Habanos s.a Update: End of week two.

[Sandman]

There is a lot more to this story. We will see how much actually makes it public.

[habanablue]

Nothing to date to suggest Imperial people involved. time will tell.

Warehouse people involved in fraud (at a high level) working with others on and offshore.

The rest will play out in due course.

No one has asked the biggest question yet: Rob, will be returning to Cuba and if so, under guise?

[MontrealRon]

There have been hints and rumors for some time that the Cuban military might have some involvement in the diversion of cigars to unauthorized dealers. If this has not in fact been the case, but rather the doings of civilians like HSA executives, perhaps the military has decided to clean out this nest of profiteers. It is hard to imagine that they have been ignorant of the problem all this time, so the question is why now? The military has also traditionally been Raul's sphere of influence. Is this campaign coming directly from him, possibly as a part of a re-assertion of authority due to the return of Fidel (who is, and has always been, the head of the Communist Party?) to a more active role? Is this a sign of conflict between Raul's and Fidel's supporters? Is it possible that there have been both military and civilian diversions, and the military are covering their asses by preemptively striking? If so, is there any chance that those arrested will get fair hearings? Are they in fact the guilty parties, or the fall guys? Has Imperial a role in this, putting pressure to defend their monopoly from unauthorized competition? And where would they put that pressure?

Ahh, so many questions, but will we ever get any honest answers???

[PigFish]

There have been hints and rumors for some time that the Cuban military might have some involvement in the diversion of cigars to unauthorized dealers. If this has not in fact been the case, but rather the doings of civilians like HSA executives, perhaps the military has decided to clean out this nest of profiteers. It is hard to imagine that they have been ignorant of the problem all this time, so the question is why now? The military has also traditionally been Raul's sphere of influence. Is this campaign coming directly from him, possibly as a part of a re-assertion of authority due to the return of Fidel (who is, and has always been, the head of the Communist Party?) to a more active role? Is this a sign of conflict between Raul's and Fidel's supporters? Is it possible that there have been both military and civilian diversions, and the military are covering their asses by preemptively striking? If so, is there any chance that those arrested will get fair hearings? Are they in fact the guilty parties, or the fall guys? Has Imperial a role in this, putting pressure to defend their monopoly from unauthorized competition? And where would they put that pressure?

Ahh, so many questions, but will we ever get any honest answers???

I was not going to write much on this because most is speculation on my part. While I have thought about it many times, I think that this assessment is as close to my own as anything. There is no secret to the Cuban gray market... everyone knows about it and who condones it, and what it supports. These are good questions, are these folks the real perpetrators, or merely scapegoats, the fallguys?

I am not going to go into a long spin on this but if I had to guess, my gut tells me that the Cuban government wants a communist partner again. I am thinking that they would like nothing better than a sugar daddy like the old Soviets. My eye is on China. I think these guys want the Chinese as a partner and want to give the Imperial the boot. Just a guess! -Piggy

[El Presidente]

I am not going to go into a long spin on this but if I had to guess, my gut tells me that the Cuban government wants a communist partner again. I am thinking that they would like nothing better than a sugar daddy like the old Soviets. My eye is on China. I think these guys want the Chinese as a partner and want to give the Imperial the boot. Just a guess! -Piggy

The Chinese grow tobacco (a lot of it Piggy) and make cigars. They would not be preferred partners as they would be an inherent threat to Cuba's own industry.

Partners need to bring two things to the table. Money and distribution reach. The Chinese only have the former.

[El Presidente]

There have been hints and rumors for some time that the Cuban military might have some involvement in the diversion of cigars to unauthorized dealers. If this has not in fact been the case, but rather the doings of civilians like HSA executives, perhaps the military has decided to clean out this nest of profiteers. It is hard to imagine that they have been ignorant of the problem all this time, so the question is why now? The military has also traditionally been Raul's sphere of influence. Is this campaign coming directly from him, possibly as a part of a re-assertion of authority due to the return of Fidel (who is, and has always been, the head of the Communist Party?) to a more active role? Is this a sign of conflict between Raul's and Fidel's supporters? Is it possible that there have been both military and civilian diversions, and the military are covering their asses by preemptively striking? If so, is there any chance that those arrested will get fair hearings? Are they in fact the guilty parties, or the fall guys? Has Imperial a role in this, putting pressure to defend their monopoly from unauthorized competition? And where would they put that pressure?

Ahh, so many questions, but will we ever get any honest answers???

When tossing up conspiracy or incompetence......go for the latter

No evidence Imperial had any knowledge.

No evidence it is a result of internal power struggles.

There is emerging a time line of events that exposed the corruption which came about by the sheer greed and hubris of some of those currently exposed.

[El Presidente]

No one has asked the biggest question yet: Rob, will be returning to Cuba and if so, under guise?

