Where does HSA go from here?

[adic88]

Unlike what many others have said on this tread, i'm actually impressed by what HSA has been able to do in the last couple of years.

Someone said it earlier, and this is the head of the issue -- cigars of the Cuban mold are luxury items. There is no such thing as a "cheap" Cuban cigar. "Cheap" is a packet of cigarettes where each stick lasts 5 minutes and costs the consumer 20 cents (a cigarette in Malaysia costs, US$0.16). Compare that against an average "corona" from Cuba which costs US$8.50 -- thats a difference of 5300%! Its even more when you factor in forex rates and purchasing power parity (PPP); in countries like Malaysia, the difference between a "cheap" cigarette and a cigar can be as much as 10,000%!

Now that we've established that a cigar is a luxury item, it needs to be treated as a luxury item. Let's try to take ourselves out of the equation, because we are looking at the problem as a customer, not necessarily as the CEO of HSA. e.g. all customers want their favourite products at a cheaper price, all customers want their favourite products distributed in quantity to where they can easily get them, all customers hate it when their particular favourite cigar gets discontinued.

How do brands treat luxury items?

Forget about HSA and cigars for a moment. How does Mont Blanc treat its pens? How does the Carrat Club treat its diamonds? How does Ferrari treat its cars? They are all luxury items, in a luxury market.

Does Mont Blanc make plastic ball point pens? I'm sure thousands of people (myself included) would love to have the great Mont Blanc reliability rolled into a plastic disposable pen. Or will Ferrari ever make a cheap family car? I know i would love to drive something like that. Same Ferrari engine, just make it cheap and put a CRV body over it. I'd buy that.

Customers will buy plastic Mont Blancs or cheap CRVs with the Ferrari logo on it. Not only will they buy it, but you can say there is a definite market and demand for it. So isn't it silly that these luxury brands ignore this market and just focus on their expensive diamond Skywalker pens or their Ferrari Diablos? Why would a business ignore potential customers?

If you can answer that question, then you will have the answer to the questions you pose to HSA. Why does HSA seem to be moving their product dome ever upwards, and scaling back on the regular product cigars, and completely eliminating certain lines? Why are Cuban cigar prices high? Why do some people think that Cuban cigar prices are "overinflated" or "not worth it" -- those are exact phrases i've heard used pretty regularly. Why do we see the likes of Cohiba Gran Reserva, retailing at US$100 per stick? (more importantly, why do we see such high demand for these cigars? you can hardly find them anywhere nowadays, every single store in Malaysia sold out of these within the first few weeks of release, even at RM500 (US$155) a stick!!!).

Rob asked us to look at this as the CEO of HSA, not as customers who wished we were CEO of HSA. There is a remarkable difference between the two.

Having said that, this is what i would do (many of these things are already being done by HSA, so i'm not really breaking new ground).

1. Ensure that all segments of my "customer dome" are well taken care of, in a proportionate manner.

Your typical customer dome is 15% low / 70% middle / 15% high <-- in relation to what they are willing and able to spend on cigars.

Segmentize my products to fit this dome, based on the availability and cost of the cigars/tobacco used to make the blends/vitolas of each segment.

Theory: Perhaps the reason why we've seen the demise of "popular" vitolas/blends such as Partagas Serie du Connoisseur is because the availability of the tobacco does not support the market price of the cigar i.e. the cigar became too expensive to produce due to a rarity or reallocation of the required ingredients. Pure speculation, but that's why other brands (non-cigars) have killed off seemingly popular product lines before.

As a business, we need to realize that tobacco is a finite resource, great tobacco even rarer still. What's the best way to make the most of what we have? That brings me to the second point.

2. Reserve my best tobacco for the 15% high segment of the customer dome, and charge them to the wazoo for it. For people who have no problems affording US$100 sticks, i don't think it's a problem for them to pay US$150 for the same stick.

