and he mine. I am not interested in any means of harming his business, we are friends, hell I promote it as if I were on the payroll but I like to challenge him a bit on levels of intellectual honesty and that includes the cigar business. Rob's last response, in the way that it was pitched, is a new twist altogether; I like the charade game... this is a new one, and I will play along. What I don't like is the same old message.

First the set up. I knew that eventually this "position of H SA" would be introduced by someone to shut me up! It does most of the time... I am not in the cigar business; therefore who am I to argue. I mean if Manny is gonna' 'tell you like it is,' who's gonna' call him a liar?

I will.

I have a number of analogies that I often quote. One of those is "trust in Allah, but tie up your camel." Perhaps that is a little vague. How about another then. As a youngster I raced motorcycles (off-road) for many years. There is one thing about racing off-road that you learn very quickly, or you get hurt very badly!!! That is, to read terrain. My analogy is this: "Follow the course markers, but trust the terrain." What I mean with the analogy in this instance is that I look beyond what is presented to me; I have a bullshit filter. I trust, but verify! If someone runs over a down arrow (danger marker in off-road racing) and you are concentrating only on the markers you could end up on your head. But if the terrain is indicating, wash, washout or creek bed you had better be on the lookout for washouts or drop-offs. Reading the terrain is simple. You use your own brain and don't always eat up what is spoon fed to you.

For the record I am not calling Rob, my friend, a liar. I am only saying that I don't think that the company line which has been fed to him is wholly truthful. I am suspect of it. The fact is I see heads of state, company executives and other persons of prominence in society lie to my face everyday. Am I to believe them despite the fact that I know that they are lying? Of course not. Am I also to beleive that H SA has got my best interests at heart and they have produced the only company in the world who's executive are working for my best interest; again, of course not.

The truth then is sometimes elusive even if you are being guided. Lets just call that an axiom. Lets read a little terrain together, but first back to the stalemate. In one thread as a group we are asked to supply positive input to H SA. In this case what I am asked is to provide positive, supportive business ADVICE. Well, I did not find the request exactly honest and I explained my opinion in that thread. It is not honest because when I post an honest reply, one that I do often here, representing my honest and straightforward opinion, I am more often than not pitched back the company fast ball. I got the eye roll on that thread so I went looking for the fast ball in this one precisely to bring up this point.

So I have to ask. Did you not think that Rob's H SA answer was a good one? I did. But I got from it what I alwaysget from it and that is; H SA knows what they are doing and they don't need my advice. The crux of the answer is as always this; the cigars that I like (and have historically bought) don't sell and all these 'new wave' cigars are the best things since the Twinkie AND DON'T CHALLENGE IT.

Lets get back the terrain and to the charade game, shall we?

Mr. MG

Hi, my name is RA and I run a successful cigar retail operation in the Pacific. I have a lot of customers. They range from people who will walk in off the street for a cigar for a baby announcement to hardcore cigar addicts. I have intellectual smokers, lawn mowing smokers, only the best will do smokers and cheap son-of-a-***** smokers. My friend Mr. Piggy is one of the above.

Some of these guys ask some pretty intreging questions about their passion of cigar smoking and most of them, not being in the business themselves, want to know what is going on in the industry so that they can better position themselves to get the best cigars available. Many depend on me for that information.

Mr. G, what do I tell them when they ask why you are no longer going to be rolling the Diplomatico #1 or a host of other cigars that they currently own and love. You guys keep telling me that you have to sell some outrageous number of cigars in order to make them profitable but frankly that does not make sense to me. I hear what you are saying but I am not altogether unfamiliar with my cleints and some of them are asking me for cigars that you are no longer selling. I thought you said there is no demand for these products; what gives? What is more I also know that when PCC offers me some of these cigars I typically sell out of them. They may not be as profitable as some of the more expensive cigars, but they keep my business going and I often get to sell a few singles of the more expensive cigars to round out the order. Yes, I do promote and sell a lot of the new trendy cigars but some of my clients are sensitive to the costs of these items. Some are even saying that they are not worth the money and are inferior to what they have been smoking and buying for years. I have said that a few times myself.

I would take you on your word that some cigars are slower movers and take some time to sell but many of these discontinued cigars are still being asked for by name. My clients seem to still want them! Answer me this, and perhaps I can better explain it to my customers. If the same amount of tobacco and effort (labor) goes into any corona (just an example) why would you say that it is cost prohibitive to produce the Diplomatico #3 right along with the Monte #3. I mean they use the same molds, the same amount of tobacco and fit in the same box. The only difference is the artwork on the box and the bands which are still being made for the other sizes. Mr. G., this does not make any sense at all. I mean if you tell me that you make more on the Monte #3 than the Diplomatico #3 I won't argue with you... as I too charge more for them retail. But how can you say that they are cost prohibitive to produce?

