Could HSA be discontinuing cigars for this reason?

[LeafLover]

Disclaimer first: I am not in the know and nor am I a student of the cigar industry. And, I apologize in advance if my assumptions have been beaten to death from numerous other posts causing eyes to roll.

So, I've been pondering why HSA discontinues our beloved cigars and hangs on to lesser cigars. For instance, how does Montecristo Opens survive when Partagas SDC 1,2,3 Punch RS 11 die. How does 50+ ring gauges get introduced in a market when traditionally customers prefer smaller ring gauges (my assumption based on comments on these boards)?

I understand basic economics such as supply and demand. But, could HSA's decisions be driven by supply also rather than just money? Could it be that they discontinue vitolas/marcas because they just can't produce them anymore? Bear with me here as this is the assumption I have. Not every part of the tobacco plant can be used to make a great cigar. And, perhaps not every crop in every region year after year can yield good tobacco. Do you think, that maybe certain vitolas are axed because there is not enough supply to make them? Or, HSA is not confident that they can continual produce enough supply of certain parts of the plants to replicate the flavor of that certain vitolat?

What if they use parts A of the tobacco plant from field 1 and part B of tobacco plant from field 2 to make Diplomaticos #4. One year, the crops yield enough raw material to produce let's say 3 years worth of Dip 4's. Then, the next year the tobacco plants from field 1 that yield Part A in the blend do not turn out like the first year. And let's say this occurs the next year and year after that. The material is so off that when they try to blend the Dip 4, it does not taste the same? To extrapolate this further, do you think they get all this surplus material, do their hardest to find a different so-so and acceptable blend, pack it more and more to make 50+ ring gauges then sell it off with a big marketing push (i.e. RE, LE)?

So, could this also be the impetus for HSA's discontinuations as well?

[Colt45]

Do you think, that maybe certain vitolas are axed because there is not enough supply to make them?

Supposedly there is an abundance of tobacco in storage, so I don't imagine this would be the case.

But who knows......

[CaptainQuintero]

I don't think anyone really knows apart from those doing the deletions, no sense of any logic that I can see!

My personal view is that they are trying to modernise their industry as best they can after realising the old methods are not capable of withstanding modern supply/demand pressures (98-2001 problem), it's just that they have relatively little knowledge of the modern business world and are relying heavily on the advice they are getting from Altadis/Imperial Tobacco who are also out of touch with how things have changed in the last decade.

You can see that as the very base level they are slashing what doesn't sell and making more of what does sell. Obviously fundamentally that is good but they haven't found the balance yet of keeping the whole of their customer base happy. Expect some expensive limited runs of 'connoisseur choice' cigars in the next decade is my best bet, at super premiums.

Then the people who complain at the old communist methods will presumably be happy at the ultra capitalistic company that emerges from all of this. I'm still not 100% sure how those people can complain about the lack of capitalistic practices in Cuba but then at the same time, expect Cuba to keep making what doesn't make them the most money out of their raw material and in fact expect Cuba to subsidise poor performing cigars/marcas.

[Pilgrims]

a scary idea...I just feel sadly that they think they feel they can charge more (even proportionally) for the bigger (meaning thicker) smokes...if I had/when i do have funds I'll be buying all the PC's I can get hold of, they use to be the "standard" intro size but that is the Robusto now I guess

[Smallclub]

(my assumption based on comments on these boards)?

To begin with, your assumption is wrong: the boards members are a drop in an ocean of smokers/buyers, they are not representative of the market.

Every tobacconist in Europe would tell you that it takes several years to get rid of a box of SdC No.1, or ERDM Grandes de España, when a good box of D4 is sold in a few hours…

[Orion21]

Smallclub is right. For every box of long and skinnies sold there are probably 5-10 boxes of 6"+ X 50+rg smokes that go out the door. If the long and skinnies or non-Global Brands sold well they would not be disappearing.

[Montaigut]

I believe Smallclub and Orion are dead right.

For cigar board members to account for most of the CC consumption, each member would have to consume (purchase and/or smoke) anywhere between 5 and 20 cigars per day.

This is based on a yearly CC production of 81.5 M cigars for 2010 (Telegraph, 14 Jun, 2011 - "Cuban cigar sales on the rise again"). Board membership is the total of CA (32,441), ICC (3,489) and FOH (7,539) for the 5 cigars per day figure and the total of ICC and FOH only for the 20 cigars per day figure. Reality is probably much higher since multi-board membership is assumed to be zero.

So what makes up the largest market segment? My guess would be special celebration purchases: birth, birthday, graduation, promotion, vacation, bachelor party, mariage, divorce, gifts, etc...

Typically, high price tickets are the mainstay of these purchases. So for cigars: big ring gauges, EL, RE and anything else perceived as classy by non-regular smokers based largely on price (the higher the better) or celebrity appeal.

Yes, board members are a drop in the ocean and as such are unlikely to influence HSA marketing decisions. HSA is doing what any business would do: make more of what sells and less of what doesn't.