Having said that, in order to service the more price sensitive 15% low / 70% middle segments, i'll ensure that current trends of quality are maintained and improved to ensure that as much value for money as possible be given for the products in this segment. I don't think customers will grumble to pay US$14 for a good Siglo IV, but each stick better be a good one.

3. The idea of regionals and custom rolls is a good one. By creating unique cigars to a particular market, you're crafting cigars that are made to serve the palates of that region, you're saying, "We hear what you want, and this is what we're doing to serve you and only you." It is a touch of class that i think the enlightened aficionado appreciates. Think McDonalds, and how their Happy Meal in India includes rice and veggie burgers while the Happy Meal in USA or UK is more traditional cheeseburger and fries.

This may also explain why cigars from outside our region may taste strange to us; i've got several sticks from Spain, Canada and Pacifica that i'll use to test this theory out -- the cigar wasn't blended for our tastes, that's why we don't like it therefore we claim its just a marketing gimmick with no added value.

However, i take a good long look at the price points for these Regionals. I think these cigars should be used to service the 70% middle segment, and also as a means to entice and hook new smokers. Therefore, the price needs to reflect this strategy.

4. Leverage on the Internet and engage directly with my customers worldwide, find out what they want; maybe even produce a limited "twitter Habanos" just like the La Aurora 107. Many others have said the same, so i'll no elaborate here.

There is a lot more i could suggest, but without knowing the actual numbers and have access to the accounts of HSA, it's very much speculatory. Many ideas would just not make any financial sense for HSA.

[Frinkiac7]

I'd say concentrating on the East Asian markets has to be central to their game plan. Here you have places where smoking is still widespread, the mainstream cultural stigma it generates in the West is not present, and there is an ever-expanding monied class with cash to burn, and is always looking for ways to conspicuously consume. Cultural attitudes towards tobacco use make the job easier, and promoting smoking as a more "refined" experience that aspiring, cash-spending types engage in is likely to go over well. Add to that fewer restrictions on promotion and getting into the market. If there's to be any expansion in brick-and-mortar, it's here rather than try and salvage it in other parts of the world.

The opposite side of the coin is to realize that cigar smoking has really reached maximum "market penetration" in the West...there simply are not loads of new smokers out there who will continue to grow your product, other than a portion of young people growing older. Recognize that your average cigar smoker in the West is at least 10 years older, on average, than your potential Eastern customers. Recognize that, between gov't restricitons, health concerns, high taxes, and cultural attitudes about smoking, you're not going to make any new groundbreaking inroads in the West.

Exploit the American market, under the table. If this means funneling more product to the internet or "grey market" suppliers who will turn around and feed the insatiable American appetite for "forbidden fruit," do it. The U.S. is likely already your single biggest market, so don't fight it. Cuba's government been at loggerheads with their government for decades, so don't worry that they have an embargo on your goods...Americans are already buying your cigars in droves, and it's not your job to let some on-paper embargo impede your marketing to this huge market. What limited push you want to make in your existing B&M stores should be all airports, duty-free, and other high-traffic destinations where these folks are likely to tread.

Finally, if the vast majority of your profits are really only coming from 20% of your offerings, continue down this road, even though you will continue to alienate connoisseurs and fans of niche brands. What's good for business is sadly not often what's good for small but dedicated numbers of fans who love the intricacies and traditions of a small local brand.

To summarize,

1. It's all about trying to grow Asia. This lets you in on a rising class of consumers who are conditioned to gravitate towards your product, and has less health-regulatory red tape. Go for the gold here.

2. Continue to discontinue non-starter vitolas and even entire lines, within reason, or continue to restrict outflow only to those countries where that brand is particularly, inexplicably popular (e.g. Sancho Panza to Spain).

