Conspiracy Theory

[Mr Peales]

I'm not in the cigar business, so would someone please enlighten me on the economics of deletions.

Production Volume: Shouldn't Habanos SA try to expand their market while maintaining all of their their current customers? Couldn't they produce their marvelously inconsistent ELs and RRs and simply make fewer of the 'less popular' cigars? Simply cut back the production of the standbys to more accurately match current demand? For example; roll Partagas Serie Connoisseur No.1 once every three years? Rob, anyone, what am I missing here? Isn't this a rather common business practice?

New Releases: I realize that trends change and there have always been deletions. But historically there was also a lot of supplementation with new cigars. What we see now is something a bit different. Delete the Partagas Tres Petit Corona, Petit Coronas, Coronas, Londsdale, Seleccion Privada No. 1, Partagas de Partagas No.1, Serie Connoisseur No.1, No.2 and No.3 and replace them with the lonely SP#2 and a rotation of ELs and non-Partagas RRs. Thin ring gauge cigars are cut, and nowhere near the equivalent number of more-popular vitolas to replace them, especially with regards to price-point.

Gloom: My concern is not just my future costs but the concerns associated with a rigorous production of so many new short-live cigars—ELs and RRs. HSA has abandoned some of their earlier business models, and now I'm just trying to guess at the trajectory of their new plan. I want HSA to be healthy and run a successful business—but selfishly—not at the expense of the standard production cigars.

[neal875]

I'm not in the cigar business, so would someone please enlighten me on the economics of deletions.

Production Volume: Shouldn't Habanos SA try to expand their market while maintaining all of their their current customers? Couldn't they produce their marvelously inconsistent ELs and RRs and simply make fewer of the 'less popular' cigars? Simply cut back the production of the standbys to more accurately match current demand? For example; roll Partagas Serie Connoisseur No.1 once every three years? Rob, anyone, what am I missing here? Isn't this a rather common business practice?

New Releases: I realize that trends change and there have always been deletions. But historically there was also a lot of supplementation with new cigars. What we see now is something a bit different. Delete the Partagas Tres Petit Corona, Petit Coronas, Coronas, Londsdale, Seleccion Privada No. 1, Partagas de Partagas No.1, Serie Connoisseur No.1, No.2 and No.3 and replace them with the lonely SP#2 and a rotation of ELs and non-Partagas RRs. Thin ring gauge cigars are cut, and nowhere near the equivalent number of more-popular vitolas to replace them, especially with regards to price-point.

Gloom: My concern is not just my future costs but the concerns associated with a rigorous production of so many new short-live cigars—ELs and RRs. HSA has abandoned some of their earlier business models, and now I'm just trying to guess at the trajectory of their new plan. I want HSA to be healthy and run a successful business—but selfishly—not at the expense of the standard production cigars.

Successful corporations are not usually in the business of supporting their more niche and slow-moving product lines. In good economic times, those products tend to hang in because the profitability of the overall brand is strong. However, in times like these, cutting the dogs is part of an economic survival plan. The costs of manufacturing, packaging, distribution and promotion are the same for a winner as a loser. So, what is the business argument for keeping the losers? What company executive will recommend keeping a portfolio of dust collectors just because a tiny cadre of people like them? I wouldn't and neither would anyone else on this forum who owns or manages a business.

In addition, efficient companies are always looking to cut the number of SKUs they manufacture as it is extremely inefficient not to do so. Besides, dealers don't like sitting on inventory that doesn't move either. So from a cash-flow standpoint, it benefits nobody to support the slackers. And at the end of the day--Habanos is a business like any other.--trying to satisfy the needs of a majority of their customer base while remaining as profitable as they can.

Believe two things for sure: Habanos will not be cutting any of the cigars that the market is buying in volume. And , second, they will continue to cut those that the market is largely overlooking. We should put our list together now of the 2011 deletion possibilities and vote against that eventuality by buying those on that list that we love and do so with with great gusto. I think we could come up with a pretty good list of these cigars right now--it might be a good exercise to do so too. I think that will be a new thread.

[El Presidente]

Believe two things for sure: Habanos will not be cutting any of the cigars that the market is buying in volume. And , second, they will continue to cut those that the market is largely overlooking.

While I agree with much of what you say Marc this last point needs some clarification.

We may be unique but we sell vastly more Partagas Connaisseur No 1,2 & 3 than Cohiba Maduro 5 Magicos. We also sell more Punch Petit Punch, Punch Petit Corona, Diplomatico No 4 and 5 than HDM Petit Robusto or Monte Petit Edmundo. I understand the RCGE gone as it has been an anchor in terms of sales.

I recall when the PLPC had not been seen for years. Brough back it sold like hotcakes. RAG's similarly. Many of these cigars should be released only every couple of years to ensure quick return on investment.

Imagine if the Punch Black Prince was brought out in 2010 but put away again until 2015. What a stampede!

I tend to lean toward incompetence rather than conspiracy.

[demiurgic]

I thought of a reason why HSA may be cutting Sdc, as an example.

If most profit is derived from a tiny fraction of cigars (LE, RE, Behike in the future), why not take some of the finest leaf which is tied up in a slow moving Sdc, for example, and put in a cigar that will sell for 5-10 times the price of an Sdc?

conspiracy theory or some possible truth to this?