I think I will give February's festival a miss and see what comes to pass. New VP should be appointed in a few weeks.

[Guest rob]

I think I will give February's festival a miss and see what comes to pass. New VP should be appointed in a few weeks.

I'm betting you are at the festival in February.

[PigFish]

I am not going to go into a long spin on this but if I had to guess, my gut tells me that the Cuban government wants a communist partner again. I am thinking that they would like nothing better than a sugar daddy like the old Soviets. My eye is on China. I think these guys want the Chinese as a partner and want to give the Imperial the boot. Just a guess! -Piggy

The Chinese grow tobacco (a lot of it Piggy) and make cigars. They would not be preferred partners as they would be an inherent threat to Cuba's own industry.

Partners need to bring two things to the table. Money and distribution reach. The Chinese only have the former.

Rob as usual you have information beyond mine as far as real tobacco issues are concerned. You make a good point here. I view almost everything from the Cubans as politically driven whereas you separate the issues. I admit to being jaded, if not downright blinded to topic of the Cuban tobacco industry et al as a source of revenue for the Cuban government and the survival of their political structure and not as industry designed to support itself and investors. I am hoping that you are right here, that there is concern for the industry outside of the money supply to fuel communism. That would be a nice and pleasant surprise for me. I am still backing my gut instinct that the Cuban communist society will take precedence to any industrial concern, but I am sincerely rooting for your side of the position. -Piggy

[El Presidente]

Rob as usual you have information beyond mine as far as real tobacco issues are concerned. You make a good point here. I view almost everything from the Cubans as politically driven whereas you separate the issues. I admit to being jaded, if not downright blinded to topic of the Cuban tobacco industry et al as a source of revenue for the Cuban government and the survival of their political structure and not as industry designed to support itself and investors. I am hoping that you are right here, that there is concern for the industry outside of the money supply to fuel communism. That would be a nice and pleasant surprise for me. I am still backing my gut instinct that the Cuban communist society will take precedence to any industrial concern, but I am sincerely rooting for your side of the position. -Piggy

Piggy the Cubans actually assisted the Chinese in the technical side of growing quality tobacco. They packed up and came home after a few years when they realised all they were doing was creating a dangerous competitor.

No one could compete with the Chinese for the production of Tubes. Ever wondered why they never got a supply contract

[PigFish]

Piggy the Cubans actually assisted the Chinese in the technical side of growing quality tobacco. They packed up and came home after a few years when they realised all they were doing was creating a dangerous competitor.

No one could compete with the Chinese for the production of Tubes. Ever wondered why they never got a supply contract

An I thought it was because they did not want lead tubes with mercury paint and an asbestos liner!!!

[CanuckSARTech]

An I thought it was because they did not want lead tubes with mercury paint and an asbestos liner!!!

So that's what makes my SDN4's and Magnum 46's so tasty!!!!

[BlackFriar]

So that's what makes my SDN4's and Magnum 46's so tasty!!!!

No, that's the melamine!

[Van55]

I am surprised how little discussion this topic is getting. Perhaps people don't want to speculate.

Reading between the lines however, I have to wonder it the businesses of several online vendors who sell cigars sourced from other than HSA authorized distributors are in severe jeopardy.

If there is a parallel channel being closed, what effects will the consumer experience?

[Colt45]

I am surprised how little discussion this topic is getting. Perhaps people don't want to speculate.

Well, Rob has advised us of what he can tell us - I think it's fairly obvious that he can't tell us all he does know. We've asked some simple

questions - but really, much more speculation is little more than a circle jerk.

Reading between the lines however, I have to wonder it the businesses of several online vendors who sell cigars sourced from other than HSA authorized distributors are in severe jeopardy.

Hopefully. For my money, I want to be 100% assured of legitimacy.

If there is a parallel channel being closed, what effects will the consumer experience?

It should give people who purchase sight unseen the confidence that they are spending their money on legitimate Habanos. I wonder how many

members who buy on price realize that the online store may never actually have the product in their possession - that the cigars are drop shipped

from a warehouse far from their online storefront.......

[PigFish]

I am surprised how little discussion this topic is getting. Perhaps people don't want to speculate.

Reading between the lines however, I have to wonder it the businesses of several online vendors who sell cigars sourced from other than HSA authorized distributors are in severe jeopardy.

If there is a parallel channel being closed, what effects will the consumer experience?

I am willing to speculate further. As I said before, the gray market is fully condoned by the Cuban government, they sell legitimate cigars that go to fund the government and other military expenses of Cuba. I think what was discovered was a parallel gray market, perhaps better defined as a true black market, also of legitimate cigars whose profits are going to a few outside of the communist oligarchy. I actually have to laugh at this a bit. Thieves stealing from thieves!!!

