Here's what could happen to Cuban cigar prices

[El Presidente]

Just an article on the subject. Nothing that hasn't been covered before and thin on any real detail.

http://fortune.com/2015/08/23/cuban-cigar-prices/

For the record, Cuba produced approximately 90 million cigars last year. It hasn't produced 150 million since 1998/99.

[skalls]

I don't see how Cuba could feed 70% of the US market without completely canabalizing the rest of the world's stock.

[btp1979]

Not to mention I wouldn't use the Russian vodka market as a benchmark either.

[archosaur]

From the article:

A sharp increase in purchases coming from the U.S. would be met by the country’s limited hand manufacturing capacity of about 150 million a year, which is about 1% of the world market.

The global cigar market is 15 billion cigars per year? Wow! That is higher than I would think, but I guess the definition of 'cigar' comes into play.

[oliverdst]

Let's see if American smokers will accept pay cuban prices.

[Smallclub]

"Cuban cigars are known for the quality of the tobacco, their tight rolling, and years of aging."

Years of aging? I guess the author has never purchased a box of reg. prod. habanos…

[Scrubber]

Let's see if American smokers will accept pay cuban prices.

This plus the prices will likely go up so they would need to pay more.

It will also be interesting to see if Americans will adapt to the Cuban flavour profile. Most would be accustomed to smoking only NC so they may not even like the flavours of CC. So there may be a spike in demand and then it may settle down. I guess only time will tel...

But I don't really see the embargo being lifted for at least another few years. Nothing will happen before the next election, that's for sure.

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[Fuzz]

Just jack up the prices for CC stock sold in the US! Gotta claw back some of that embargo money.

[OZCUBAN]

Just jack up the prices for CC stock sold in the US! Gotta claw back some of that embargo money.

It's all about the TAXES we are all to familiar with right ........

[JY0]

I bet taxes will double the price in the American distribution channel.

I know I will want to continue doing business with my current sources. If the embargo does fall I wonder if customs will clamp down on offshore distribution?

[Bartolomeo]

This plus the prices will likely go up so they would need to pay more.

It will also be interesting to see if Americans will adapt to the Cuban flavour profile. Most would be accustomed to smoking only NC so they may not even like the flavours of CC. So there may be a spike in demand and then it may settle down. I guess only time will tel...

But I don't really see the embargo being lifted for at least another few years. Nothing will happen before the next election, that's for sure.

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Speaking of NC characteristics, Talking to Hamlet thru his trial phase of developing his own line of cigars, he had to open up the draw on his cigars compared to what he was rolling back home, the American smoker doesnt want any draw issues or resistence in their smoke unlike typical Cuban cigars, something he had to modify for his new end user

[charlesod]

I'll still be buying my cigars right here!

[MrGTO]

Most of the Dbag's I meet at the cigar shops and out at bars smoking cigars talk so much **** about CCs I don't think we have anything to worry about. It's funny how they say that NCs are the same "seed" and all that garbage. I just nod my head and smile usually. I have smoked NCs because I didn't have a choice for a long time before I stumbled in here and I wish I could get that time back.

[leftimatic]

Speaking of NC characteristics, Talking to Hamlet thru his trial phase of developing his own line of cigars, he had to open up the draw on his cigars compared to what he was rolling back home, the American smoker doesnt want any draw issues or resistence in their smoke unlike typical Cuban cigars, something he had to modify for his new end user

Too bad a guy couldn't choose a stiffer draw as opposed to a wind tunnel. You know maybe make the "cubanesque" draw and a non-"cubanesque" draw option. People want Cuba without working for it I guess. I know even before I found CC's at a great quality and price and was stuck with NC's I couldn't stand smoking a "toilet paper rollesque" cigar.

Back to the topic at hand, what about all the new smokers this will create. The guys like me that went to Cuba for a few weeks and came home loving cigars. If the prices go up and they don't know any better and start buying and then move on too cheaper cigars or stop when the novelty dies off. I don't know, it may be just a bump in sales for a few years but once the prices go up on anything, rarely do they go down. Just ask the local gas station.

[CaptainQuintero]

From the article:

 

 

 

The global cigar market is 15 billion cigars per year?  Wow!  That is higher than I would think, but I guess the definition of 'cigar' comes into play.

I'm guessing it includes dry/dutch style cigars. They are pumped out in the billions

[jimsta10]

If the prices increase for Americans will it have a ripple affect onto places like AU? Could the quality decrease? Should I stock up now?

[Scrubber]

If the prices increase for Americans will it have a ripple affect onto places like AU? Could the quality decrease? Should I stock up now?

My guess would be yes, yes and probably stock up over the next couple years.

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[hoffmr3]

Not to mention I wouldn't use the Russian vodka market as a benchmark either.

