HSA Price Rise.

[Corylax18]

8 hours ago, Cep said:

so...  what is product diluted with volado?   Which cigars are we talking about here?

 

Pretty much anything in the larger guages.

52 (pyramides) was the largest standard size for decades. Each cigar gets 1 wrapper leaf, 2 binders (in Cuba) and the rest seco/volado/ligero for filler. Ligero has the most flavor but doesnt burn well. Volado doesnt have much flavor but burns easily. 

For a 56 or 60 gauge cigar to burn they need to add more Volado, to ensure it burns correctly. They may add a bit more seco/ligero (its almost impossible to confirm) but you certainly dont get a 2nd wrapper or 3rd binder leaf. The larger in diameter a cigar gets the higher that Volado ratio gets (in theory). Its also much easier and cheaper to grow filler tobacco, so the more of that they can stuff into each wrapper leaf the better their margins look on each cigar. 

No matter how you look at things, the trends are going in the wrong direction. Someone with some business training (college) clearly moved into a decision making roll at Tabacuba when the merger happened. Their business decisions over that period have all been made with a single thought in mind. Profit. REs, LEs, Reservas, Grand reservas, etc. Are all FAR higher margin products than anything in regular production (even Cohiba) 

Nobody has ever stated any of these cigars has any different tobacco than regular production, just that its been aged longer. They have found a way to double or triple their profit margins using the same product, the same poorly trained rollers in the same crumbling buildings they've been using for years. They buy a fancier box and an extra band from the Dutch, triple the price and tell us its special. IT'S GENIUS.

P.T. Barnum nailed it, another sucker is born every minute. Positioning yourself to take advantage of people with more money than brains is never a bad idea. Especially so when the economy is doing well. It will be a lot of fun to watch what happens when things take a turn and they have to rely on a far smaller customer base.

 

[NSXCIGAR]

8 hours ago, Fugu said:

Not sure whether we are really speaking about a "record" harvest or whether Cuba will just be back to "normal" (whatever that might be ...).

I believe this was the largest harvest in many, many years based on the numbers I can find in terms of both hectares planted and net tonnage due to the excellent weather. Interstingly, as we know actual cigar production is way down over the last 20 years--around 80% less than the all-time highs in 2006. Obviously, machine-mades were much more prevalent then and they may also have been counting the Clubs/Minis/Puritos in that figure at that time before ICT took it over. And of course, HSA gross revenue has never been higher with the fewest cigars they've ever made since Altadis took over in 2000.

Makes one wonder what the actual demand for total cigars is as they seemed to be selling five times as many sticks in 2006 as they are now. And how were they able to roll 440 million sticks in 2006 with far less tobacco yield than today? While they may be utilizing more volado these days individual sticks still need wrapper and a lot of it. If they're struggling to make 90 million sticks maybe actual yield is much lower than 2006 but quality up--they're very odd numbers indeed.

[NSXCIGAR]

1 hour ago, heminway186 said:

There is one guy who uses a grey market distributor, buys their monthly on sale products, and then like clockwork flips them at 50-100% margin. Thankfully members of that community have become increasingly snarky towards him. As I get more and more into this hobby I am more and more thankful for clearance mondays on FOH. Picking up boxes for even less than what they go for in Cuba. Utterly brilliant. 

This guy's "friends" are idiots. I suppose if you've convinced a bunch of people it's "risky" to order from trusted vendors or they don't own a computer. Good luck playing this game outside of a very small circle of ignoramuses. I have done it for a small markup on a limited basis as I have friends who cannot risk a OFAC letter due to high security clearances and background concerns, but they fully understand this and are willing to pay me for the service.

As far as "gray market" a large portion of trusted vendors are "gray market". All that means is that they get distributor blowout/overstock/rejects/seconds bulk in wholesale but have no official relationship with the distributor. Which is most vendors, and many trusted vendors. I don't consider it a pejorative or "suspicious" characterization at all. The bar codes of these boxes are often removed as they distributors or the receivers have agreed to essentially hide the identity of the distributors who have sold the cigars, but again, this is a fairly common practice. 

That being said, there's no inherent advantage to this but as Rob's niche is really hand-selecting overachieving boxes and working hard on pricing with a lower volume his prices often can't be beat and certainly his price-to-quality ratio can't be touched by any other vendor I'm aware of. 