3. Internet is your friend...this is where almost all savvy consumers are getting their sticks today, and your brick and mortar network is dying. Build relationships with internet retailers or your distributors who will turn around and sell to them. Don't arrest your own people who realize this is where the market is and are thus trying to supply these grey market folks...promote them! Or at least jail them, but steal their idea. This also will indirectly let you pursue the U.S. market. Also edit to say that the embargo probably won't end within three years, so don't make any plans for an immediate U.S. run on your stock!

So when can we all expect calls offering jobs from HSA?

[gsmoke]

On that note, I am beginning to notice cigars are creeping into movies. The most recent example being Wall St 2. There are three distinctive shots with cigars.

I know I've seen a few more in recent movies, but the details escape me. Maybe a new thread to highlight cigars in the arts?

On that note, I was watching the Che movie with Benicio del Toro recently and became completely hypnotized by all the cigar smoking in that magnum opus. Although I didn't get through the 4 hours or so of the movie I definitely needed to go outside and have a stogie after seeing all that smoking on the screen. Too bad I was too sleepy to do so.

[Ken Gargett]

[quote

Maybe Oliver Stone is an aficianado? Or he wanted to play on the cigar = rich big-shot stereotype?

the latter presumably suits the movie but stone did spend quite some time with castro and did a very interesting doco about it.

[gsmoke]

Forget about HSA and cigars for a moment. How does Mont Blanc treat its pens? How does the Carrat Club treat its diamonds? How does Ferrari treat its cars? They are all luxury items, in a luxury market.

Does Mont Blanc make plastic ball point pens? I'm sure thousands of people (myself included) would love to have the great Mont Blanc reliability rolled into a plastic disposable pen. Or will Ferrari ever make a cheap family car? I know i would love to drive something like that. Same Ferrari engine, just make it cheap and put a CRV body over it. I'd buy that.

My only problem with your otherwise astute analysis is that most people will only buy Mont Blanc or Ferrari a few times in their lifetime. Maybe a few dozen times overall, if I can make the assumption.

With cigars, it's feasible that we'll be buying them dozens of time per year. So, yes, they may be a luxury item, but they are items we consume in a far quicker and more engaged (for lack of a better word) than luxury pens or cars. I think wine and spirits may be the best analogy for Cuban cigars and may be the best industry to study. My input stops there because I'm just a newb.

[Frinkiac7]

Luxury brands lose their cachet if they try and "common up" their product. Sure, it would expand their market, but their entire product is built on being expensive, exclusive, and uncommon. At the end of the day, both Bic and Montblanc make pens...only Montblanc can get away with charging hundreds or even thousands of dollars for one.

[PigFish]

A cigar is no more a luxury item than toilet paper! One may perceive it as a luxury item, one may market it as a luxury item... but eventually people figure it out. That it is not a luxury item.

I have listened to all these fine folks telling me that my cigars have been dictated by the market to be, "no longer necessary." Well my friends, this marketing model is being responded to. People are saying the cigar is no longer necessary! If the argument works for discontinued cigars, it must work for cigars as a whole. There is not a person here whose life depends on a cigar. A needle and syringe on the other hand can be life or death for a person who is ill. They are infinitely more technical and costly. They are also one use, disposable. They cost only pennies! To one who is ill the value is priceless, but with that in mind, the still reflect the efficiency of the market. The cigar is priceless to no one, and it is well into the cycle that is determining its core value to many... very little!

Smoking has its elites but its base is in the common folk. Please look at smoking history. Was it invented by aristocrats or simply adopted by them. If anything smoking in general is associated with those wishing to indulge in an inexpensive pleasure. The marketing problems being felt by H SA reflect a general lack of knowledge of the market segment. No thought has been given to what tobacco is (what it has been historically), verses how they think it should be (today). The value of tobacco is set by the consumer... not the producer. Tobacco is of no real value, has no nutritional value and is simply burned as consumed. When looked at in a reductionist view, its actual value is likely less than wood for a fire!