I remember learning about the marketing plan behind the growth of Absolut in my Econ 101 class. I don't drink Vodka, but it amazes me how devoted vodka drinkers are to a particular brand of vodka when the liquor itself is supposed to be tasteless and odorless. The entire Vodka market is based on consumers choosing the priciest brand with the slickest marketing plan. The article seems to infer that vodka prices went down when new players came to market, when in fact the opposite seems to have occurred.

For our sake, let's hope NCs can distract the market with slick new marketing for their newest 'Cubanesque' super premium blends grown from seeds discovered in the long-forgotten garden of Theodore Roosevelt.

[brschoppe]

I could see a few things happening here....

1. I believe that the US has one of the lowest Cigar taxes from a federal government level. States vary on what they tax cigars. Unless there is a change in tax policy, the US could become one of the cheapest places outside of Cuba to buy Cuban cigars (this is just a general observation from what I have read and in my travels. Does anybody have a chart with cigar taxes by country?)

2. Many Candian customers who pay high cigar taxes live very close to US boarder. Many of them could utilize duty free to bring Cubans back to Canada for personal consumption (thus driving down Canadian cigar tax revenue)

3. Many other countries such a Canada would see a loss in their cigar tax revenue from US tourist trying the forbidden fruit while traveling abroad (yea...why did I pay $45 for a HdM E2 and Dippy 2 in Mexico last month).

[Scrubber]

I recall reading that JFK actually wanted to exempt tobacco from the embargo but there was intense lobbying from American tobacco companies to include it in the embargo. Instead he included it but not before stocking up on the upmanns.

It will be interesting to see how the NC companies react when it is close to the embargo being lifted. I assume there will again be intense lobbying so perhaps there may be tariffs or something else put in place in an attempt to protect the NC companies.

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[Ryan]

I saw somewhere recently that the US consumes 300 million premium cigars annually. I think that's about 50% of the world's premium cigar market.

Habanos hopes to get 25-30% of the US market right away, up to 70% eventually.

Habanos exported 80-90 million cigars last year.

Something in those numbers doesn't add up.

If Habanos basically doubles exports, not a small thing, up to 150 million exported. That's 50% of the US market. Provided none of the rest of the world wants any.

Basically, as far as I see it. The numbers cannot work with the Habanos model.

Cuba exported up to 300 million cigars annually in the 1930s.

But that was done with private companies, owning private factories, paying farmers and sorting houses for their tobacco.

That's the way it would have to be again in order to serve a world market which includes the U.S. There are people in Cuba, not to mention Imperial Tobacco, very happy with the status quo and won't give that up without a fight.

Until then, start saving.

Existing Habanos distributers will make all the "relationship" and "guaranteed delivery" arguments they want with Habanos.

Money.

[PigFish]

Most Americans don't know what a good cigar tastes like.

Most people across the world don't know how to store cigars.

Many Americans swear that there is little difference in cigars from Cuba and there will be little to prove otherwise.

Considering the tastes and habits of Americans generally (cigar smokers) they are completely tainted by available products and their tastes have been groomed for cigars not made in Cuba. When you and add it to what is necessary to really get the best from a Cuban cigar, what the aficionado endures to get the best from them, I don't think the typical smoker, much less the typical American smoker is going to have the patience and the fortitude to see it through. Most people are not going to do what it takes to learn from a group like this one! There will be a spike in domestic sales, and it will die rather quickly.

My take. It is not going to happen any time soon. The people who have the most to lose will be internet vendors. Americans will be exporting and that will do damage to their international trade.

Importing via the internet vendor will likely still be a great option... You all know what I mean. With the cost of self insurance removed from the price. Internet pricing will necessarily fall to 'certain' markets. I think vendors will suffer the most!

Many domestic American smokers don't believe there is a difference. As long as people don't understand what it takes to get the best from a Cuban cigar (in forms of water content and storage) there is going to be little that is going to get the typical American smoker to change to them overnight. Most will get them too wet (Cuban cigars), see little in the forms of advantage to smoking them, then go smugly back to smoking 60RG pablum... MHO

There will be a huge resurgence to frauds. This is going to hurt the Cuban cigar even further. I am not worried!!!

-Piggy

[stunod]

If the market is open to the US, it will be a **** show. Prices skyrocket, quality in the crapper, worldwide supply down, and fakes will be rampid, which I know I spelled wrong.

[parabola66]

"Cuban cigars have been the stuff of legend to U.S. smokers ever since President John Kennedy imposed broad import bans in 1962."

I wasn't aware there is an embargo!!

[DoubleDD]

......fakes will be rampid, which I know I spelled wrong.

Rampant.....I got ya bro. ? But truthfully, I've been stocking up on my favorites just in case. Worst case, I have aged sticks to mix in with fresh sticks if nothing happens to supply. My concern is taxes. Cigars are already taxed heavily where I'm at.