Here is a point that one of my clients has made. He claims to like the Monte #3 as well as the Diplomatico #3 (named cigars are for example only). He also likes the Bolivar coronas, the RA coronas and the Partagas coronas as well. Knowing that he owns a good selection of cigars, when he tells me that he wishes to own and smoke a wider range of cigars in the coronas size, cigars he has bought from me in the past, I have to believe him. He is not alone either. Many of my customers ask for cigars that I once sold them so there is a demand. I would like to answer that demand. I just don't believe anymore that there is no demand for these cigars.

A lot of my smokers like variety, and age their own cigars. Many of my customers own hundreds if not thousands of cigars and their humidors are filled to that extent because of variety. You told us once that there was no demand for the PL PC, yet when you brought it back I sold a bunch of them. I sold the Bolivar PC along side of it. So clearly there is room in the market for both. I am thinking that the PC market might withstand the reintroduction of the RA PC, or the Partagas PC. When I see the annual reports does the Monte #4 not outsell the Monte #2? When my client Mr. Piggy picks up a petit coronas, he wants more choices than the ones you have chosen to continue to produce. With the only difference being the stamps in the box, why can't a cab of RA PC's or Partagas PC's be produced at the same cost of the Boli or the PL?

This man and others like him, buy what they like, not what you tell them to like and they are not buying more Monte #3's and #4's from be me because that is all that is left. I see them buying less cigars from me in the future as a result.

When he criticizes the trend for large cigars I tell him just what you tell me; don't argue with success, they sell. Yet he is still not buying them from me! You told me he would! What is more, when he criticizes the EL's and RE's I use the same rational. You tell me they always sell out... but I have them in my store back to 2007 and I am not sold out of them yet. Lets face it they are expensive cigars. Some of my clients are well to do, but they don't always want an expensive cigar, or a large cigar. Some of my cleints say that unless they are really worth twice what I charge him for a coronas or a lonsdale they won't buy them anymore. I don't smoke the EL's everyday and I get them cheaper than they do, why should I expect them to? The fact is these pricy cigars don't replace, and are often not even as good as your regular production cigars and my customers are beginning to speak openly about it. I just don't see them as hot as a commodity any more. It reminds me of the Cohiba Reservas from '02 and '03. Those needed to be reduced to less than half price to sell. Lord knows I don't want to be stuck with a pile of expensive cigars when you guys decide to dump the remaining stock at a lower price. You have done this before.

Lets talk about your tendency to increase prices in a tough economy. You say on the one hand that you have to make more money yet by laying off your work force and shutting down factories how do you propose to make cigars and sell them. I mean if I ignored the market I would go out of business. I have sale after sale. Together with my staff we have come up with all kinds of new ways to market cigars to our audience and it does not cost us a lot to do it. We generate interest in many ways but it is the good old fashioned sale that brings 'em in and gets them to order. I too would like to get my profit up... but I have employees to think of and a family to support; I need to sell cigars! Frankly I would rather sell two boxes of lesser expensive cigars for less percentage profit than two cigars for less net profit. When was the last time you had a sale? They work for me.

It would appear to me that all the things that I do in my business are tried and true methods to promote products and sell them. You tell me different things. I reduce prices in the form of sales and you raise them. I promote bulk buying and you promote fewer cigars in larger formats. My employees are busy and you are laying yours off...

Wait a minute now... we are in the same business!!! There is a problem here. I can see now why I am grilled on this so often. What you are telling me does not really make an sense at all. I think we need to talk...

Sincerely, RA

I am not in the cigar business but I recognize good business practice that is why I am a client of Rob. I also recognize stupidity and arrogance in business. As a result I often wonder how long I will be client of H SA. Thanks for reading. -Piggy

[anacostiakat]

One flaw in that I think is that you are using yourself as an example. While some (a lot) of us agree with you in one way or another I am guessing the numbers HSA is using tell a different story and so they are acting accordingly.

!

We need a jihad on uneducated poseurs!!!

[Colt45]

While some (a lot) of us agree with you in one way or another I am guessing the numbers HSA is using tell a different story and so they are acting accordingly.

Yes, while many may (or may not) agree in part or whole, the reality is that we can only represent ourselves.

Also, anyone who might expect a for profit business to have their best interests at heart is, for lack of a better

term, delusional.

And though they may be cutting cigars that some of us like, they are obviously replacing them with other cigars

that many more prefer and that they can actually sell.

Reality - it's a *****.

[PigFish]

Also, anyone who might expect a for profit business to have their best interests at heart is, for lack of a better

term, delusional.

Reality - it's a *****.

I disagree Ross, strongly!