Some have bought into this model, there is a P T Barnum quote out there reflecting the model, most know what it is. It has been the following of this model that has got them here; the denial of the reality for the sake of the delusional. The market is speaking back. For all those who have preached demand and return on investment you may wish to look more closely at what you preach. This is not a complex problem. H SA et al is not delivering what people want in that there is demand for their product at the quantity that they wish to sell it. The free for all is over for now. Real estate is going down, employment rates are going down and salaries are going down with them (in certain established markets). Yet the price of a cigar remains high, and is pushed even higher by leftist, nanny state legislation.

The cigar as a luxury item market model is a failure. It is only a matter of time until H SA starts blowing excess inventory out for cents on a dollar, likely through the gray market. When they have had enough they will respond. And like any other greedy investor who is leveraged too far for too long they will cut loose and dump holdings. And like every other greedy investor they are too blind to see that party is over for today. They will hold on until the very last moment. If you have ever held on to an investment too long you know exactly what I am talking about. Making the wrong decision hurts. Realizing it and realizing that you are wrong hurts even more. Currently... a stockpile of '07-'10 cigars (wholesale, when you are the producer) is a bad investment, and these folks simply have not seen it yet! -Piggy

PS: You knew I could not hold out forever, didn't you Rob?

[Puros Y Vino]

My only problem with your otherwise astute analysis is that most people will only buy Mont Blanc or Ferrari a few times in their lifetime. Maybe a few dozen times overall, if I can make the assumption.

With cigars, it's feasible that we'll be buying them dozens of time per year. So, yes, they may be a luxury item, but they are items we consume in a far quicker and more engaged (for lack of a better word) than luxury pens or cars. I think wine and spirits may be the best analogy for Cuban cigars and may be the best industry to study. My input stops there because I'm just a newb.

I agree, equating cigars with wine is more appropriate and is worthy of study. There are wine drinkers who are dredging for gold in the under $20/bottle range and then there are Barolo, Burgundy, Bordeaux drinkers who are willing to spend a lot more for their favourite wines. The only issue is the stigma associated with smoking in general. Its not "anti-social" to get into wine and the potential market continues to grow. Whereas cigar smokers have chosen their vice through their own volition and bringing in new people is harder due to social engineering and legislation.

[Colt45]

Piggy, I agree that while not a necessity, a good cigar need not need be considered a luxury item either. Also, in my eyes the term luxury item

usually intimates something of exceptional quality - on a consistent basis.

As for the wine analogy, barring any problems due to mishandling or storage, when I pick up a bottle of my favorite $13 Cotes du Rhone, I pretty

much know what I'm getting each and every time. With higher priced wines, value is of course subjective, but from a good producer, you are all but

guaranteed the quality of the wine in the bottle.

Can the same be said for the Havana cigar on the whole? How many of us, after clipping the cap, check and hope for a proper draw.

After lighting, and smoking a bit, hope that this particular cigar was properly blended?

[khomeinist]

Let me aim my .30-06 at this amusing question. Tongue firmly in cheek.

Good luck with me stopping at 3 takes....

1. Quality control.... Sure. Better product. Lower prices. Blah Blah. Vote for me in 2012. How about real change in the factories. I am disturbed to hear about the sanitary conditions. Unacceptable. Clean the factories up. Consider my salary 'unpaid' until workers can take a crap in peace. Associate factories with particular brands. Make the quality control supervisors well-paid and highly accountable. A good friend of mine is involved in produce quality control. It takes years of experience and a lot of dedication. Hopefully these people can be found within and promoted.

2. Let me see the books. I am bringing in my own cadre of brilliant fools. Marketing from the ground up. Focus on the majority of consumers. The rich will buy whatever crap is flashy and makes them feel special. They can enjoy H Upmann My Uncle Frank..... Permanently limited. They will love the limited F1 boxes shaped like cars. Get your Montblanc pen with a super-limited 70 Gauge BEHIKE. Wowww. Super impressive. Not hard to come up with these clever ideas. More difficult is the average consumer. This consumer wants value, performance, and information. Reach out to this consumer using MODERN methods of consumer contact (ie Internet, YouTube, etc). Many average consumers don't know an El Rey from a Vegas Robaina. We will need to educate these consumers and help foster a lifetime passion.