[Cep]

but i also hear people when reviewing certain cigars, they mention,  oh you can tell this is PREMIUM tobacco, implying its better than the standard tobacco that is used in all (majority of) habanos cigars. 

Is there such a thing as a higher quality tobacco than the standard tobacco coming out of vuelta abajo?

 

[heminway186]

22 minutes ago, NSXCIGAR said:

This guy's "friends" are idiots. I suppose if you've convinced a bunch of people it's "risky" to order from trusted vendors or they don't own a computer. Good luck playing this game outside of a very small circle of ignoramuses. I have done it for a small markup on a limited basis as I have friends who cannot risk a OFAC letter due to high security clearances and background concerns, but they fully understand this and are willing to pay me for the service.

As far as "gray market" a large portion of trusted vendors are "gray market". All that means is that they get distributor blowout/overstock/rejects/seconds bulk in wholesale but have no official relationship with the distributor. Which is most vendors, and many trusted vendors. I don't consider it a pejorative or "suspicious" characterization at all. The bar codes of these boxes are often removed as they distributors or the receivers have agreed to essentially hide the identity of the distributors who have sold the cigars, but again, this is a fairly common practice. 

That being said, there's no inherent advantage to this but as Rob's niche is really hand-selecting overachieving boxes and working hard on pricing with a lower volume his prices often can't be beat and certainly his price-to-quality ratio can't be touched by any other vendor I'm aware of. 

You are totally correct re grey market, the reseller in question uses a trusted vendor like you or I could and then flips those to the less informed capturing the difference in the sale price and regular price on that trusted vendors site.  

[JamesKPolkEsq]

For a buncha commies, they sure do have this capitalism thing down pat.

"Sell more lower priced units and do more work?"

'Nah, let's artificially limit supply, do less work, and make more money.'

"Sounds great, pass the Mojitos!"

[Fugu]

2 hours ago, NSXCIGAR said:

Makes one wonder what the actual demand for total cigars is as they seemed to be selling five times as many sticks in 2006 as they are now. And how were they able to roll 440 million sticks in 2006 with far less tobacco yield than today?

No, no, these figures are not comparable. The 440 m certainly include production for the domestic market and mecanizados. The premium cigar (hecho a mano) export figures have usually been below or even well below 100 million. Their annual goal usually is a figure around 100 to 120 m.

After two bad / subpar crops, in particular for wrapper leaf, they have to replenish stocks, and also likely have to set aside some additional tobacco in the warehouses for aging and buffer. So that I think, even with one above average harvest, we won't likely see ahead a glut on the market by premium sticks.

[Fugu]

7 hours ago, Cep said:

so...  what is product diluted with volado?   Which cigars are we talking about here?

To give you an indirect answer, let me ask back this question for everybodies consideration:

How is it that cigars like the emblematic Bolívar Coronas Gigantes or the Coronas Extras (cigars with a decades, almost centuries long history) got the axe - while we are presented with a Boli Libertador (I mean the LCDH release)? Or why - oh why - is it that there is only one regular vitola of the La Gloria Cubana surviving, while we are being confronted with the windtunnel cousin of the Libertador, the Inmensos, and a range of highly questionable LGC Regionals on top?

Many more examples.....

[Luca]

My reaction to the price rises...

[PigFish]

2 hours ago, JamesKPolkEsq said:

For a buncha commies, they sure do have this capitalism thing down pat.

"Sell more lower priced units and do more work?"

'Nah, let's artificially limit supply, do less work, and make more money.'

"Sounds great, pass the Mojitos!"

I am going to disagree with you here mate. Capitalism is not defined by a dictatorship, using slave labor to build a monopoly product.

True capitalism is a 'free market' process where one part is profit, and there is value for the consumer based on his ability to 'trade' freely amongst many companies offering similar goods. It is a multilateral process where people can freely move their employment, industries can freely source wholesale commodities, and customers can freely spend their capital. There is nothing about that the Cuban government does, nor that Tabacuba does that is free market or capitalistic.

You have confused making a profit for capitalism. Surely a slave trader is not a capitalist. It defies all recognized definitions of the word. 

Criminal activity, and I won't hide my prejudice, Communism is a criminal enterprise, is the antithesis of capitalism. Labor on the island is captive. All processes and trading (legal trading) is controlled by a central authority and none of it, unless it is within the black market, is free.

