10 years of joint venture. The Habanos s.a scorecard.


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It was a decade ago (more or less) that Habanos s.a took on a 50% joint venture partner in Spanish multinational Altadis which today itself is owned by British multinational, Imperial tobacco.

The role of Habanos s.a is the global commercialization of hand made Cuban cigars.

At the outset in the late 90's, the Cuban cigar industry was wrought by underfunding, overproduction and a collapse in quality. Altadis marketing expertise (and money) was desperately needed to reinvigorate the industry.

Habanos s.a has minimal to no control over the factories. However they were instrumental in allowing (money again) the introduction of draw machines, moistening chambers, dryers and many behind the scenes infrastructure improvements.

Under the Habanos s.a. stewardship was seen the evolution of the Limited Edition concept, Regional Release, Habanos Festivals and the release of cigars which are seen as staples today such as the Cohiba Siglo VI, Partagas P2, Upmann Magnum 50 as well as controversial cigars such as the Montecristo Open.

Under Habanos s.a we have also seen an acceleration of discontinued cigars. While cigars have been discontinued prior to their reign, the pace has certainly increased throughout the decade.

The question to members is twofold.

1. Given the tumultuous beginnings, would you give HSA a passmark? If so, why. If not, why not.

2. You are CEO of HSA for the next decade. What changes would you enact, what direction would you take the organisation and why do you think it important.

This is not meant to be a chance to sink the boot but rather an open, honest and constructive assessment by people who enjoy their product and spend good money on it.

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2. You are CEO of HSA for the next decade. What changes would you enact, what direction would you take the organisation and why do you think it important.

release some limited, regional etc cigars that are a bit more budget friendly, as opposed to only behikes and GRs etc

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The role of Habanos s.a is the global commercialization of hand made Cuban cigars.

The question to members is twofold.

1. Given the tumultuous beginnings, would you give HSA a passmark? If so, why. If not, why not.

2. You are CEO of HSA for the next decade. What changes would you enact, what direction would you take the organisation and why do you think it important.

Personally, I find it a little difficult to be objective - I have my own likes and dislikes, but I don't know how that fits with running a company such as

Habanos. So do I give a pass as they have helped promote the product world wide, or an incomplete or fail as I don't care for many of their concepts?

As to part two, as the "marketing arm" with little control of production, what could I really change save for the shiny bits? If it were possible,

I'd focus on quality of product across the board. All the bling in the world means little if what's underneath cannot be counted on to consistently

deliver on promise.

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Interesting question mate.

1) I would give an overall pass to HSA. Grade B- Whilst I don't necessarily agree with all of the EL and RR efforts, for me it's a step in the right direction. It's also a question best answered by those who've been smoking Cubans for close to 20yrs. I started around 10yrs ago so I never really experienced the flaws and frustrations of widespread poor quality in the 90s. However, it would appear that the introduction of better quality control, in particular the draw machines you mention, but also freezing etc has improved quality so HSA must get credit for that.

Still, they're not quite there. Probably the most common complaint / issue that comes up on these boards is consistency. In terms of both construction quality and just as important, flavour profile. We all know the product is organic and handmade, but I still believe there's considerable room for improvement. Just this weekend I was 'caught short' on a quick trip away, and had to buy from a hotel cigar shop. I picked up a Punch Churchill, about $25, lit up an hr later only to find it was totally plugged. Not many other products I can think of where that can happen and the buyer just has to accept it.

2) As HSA CEO my focus would be to continue improving product quality and consistency first and foremost. My change however would be in the structure of the company itself. As far as possible under the rules of a communist state, I would appoint directors for each of the marcas and allow them as much autonomy as possible over their own houses. I would try to push them towards maintaining a house flavour profile, to the point where one can fairly easily tell which brand of cigar you're smoking even when blind tasting.

Also, I would look to ease up on the EL and RR formats, making them rarer and subsequently more exclusive / top end. In turn, however, I would look at revitalising some failing brands that have good fundamentals (LGC, ERDM etc), binning some that imo were doomed from the start (SCDLH) and resurrecting some discontinued brands on a temporary basis to see what was popular and then consider making them permanent.