3. IF you were involved in the deterioration of the so-called marginal brands.....consider yourself fired. See ya. Get a job in Florida. Can you aspiring executives that want to cut back on brands be more specific? What are we talking about here? Bye Bye El Rey? Adios La Gloria? Peace out Quai? This makes no sense to me. If these brands represent a low volume of sales and profits, then there is no reason to axe these brands entirely. Why lose a brand that will only get picked up or strengthen the legal case for a pre-existing 'imposter' Dominican or Honduran knock-off? We need to realize that there is pending litigation on the status of 'Cuban' brands in the American marketplace. I would go into attack mode on this. Swedish Match? Say hello to my little friend.

4. Strengthen the struggling brands. Sorry but La Gloria and Ramon Allones are two of the best brands PERIOD. We need to continue releasing new cigars for these brands. The Ramon Allones corona gorda is a step in the right direction. La Gloria PC would be next on my list. Cuban cigars need better marketing. Understatement of the year. Increased direct contact with consumers over the internet should help in this regard.

5. Cut the EL program. Give it a rest for a few years. This concept has been DOA for some time.

6. Use the Regional program more effectively. Bring back discontinued cigars. The Por Larranaga Magnifico release is what I would model my releases on for a few years. RA 898. Partagas Seleccion Privada. El Rey Tainos. ETC.

7. Ban all petite robustos. Enough said.

8. Gotta increase 10 count boxes. I hesitate to do this with my consumer hat on...but as a filthy capitalist pig, I gotta get some money out of packaging. SNORT.

9. Most importantly.... Install myself as head of a new advertising campaign. My Yankee Doodle ass will go over well in China. A subtle f-you to my homeland wrapped in gorgeous Cuban leaf.

Further notes....Cigars are not necessarily a luxury item. I consider smoking a necessity of life. I will promote this to all. WHO can kiss my ass. That being said, cigars certainly have value. Value is not a function of strict necessity anyway. Anything exchanged in a marketplace has VALUE... we just might disagree with various interpretations of that value. It is the job of an effective business enterprise to help guide the consumer's conception of value. Whether you want to follow the Hennessey luxury model (a damn fine model) or stick with a information-based approach (use internet to leverage increased demand and curiousity).... changes need to be made.

I am your man. On that billboard. Smoking a lonsdale. HSA..... BRING SEXY BACK.

[adic88]

I am your man. On that billboard. Smoking a lonsdale. HSA..... BRING SEXY BACK.

This is such a thumbs up posting! Uber!

[adic88]

My only problem with your otherwise astute analysis is that most people will only buy Mont Blanc or Ferrari a few times in their lifetime. Maybe a few dozen times overall, if I can make the assumption.

With cigars, it's feasible that we'll be buying them dozens of time per year. So, yes, they may be a luxury item, but they are items we consume in a far quicker and more engaged (for lack of a better word) than luxury pens or cars. I think wine and spirits may be the best analogy for Cuban cigars and may be the best industry to study. My input stops there because I'm just a newb.

I think you've both asked and answered your own questions.

When i was referring to the cigar as a luxury item, of course i was referring to the Cuban cigar. Within the product range that is the "cigar" there is a low range (like Swishers or "7-Eleven cigars") and there is a high range. The Cuban cigar belongs to that upper range, and is therefore, considered "luxury" (or at least, that's how i look at it) -- luxury being something that not everyone can afford.

Therefore, when we compare it to wine, what are the top range of luxury wines? You'll find that that top range of luxury will be encountering the same issues as we face with our cigars. Price, value for money, quality, availability, even marketing.

