I take it back....

[El Presidente]

With the likely opening up of US trade relations in the coming years, I was thinking that such a time leeway would allow Tabacuba/HSA to plan methodically for the increase in tobacco planting from this year, refurb its factories and infrastructure, put away good levels of tobacco, increase stock levels......the sort of thing that normal businesses do when they see the greatest demand change in 50 years on the horizon.

Well if what I am hearing is correct, 17,000 hectares will be planted this coming season. That is in comparison to 20,000 hectares last year. To put it in perspective, 26,000 hectares was planted in 2004. I have no reason to doubt my sources.

There is a quality tobacco shortage currently which was the reason for most Cohiba production effectively being taken offline for half a year in 2014 (confirmed).

You would think....that this year would be the year to "go for broke " in planting....followed by even a bigger year next year..and again the year following.

It doesn't look like it will be panning out that way. With planting commencing November, we will soon find out.

I hope I am wrong because if the information provided to me is correct, there are going to be some dark days ahead in terms of global supply

[Habana Mike]

Yikes!!!

Why would any business cut back on production when demand is already heavy with a huge potential tailwind near-term?

Which emoticon to use......

[Dimmers]

Pure guess - maybe the land cannot take "go for broke " plantings right now ?

[El Presidente]

Pure guess - maybe the land cannot take "go for broke " plantings right now ?

We will know soon enough what they do plant this year. I certainly hope 17000 hectares turns out to be wrong.

Dimmers the land is not being left fallow. You will find that is being used to plant other crops.

[ElPuro]

Even if supply increased marginally, the US demand will outstrip supply (especially in the first few years) by a large margin. I believe prices will go up and quality will decline, at least temporarily. http://fortune.com/2015/02/23/cuban-cigar-maker-eyes-25-30-of-u-s-market-if-embargo-lifted/

[CoCigarSmoker]

Even if supply increased marginally, the US demand will outstrip supply (especially in the first few years) by a large margin. I believe prices will go up and quality will decline, at least temporarily. http://fortune.com/2015/02/23/cuban-cigar-maker-eyes-25-30-of-u-s-market-if-embargo-lifted/

This is exactly my fear. I wish I had the bankroll to drop 25k on cigars now so I could ride out this tomfoolery!!

Seth

[skalls]

Looks coolidor #2 is needed.

[El Presidente]

Even if supply increased marginally, the US demand will outstrip supply (especially in the first few years) by a large margin. I believe prices will go up and quality will decline, at least temporarily. http://fortune.com/2015/02/23/cuban-cigar-maker-eyes-25-30-of-u-s-market-if-embargo-lifted/

They (HSA) estimate US demand at 50 million cigars a year. I would suspect you could double that in the first two years before it may settle down.

Total production last year was 88 Million cigars or thereabouts. Sensibly you may not need to actually roll more cigars next year (definitely the year after) but stockpile the tobacco (and build the infrastructure) in anticipation of 160 million cigars a year.

The last time they did 160 million cigars was in 1998/99 and that wasn't their finest hour. Still, they have the lessons learned, a little time on their side. However they haven't got a season to waste and that is what is perplexing.

Maybe you are right. Increase pricing, keep supply steady and let the supply/demand paradigm go to work.

[cardinalfan85]

Glad you guys are here now Prez!

[GasGuy82]

I spent the weekend looking at upright refrigerators/freezers and reading posts even before I saw this post. Looks as though my pre-planning is justified

[leftimatic]

$3500 mechanics bill on the car and the truck is on the fritz! And now I need to stock up for hard times a coming. Hmm.... Well a box or two a month, over the next 2 years, carry the 3 add 6 .... Yep, yah. I think I can weather the storm.

None the less. Ready or not. It's going to be interesting to watch how things pan out. Cigars, tourism, the whole shebang.

[dangolf18]

Sorry if I'm going a little off-topic, but let's say the embargo ended later this year. Would CCs produced 1962-2015 still be considered illegal?

[CoCigarSmoker]

Don't poke the bear.

[mash]

This assumes the embargo is going to end in the foreseeable future which I don't think is going to happen. Still a lot of opposition to this and next year's an election. They've got much bigger fish to fry and spend political capital on.

[stunod]

Suggestion gents. Stock up now. If the embargo is lifted, it will be a **** show. Crap quality and short supply.

[joeboxer]

I think there will definitely be a drop in quality as Cuba pushes to meet a huge spike in demand and we will all be extremely grateful for the few people that hand-pick boxes of cigars we spend our hard earned money hoping to enjoy. I also have a feeling that, as supply shortages occur, some of the high quality, lower priced NCs will find their way into markets that were previously corned by CCs and some the people in those markets will be suprised and develop a taste for them. While I love CCs, I am also aware that there are some very good NCs that many parts of the world have never seen before. I think (and hope!) that the NC market will expand quickly and the production problems in Cuba may balance themselves out faster than we fear as the demand returns to levels closer to embargo times due to NCs taking a larger market share outside of the U.S. These NC manufacturers may also put pressure on Cuba to increase the quality of their product over time as they move into these markets. That is what I am hoping for at least...

Sadly, Despite being a U.S. Citizen, I have no desire to see the embargo lifted because I would rather not suffer through any drop in quality.

[cigcars]

We will know soon enough what they do plant this year. I certainly hope 17000 hectares turns out to be wrong.