Good business is symbiotic not parasitic. Each party must be happy with the/a transaction or it is bad for both parties. Perhaps that is not true in governments or tyrannies, or perhaps even not true in the sort term, but long term businesses thrive by taking care of their best customers.

I would have to agree that I worded it poorly, but that does not change my stance on good business being bilateral and fair. Ask yourself why you stopped doing business with someone and find your answer there. Call me anachronistic but I have always taken care of my customers whether working for myself or others. Do you cheat your customers? -P

[El Presidente]

Of course profit and best intent are not mutually exclusive.

The problem here Ray is your reference to customer. You picture him as a man such as yourself (or myself or the majority of peole we associate with in the cigar world). The reality in the real cigar world is very different.

Lets take the premium cigar world....which is the minority. More Henry Wintermans/Cafe Creme etc would sell in a Quarter than all other Global Premium brands combined in a year.

Lets assume Ray we Premium Cigar Lovers had our own country and ran a 100 seat "house of Puro" to oversee the country of "Puro".

You, I, Chuck belong to the centre left party of <38 and we ran strongly against the right wing party >50. We work well with the centre party moderates of 38-48

The voters cast their ballots and again the <38 party has 10 seats. The 38-48 party has 50 seats and the >50 party has 40 seats.

The problem is our party of <38 doesn't resonate in the electorate as it once did. We use to hold 40 seats and the 38-48 party 40 seats as well. The >50 party only 10 years ago had 20 seats.

Our voters are changing but the <38 party is its own worst enemy. We cling to the past and unintentionally denigrate the other parties (and their voters) where we should be celebrating their success while working hard to remodel our cigars (packaging/blends/releases) to capture a new consituency while inspiring our existing one.

In the end the Executive Government of "Puro" produces in exact quantity what the citizens of Puro have voted for with their wallets.

Now Ray, both you and I believe there is a conspiracy against the <38 party. We just can't prove it. When no attention is being paid to a part of a garden it dies or degenerates. It is galling when another part of the same garden is being tended to with loving care.

So where do we go?

1. Educate HSA (Cuban Side) execs on thin guage tobacco. Run a Havana symposium on <38. Develop some zealots internally within the machine. The reality is many within HSA have had less than a handful of <38 guage cigars in their lifetime.

2. Be patient. Protect what lines remain for 2 years. This is not a time for experimentation and money is tight in Cuba.

3. Get rid of the "us and them" attitude we have unintentionally portrayed. If the >50 party has a success...lets celebrate it.

4. $5 Carlota's (Cabs of 50 and tins of 10) in La Gloria Cubana, Bolivar, Por Larrananaga, Ramon Allones and Diplomatico. Specialty humidor package available for 100 Cigars (20 of each).

[Ken Gargett]

I disagree Ross, strongly!

Good business is symbiotic not parasitic. Each party must be happy with the/a transaction or it is bad for both parties. Perhaps that is not true in governments or tyrannies, or perhaps even not true in the sort term, but long term businesses thrive by taking care of their best customers.

I would have to agree that I worded it poorly, but that does not change my stance on good business being bilateral and fair. Ask yourself why you stopped doing business with someone and find your answer there. Call me anachronistic but I have always taken care of my customers whether working for myself or others. Do you cheat your customers? -P

i think that a lot of this relates to the massive differences in experience of the two nations (should probably say west rather than states but it covrs it for these purposes).

i have met a large number of cubans and hold them in the highest regard. equally, and i mean this with no offence, to the surprise of many mates, i say the same about americans (the reason i made the surprise comment was because so many of us outside the states get a view of it from your television/books/movies etc and so the vast majority of the world assumes that every american lawyer is an ambulance chasing shonk who you wouldn't trust in any circumstances, whereas my experience was completely different and i have no hesitation in saying that the firm i worked for in DC was by far the most ethical, principled law firm with which i have ever been associated). BUT americans and the rest of the world have a way of doing business and simply the cubans have been excluded from most of it, imposed or voluntarily, and simply don't follow it. and a lot of westerners don't get that. they expect habanos and others to act in the manner they would expect from western companies.

"Good business is symbiotic" - absolutely, but the cubans have come through a completely different system. i honestly believe that the cuban cigar industry would not ever consider cheating their customers and i think they'd be rightly offended by the suggestion (i'm not for a minute suggesting that this is what you were trying to say) but i think they are doing their best in a system that their culture and background has left them poorly equipped to handle. however in this instance, they have the product we want so have to work with them, even if many decisions seem bizarre.

perhaps their 'partners' should be giving them more help and guidance.

this is, of course, a gross generalisation of part of the problem.

meanwhile, the reality becomes an unfortunate situation where we end up with curious decisions about discontinued cigars, price rises and the introduction of duds like the monte opens.

i have no doubt that the bans are doing their best - it is just that their best and what we think should be their best are ooften wildly different affairs.

back to the cricket.