"luxury" as a brand segment plays by different rules, Adam Smith's invisible hand is sometimes a fist rather than an open palm.

[MontrealRon]

Let me aim my .30-06 at this amusing question. Tongue firmly in cheek.

Good luck with me stopping at 3 takes....

1. Quality control.... Sure. Better product. Lower prices. Blah Blah. Vote for me in 2012. How about real change in the factories. I am disturbed to hear about the sanitary conditions. Unacceptable. Clean the factories up. Consider my salary 'unpaid' until workers can take a crap in peace. Associate factories with particular brands. Make the quality control supervisors well-paid and highly accountable. A good friend of mine is involved in produce quality control. It takes years of experience and a lot of dedication. Hopefully these people can be found within and promoted.

2. Let me see the books. I am bringing in my own cadre of brilliant fools. Marketing from the ground up. Focus on the majority of consumers. The rich will buy whatever crap is flashy and makes them feel special. They can enjoy H Upmann My Uncle Frank..... Permanently limited. They will love the limited F1 boxes shaped like cars. Get your Montblanc pen with a super-limited 70 Gauge BEHIKE. Wowww. Super impressive. Not hard to come up with these clever ideas. More difficult is the average consumer. This consumer wants value, performance, and information. Reach out to this consumer using MODERN methods of consumer contact (ie Internet, YouTube, etc). Many average consumers don't know an El Rey from a Vegas Robaina. We will need to educate these consumers and help foster a lifetime passion.

3. IF you were involved in the deterioration of the so-called marginal brands.....consider yourself fired. See ya. Get a job in Florida. Can you aspiring executives that want to cut back on brands be more specific? What are we talking about here? Bye Bye El Rey? Adios La Gloria? Peace out Quai? This makes no sense to me. If these brands represent a low volume of sales and profits, then there is no reason to axe these brands entirely. Why lose a brand that will only get picked up or strengthen the legal case for a pre-existing 'imposter' Dominican or Honduran knock-off? We need to realize that there is pending litigation on the status of 'Cuban' brands in the American marketplace. I would go into attack mode on this. Swedish Match? Say hello to my little friend.

4. Strengthen the struggling brands. Sorry but La Gloria and Ramon Allones are two of the best brands PERIOD. We need to continue releasing new cigars for these brands. The Ramon Allones corona gorda is a step in the right direction. La Gloria PC would be next on my list. Cuban cigars need better marketing. Understatement of the year. Increased direct contact with consumers over the internet should help in this regard.

5. Cut the EL program. Give it a rest for a few years. This concept has been DOA for some time.

6. Use the Regional program more effectively. Bring back discontinued cigars. The Por Larranaga Magnifico release is what I would model my releases on for a few years. RA 898. Partagas Seleccion Privada. El Rey Tainos. ETC.

7. Ban all petite robustos. Enough said.

8. Gotta increase 10 count boxes. I hesitate to do this with my consumer hat on...but as a filthy capitalist pig, I gotta get some money out of packaging. SNORT.

9. Most importantly.... Install myself as head of a new advertising campaign. My Yankee Doodle ass will go over well in China. A subtle f-you to my homeland wrapped in gorgeous Cuban leaf.

Further notes....Cigars are not necessarily a luxury item. I consider smoking a necessity of life. I will promote this to all. WHO can kiss my ass. That being said, cigars certainly have value. Value is not a function of strict necessity anyway. Anything exchanged in a marketplace has VALUE... we just might disagree with various interpretations of that value. It is the job of an effective business enterprise to help guide the consumer's conception of value. Whether you want to follow the Hennessey luxury model (a damn fine model) or stick with a information-based approach (use internet to leverage increased demand and curiousity).... changes need to be made.

I am your man. On that billboard. Smoking a lonsdale. HSA..... BRING SEXY BACK.

The finest analysis I've seen in a LONG time.

[mkz]

khomeinist......