Dimmers the land is not being left fallow. You will find that is being used to plant other crops.

Yeah, that's the same thing I was thinking...that there's other crops they may be planning for to possibly be in demand besides tobacco. Just because WE might be Habana Seegar crazed maniacs doesn't mean that others might not want (or need) some other Cuban agricultural products!!!

[PapaDisco]

I expect the extra tobacco won't be needed right away. The first 5-10 years of U.S. demand will be easily handled by increased production of fake barber pole Cohibas. Nobody here will be able to tell the difference anyway! It takes a while to change tastes.

I wouldn't seriously expect current NC smokers in the U.S. to convert wholesale to CC's, sure there will be lots of novelty sampling, but I'll bet most guys will continue to smoke 90-95% of what they smoke now. I would project that any big, initial purchase of CC's would mostly reflect inventory buildup in the distribution system (distributors, retailers, e-tailers, etc.) as they go from zero to some level of stock. After that flurry of buying the consumption curve should moderate quite a bit.

[treberty]

I personally believe that once Americans can freely go to Cuba with looser restrictions on the value of the cigars they can take home (currently 100USD) prices will go up dramatically AND quality should decrease. Maybe not the first year, but within 3 years for sure.

Rob; why not plan your trip for November 2015 instead of 2016 ;-) ??

Just an idea...

[gr8eman]

Looks coolidor #2 is needed.

Yes...my theory is the U.S. will impose taxes on Cuban cigars similar to Canada if they become legal...Yikes, indeed! Glad I took the time and effort to build my coolidor

[wabashcr]

Assuming supply will be tight, to me the interesting question becomes how do HSA allocate cigars worldwide? Surely opening the American market will mean tighter flow to the rest of the world, but to what extent? It's going to require quite the balancing act to keep their existing partners happy, and still take advantage of new access to the American market.

I'd also be interested to see how many of their cigars they (HSA) think are already making their way to the US. I honestly don't think we're going to see a flood of cigars into the US, at least through official US distribution channels. Maybe they'll just let the gray market and other international vendors supply, or at least supplement the US market for awhile.

I know Cuba and HSA are famous for illogical decisions that nobody can explain. But I have to imagine they've spent quite some time planning for this. They may completely botch it, but they have to have a plan in place. Sounds like a good time to stock up, though.

[Quint]

Agree that demand will most likely double over night. I suspect, and robs observation seems to confirm that Cuba will not be ready for it. IMO prices will skyrocket, quality goes to sh$t for at least the short term. Maybe American interests try and move in and aquire the industry.

With all that in mind I think that what might be in our favor (present CC appreciators) is that Americans have become an instant gratification society, the upspike in demand by the millions of casual smokers is going to be short lived. These people are not going to have the patience to age cigars, one, two, or five years. After the initial wave your going to hear people saying "I don't under stand what the big deal is with Cubans" the fact is many young Cubans are not as good as aged NCs. Also the inconsistency in quality of Cubans is not going to improve during this period. Many of the serious Connoisseurs are already buying Cubans and understand the process. The golfer, out with the guys at a bar, backyard outing, type of smoker, which is a huge buyer base is going to lose interest quite quickly. These people are not going to want to drop $18-20 on a cigar that was rolled last month and smokes like a ****.

So I think there is going to be a huge spike and all our fears will be realized but it's going to be short term. Will there be a larger market no doubt, but I bet it settles at much much less than the initial bump.

[btp1979]

I still think it will be the blends that will have the major paradigm shift for the American market. Many of us love the CC Puro, but there are enough farmers growing excellent leaf outside of Cuba that there will be a large demand for blends "containing" Cuban tobacco. Plus non CC cigar companies will be able to charge a premium for "contains Cuban tobacco" on the box.

I know it's an affront to the purists, but that is the way the market will go further eroding the supply of Cuban tobacco. I suppose Cuba could ban the export of "un processed" tobacco, or maybe they already do?

[ElPuro]

Couple questions that I'd be curious to explore:

• Aren't there issues with several of the marcas - namely that there are non-cuban companies using the same brand name? I got the sense (not sure from where) that these issues needed to be figured out before the embargo could be lifted. Best of luck to whoever negotiates that situation, by the way. Not sure the Cuban government is going to be too flexible.
• I'd be curious if President Obama could effectively lift the embargo without Congressional approval similar to how he used executive order to allow the $100 limit of cigars personally carried back by US travelers. Is there something to stop him from simply ordering agencies to halt enforcement of the embargo, thus rendering it relatively impotent? Or raising the cap so high as to make it almost impossible to violate?

[Optic101]

<p>Couple questions that I'd be curious to explore:

• Aren't there issues with several of the marcas - namely that there are non-cuban companies using the same brand name? I got the sense (not sure from where) that these issues needed to be figured out before the embargo could be lifted. Best of luck to whoever negotiates that situation, by the way. Not sure the Cuban government is going to be too flexible.

There are and there are a lot of actions going on since a long time, as far we can trust 3rd hand informations.As for lifting the embargo, it would be benificial if both sides (tobacco business not Government) could solve their "topics" before but the embargo is on the country Cuba and not only on Cuban Cigars.We tent to forget to look at the bigger picture from time to time.Lets hope for a "as good as possible" preparation of the Cuban Government for that day with the focus and main interest to the Cuban people.

Just my 2cents.