Frankly I am not worried about it, if it is even true. I don't believe much of what I hear out of Cuba. While I can believe that people have been arrested, the reasons, at least those that will be released through any ministry of propaganda have to be questioned for truthful content. I will not jump on a bandwagon to condemn those accused because I understand that those imprisoned in a communist country can be just about anyone at any time and the charges may have nothing to do with the "real" reasons of those in power.

These folks are not really that cleaver. The channels for wholesale Cuban cigars are limited. If anything we may find that "legitimate" people have been caught up in this quagmire. With all the speculation going regarding gray market sourced cigars, one has ignored the possibility that these cigars may have been going to legitimate distributors for discounts paid in cash. These may in fact be "gray market" cigars, now posing as legitimately channeled cigars. I mean when the parties involved are warehouse managers and distribution representatives... just about anyone can be smoking these cigars now regardless of who they bought them from or how much they paid for them. The corruption starts in Cuba and as consumers we are all affected by their decisions... which stem from the top. There may be levels of risk associated with buying cigars from different sources. I believe there are anyway, but as it is the Cuban government itself that allows this to continue for their benefit, there will always be some risk in all Cuban cigars as a result.

My guess, as cigars go, they are smoking just fine by now! -Piggy

[MontrealRon]

I am willing to speculate further. As I said before, the gray market is fully condoned by the Cuban government, they sell legitimate cigars that go to fund the government and other military expenses of Cuba. I think what was discovered was a parallel gray market, perhaps better defined as a true black market, also of legitimate cigars whose profits are going to a few outside of the communist oligarchy. I actually have to laugh at this a bit. Thieves stealing from thieves!!!

Frankly I am not worried about it, if it is even true. I don't believe much of what I hear out of Cuba. While I can believe that people have been arrested, the reasons, at least those that will be released through any ministry of propaganda have to be questioned for truthful content. I will not jump on a bandwagon to condemn those accused because I understand that those imprisoned in a communist country can be just about anyone at any time and the charges may have nothing to do with the "real" reasons of those in power.

These folks are not really that cleaver. The channels for wholesale Cuban cigars are limited. If anything we may find that "legitimate" people have been caught up in this quagmire. With all the speculation going regarding gray market sourced cigars, one has ignored the possibility that these cigars may have been going to legitimate distributors for discounts paid in cash. These may in fact be "gray market" cigars, now posing as legitimately channeled cigars. I mean when the parties involved are warehouse managers and distribution representatives... just about anyone can be smoking these cigars now regardless of who they bought them from or how much they paid for them. The corruption starts in Cuba and as consumers we are all affected by their decisions... which stem from the top. There may be levels of risk associated with buying cigars from different sources. I believe there are anyway, but as it is the Cuban government itself that allows this to continue for their benefit, there will always be some risk in all Cuban cigars as a result.

My guess, as cigars go, they are smoking just fine by now! -Piggy

Some very interesting points here, Ray, and my gut feeling is that you are right on,

especially concerning the black/grey market. Yes, it is ironic, isn't it!

This also makes me wonder about whether these real though unofficial cigars have bypassed any quality control steps. What about cigars that are rejected by legitimate distributors/retailers, and returned for credit? (Our very own Prez being a noteworthy exemplar of this practise).

Do these rejects find their way back into circulation, and if so, where?

Since I'm off to Cuba next week, I also wonder about the source of cigars sold there.

Those who check out the websites of some of the "Swiss warehouse" vendors may have noticed some of the massive discounting going on. Is stock being dumpted (by the vendors) out of fear of the situation in Cuba, or is stock being dumpted by Cubans, of one faction or another?

[Trevor2118]

Five now confirmed in Jail in Havana (awaiting trial) including Vice president of HSA Manuel Garcia.More are being held under questioning.

I won't go into the names but it spreads from the export section to overseas HSA heads.

Fraud/corruption is essentially the charge.

The investigations are going deeper and deeper as people "roll" under questioning.

The next week should prove interesting.

Any updates?

[jman]

I love cuban cigars, they are the best in the world, that saying... At least in the American market there is none of this stupid bullshit, you never have to worry about.... Fakes, grey market, and prices that are through the roof. I hate communism. Hopefully this thing gets solved. I will say that the cigars that are coming out of Cuba right now are amazing...taste, construction

[MontrealRon]

I love cuban cigars, they are the best in the world, that saying... At least in the American market there is none of this stupid bullshit, you never have to worry about.... Fakes, grey market, and prices that are through the roof. I hate communism. Hopefully this thing gets solved. I will say that the cigars that are coming out of Cuba right now are amazing...taste, construction

Cuban cigars, "the best in the world" "amazing... taste, construction"

are, like it or not, produced under Communism.

"prices through the roof"?

Maybe, if you go for Behikes or Gran Reservas,

but not so, IMHO, with regular production.