That was bloody brilliant!!! :clap: :clap:

[cellinisart]

Lets call 2000 - 2020 the HSA game and they are now at half time.

After a promising first quarter they have hit the wall in the second. One of their leaders is in custody for corruption, their big plays of LE and RR are no longer entirely effective, once loyal crowds are staying away on the basis of tough economic times, troubles getting to the game (restrictions) and general boredom and disillusionment with the management committee whose decisions are seen as both baffling and disenfrachising.

Sounds like some football teams we all know

You have just been appointed the new HSA CEO, an opportunity or a poisoned challice?

Here is your brief:

"Three year contract to turn around the fortunes of the company and the joint venture.

Limitations you must take into account:

1. You have a diminishing retail arm. Your traditional network of bricks and mortar retailers are going to the wall or doing it tough across the world. Increased legislation won't help this during your tenure.

2. You don't have a lot of money. You need to maintain or increase return on investment while increasing sales.

3. You do have excellent reserves of quality tobacco however 80% of your profit comes from 20% of your catalogue.

As CEO, light a cigar, take a nip of rum and put forward 1-3 positive points/ideas which you believe will get you back in the game.

We have heard the consumer perspective now lets hear a retailers......Rob what would you do?

[El Presidente]

We have heard the consumer perspective now lets hear a retailers......Rob what would you do?

Firstly, some truly magnificent responses. Thankyou to all. I know we have covered this issue in different forms from time to time, but it is read by people at HSA and so a worthwhile exercise.

From a retailers perspective?

Bring back the sex in cigars

Re-engage With traditionalist clientele through a Heritage series, ditch the LE and Regionals or at least bring them out rarely and a maximum number of sticks which makes them special.

Connect to new markets and a younger generation through your proud history but utilizing modern communication tools and marketing. Yes...this involves the use of Twitter, FB, Digi etc. This also means bringing in a younger generation of HSA exec who understands and lives these mediums.

bricks and Mortar stores need support as they play a grassroots role. Control your distribution channels with an iron glove and only permit Internet retail by B&M retailers or they will all die.

There are never discontinued cigars. Only "special" cigars that are brought out every 3-5 years.

Boost struggling brands by introduction of a robusto where needed and produce "selection 30's" of those brands ala the Cohiba selection without the cohiba price tag.

Hold HSA country events. It could run like Formulae 1 racing. Every two weeks a new event in a different country.

Political realities within Cuba stifle true excellence benchmarks for construction and consistency. You need greater say at the factory level. Buy them in a JV. Vertically integrate and agitate for pay on performance.

Put a broom through current executive management. Bring in quality and marketing experience from the outside.

cigars are a lifestyle choice. They are not a rich mans play thing as one can have an ethos of excellence on differing income levels. make the Havana cigar an experience no matter what the price point.

Have fun!!!!

[Omskakas]

Bring back the sex in cigars

Connect to new markets and a younger generation through your proud history but utilizing modern communication tools and marketing. Yes...this involves the use of Twitter, FB, Digi etc. This also means bringing in a younger generation of HSA exec who understands and lives these mediums.

Right! H SA has a lot to learn from these new tools to reach young (not too!) customers. In most western countries tobacco advertising has been banned. Internet is still available to reach these countries.

And don't forget viral marketing!

See how Nintendo does it (is this what you meant with "Bring sex back", Rob?)

Ten million views! I bet this video has sold thousands of game consoles.

See how Colgate does it:

[Tom Bolivar]

Some really excellent ideas and analysis done here. And since Habanos S.A. is reading this I would like to add two things.

1. Limit ERs, ELs and use the quality tobacco for regular production. Increased quality,over the long run, will be better perceived by the customer than a lowered price.

2. Manage the production chain of the product as good and close as possible. We heard of improvements in the factories. Try to improve conditions for farmers at the almacen and other places. And most importantly train follow up people to replace the dying old guard, particularly in the master blender and curing area.

Regards,

Tom