In effect, I would look to lead the market, rather than follow it which is what seems to be happening with all this Monte Open and Cohiba GR/Behike stuff. All sounds like the work of sales men rather than those who love the industry. Be more like Apple - be so good you tell people what they want and they then want it.

Unlikley perhaps, but I would look at striking a deal again between the Cuban govt and Dunhill & Davidoff to return to Cuban production. That would be a massive coup if you could pull that off.

I would also look at building dead capacity in some form in anticipation of the US market opening within a decade or so. I would also look at doing everything I could to protect the leaf itself once Cuba does open up, so that no foreign manufacturers could export the leaf and roll it themselves. Keep the product Cuban.

My 2p :)

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Since I’m heading to bed in a few seconds, I need to make this brief.

These are in no particular order:

1. Lobby – Big companies like HSA need to lobby governments to separate cigarette taxation from cigar (hobby) taxation. It will be the death of us.

2. Fake Cuban Cigars – HSA needs to get tough on counterfeits, like many clothing design companies have done.

3. Discontinue but reintroduce – This is what marketing is all about, creating demand. It’s either from introducing new brands, sizes, etc, or it can come from reintroducing cigars we haven’t seen in a few years (2-5 years).

4. Quality – I think that HSA needs to continue investing in quality. I think they are on the right track.

5. Tradition – Sometimes big companies forget tradition and how important it can be for the soul of a product, especially something like Cuban cigars.

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The only things that could make things better is if Hsa stopped importing Nic. Tobacco, added more weed to their smokes, rolled more cigars generically and put branded bands on them, and released more leather cannisters of very rare smokes without telling anyone about them. :)

1. Overall, I give them a passing grade, because while they don't have direct control over the factories, quality has become much more consistent as the decade has progressed. I feel that if I buy a box of cigars, I have a fair idea of what I'll be getting. I've no doubt that a non-communist influence has helped in that regard.

I'm irate about the continuing discontinuation of some really great cigars - particularly those 42 rg and below. And the girth of many of the newer cigars irks me.

But I've enjoyed most of what of smoked from '04 or so onward.

2. I can't honestly say that it's in the best interest of the bottom line, but I would bring back production of some of the cigars that have been discontinued from 2002 on, perhaps in smaller runs than previously. I'm somewhat old-fashioned, I guess, but history and culture mean something to me.

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Interesting question mate.

2) As HSA CEO my focus would be to continue improving product quality and consistency first and foremost. My change however would be in the structure of the company itself. As far as possible under the rules of a communist state, I would appoint directors for each of the marcas and allow them as much autonomy as possible over their own houses. I would try to push them towards maintaining a house flavour profile, to the point where one can fairly easily tell which brand of cigar you're smoking even when blind tasting.

It will make quality of each brand unique. Agree completely! And of course to separate cigarette taxation from cigar taxation. Uncompromising struggle against counterfeit cigars worldwide, especially in the Caribbean region (Panama, Bahamas etc).

More to be interested in wishes of their consumers. For example such poll should spend by HSA :)

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You know, it's times like this that I'm forced to confront the reality of HSA, which is that the entire industry is owned by the government and each house is so inbred that they've become like cousins in rural mississippi. After however many years of conducting this experiment where marque is nothing other than an exchangeable label... I think it's a failure.

I'd go ahead and give HSA a D at best.

I think it's time, and I'm just going to say it, that they isolate and privatize the brands and then allow the state to do whatever sort of communism they do in the end to take all of the money and centralize it. There's zero competition internally, cigars that no longer taste like the label that surrounds them and an overall lack of distinction among too much. Every decision made by central planning seems poorly made in hindsight and the QC problems smack of old Soviet collectives.

Okay, I'll get off my soapbox now, communism is what it is, we've known all about it for 50 years and Cuba's one of the last hold outs. Unfortunately North Korea & Vietnam produce nothing much of interest and Cuba has a beautiful country and my beloved cigars.

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