Even the lower end cigars are quite good;

check some of the commentary in the "Cheap & cheerful" forum.

The American market is loaded with overpriced,

highly advertised cigars of dubious quality,

produced under Capitalism.

Why are so many Cuban cigars ending up in the US, in spite of the embargo,

if this were not the case?

The allure of forbidden fruit only goes so far.

Americans are buying millions of Cuban cigars,

because more and more smokers are discovering that,

for money spent, they offer flavour, complexity, ability to improve with age,

finesse, variety, and a sense of satisfaction that is unmatched by their NC competitors.

The Cuban cigar industry is built on nearly two centuries of experience,

combined with what is universally recognized as the the finest

soil and climate for growing cigar tobacco.

Governments, and governing systems, come and go;

Habanos remain Habanos.

This was true under Spanish colonialism, under American occupation,

under American-supported dictatorships, and under Castro's Communism.

This too shall pass,

and Habanos will remain Habanos.

[cellinisart]

Cuban cigars, "the best in the world" "amazing... taste, construction"

are, like it or not, produced under Communism.

"prices through the roof"?

Maybe, if you go for Behikes or Gran Reservas,

but not so, IMHO, with regular production.

Even the lower end cigars are quite good;

check some of the commentary in the "Cheap & cheerful" forum.

The American market is loaded with overpriced,

highly advertised cigars of dubious quality,

produced under Capitalism.

Why are so many Cuban cigars ending up in the US, in spite of the embargo,

if this were not the case?

The allure of forbidden fruit only goes so far.

Americans are buying millions of Cuban cigars,

because more and more smokers are discovering that,

for money spent, they offer flavour, complexity, ability to improve with age,

finesse, variety, and a sense of satisfaction that is unmatched by their NC competitors.

The Cuban cigar industry is built on nearly two centuries of experience,

combined with what is universally recognized as the the finest

soil and climate for growing cigar tobacco.

Governments, and governing systems, come and go;

Habanos remain Habanos.

This was true under Spanish colonialism, under American occupation,

under American-supported dictatorships, and under Castro's Communism.

This too shall pass,

and Habanos will remain Habanos.

One of the best posts I have read in a long time. good points!

[El Presidente]

Great post Ron

On the news front all relatively quiet which is just the way they want it. Movements should be announced in the next few weeks. and there is likely to be a surprise.

[tugboat]

Recent events and news out of Cuba could sway one to believe the Government may actually be trying to get their **** together. A lot of talk of reform towards a more easing of workers' rights including laying off half a million under the governments wing.

..."the state is essentially saying we can't and won't take care of you anymore and you'll have to take care of yourselves,''...

Finally realizing their economic road is full of potholes. When this type of choice and autonomy rears up. Accountability and responsibility become worth so does the level of accurate information.

[jman]

The American market is loaded with overpriced,

highly advertised cigars of dubious quality,

produced under Capitalism.

Most Non-Cuban cigars are produced in other countries, not the US! I agree that cubans produce the best cigars in the world, no agument there. I try to enjoy different cigars from around the world. I have been able to develope a nice regional pallete for cigars. Please stop the snobery, it's good to try different things. I'm just tired of the stupid embargo here in the States! It's hard for us to enjoy good cubans, plus there is a chance you could get fake or gray market cigars.

I guess you were ok with the goverment of Cuba stealing the farms from men who had spent their entire lives building up the industry. Those folks are now forced to make there cigar elsewhere. Don't tell me a about tradition, for the tradition ended with communism.

[Tarks]

The American market is loaded with overpriced,

highly advertised cigars of dubious quality,

produced under Capitalism.

Most Non-Cuban cigars are produced in other countries, not the US! MontrealRon never indicated that they they were made in the USA. Not sure why you think otherwise??? I agree that cubans produce the best cigars in the world, no agument there. I try to enjoy different cigars from around the world. I have been able to develope a nice regional pallete for cigars. Please stop the snobery, it's good to try different things. So, a person is a snob if they only smoke Cuban cigars? Really? I exclusively smoke Cuban cigars because I enjoy them most. I have wasted thousands of dollars over the years on crappy non Cuban cigars. This makes me a snob? I'm just tired of the stupid embargo here in the States! It's hard for us to enjoy good cubans, plus there is a chance you could get fake or gray market cigars. IMO, it is not hard for Americans to enjoy Cuban cigars at a good price. We all know that. In fact, it is probably one of the easiest countries in the world to enjoy a Cuban cigar at a reasonable price.

I guess you were ok with the goverment of Cuba stealing the farms from men who had spent their entire lives building up the industry. Those folks are now forced to make there cigar elsewhere. Don't tell me a about tradition, for the tradition ended with communism.

Where did this comment come from? Who looks like a snob now?