Cheers! -Piggy

[NSXCIGAR]

1 hour ago, Fugu said:

No, no, these figures are not comparable. The 440 m certainly include production for the domestic market and mecanizados. The premium cigar (hecho a mano) export figures have usually been below or even well below 100 million. Their annual goal usually is a figure around 100 to 120 m.

After two bad / subpar crops, in particular for wrapper leaf, they have to replenish stocks, and also likely have to set aside some additional tobacco in the warehouses for aging and buffer. So that I think, even with one above average harvest, we won't likely see ahead a glut on the market by premium sticks.

Right, I thought as much as the numbers I always heard were around 200 million sticks around 1999-2000 which I thought was exclusively premium/for export cigars. But that's still probably double the production we see today, and double the cigars needing wrappers. You make tons more cigars stuffing them with Volado but wrapper leaf is wrapper leaf.

I grasp the replenishment theory, but again, my question is, is there really a shortage outside of some Cohiba and the absence of low-production cigars (HUSW, SLR DC, etc.)? Is there any regular production cigar that can't be had in sufficient quantities at the moment from pretty much any trusted vendor? Rob always states the quality is rough and as he really screens for quality. There's surely a shortage of quality boxes, but production is still sufficient for vendors to show pretty much everything in stock with plenty of 14 and 15 kicking around with the lone exception of the Party 898 which has always been bordering on low-production.

I suppose if the lion's share of this additional tobacco from 17 is all high-quality wrapper, seco and ligero than they can simply fill in gaps and increase quality while avoiding overstock. I think the use of so much volado has exposed the fact that HSA has really had a huge ligero and seco shortage in the last 5-7 years as only 10% of the plant is volado. Or perhaps the ligero and seco has been so bad it tastes like ligero. I've had so many poorly burning large RG cigars (and small as well) that I'm wondering if there's much volado in them at all and it's possibly just bland seco and ligero. I honestly don't recall cigars burning this poorly overall 8-10 years ago and of course 07-09 has yet to be surpassed in terms of overall quality IMO, although 13 and 14 wasn't bad. But it was no 07-09, especially for fresh Monte and Cohiba.

[Fugu]

On 07/06/2017 at 2:20 AM, NSXCIGAR said:

I always heard were around 200 million sticks around 1999-2000 which I thought was exclusively premium/for export cigars.

You're right, the millenium years had seen a boost well above 200m, but that really was an exception, apart from 2006. Such patterns of high variability in exports occured quite regularly if you look back in history.

Some figures I found in an older interview with Francisco Padron from spring 1994, head of Cubatabaco. At that time facing a similar situation of wrapper shortages due to a 1993-hurricane:

Export figures:

• 1990: 80m
• 1991: 77m
• 1992: 67m
• 1993: 57m
• 1994 (plan): <50m
• 1995 (forecast): 70
• 1996 (forecast): 80-90

What can be taken from that, it takes some time (some harvests) for a slow and steady recovery of production.

You are also right regarding the all time high in 2006. I found some figures for the premium exports (from a FT report in 2010, unfortunately difficult to find a singe, concise compilation of export numbers):

• 2006: 217m
• 2007: 123m
• 2008: 73m

On 06/06/2017 at 10:17 PM, NSXCIGAR said:

Makes one wonder what the actual demand for total cigars is as they seemed to be selling five times as many sticks in 2006 as they are now. And how were they able to roll 440 million sticks in 2006 with far less tobacco yield than today?

Yes, true (but only about >double not five times, see above; also WSJ mentions 91m cigars for 2014 and sais "58% down from 2006", which is in line with the figure above), but we obviously have to distinguish between exports and actual sales in retail. No one knows (at least not us...) for how long stocks had been held back in importer's warehouses, and for how long they were sitting on shelves of retailers, until the 2008 shortages stepped in and then made them move rather quickly... These variations in Cuba's production output are not new to importers, and as such they do account and plan forward for that, at least to some extent, by a particular stock keeping. Which seems why most regular production is still available, as you say.

As to wrappers - well, there are wrappers and there are wrappers, obviously. For the absolute premium marcas they seem to make (almost) no compromises, which is why we see and saw shortages in certain production. On the other hand - see the current reporting from Rob regarding the wrapper crap that can be found in the most recent production....

[El Presidente]

On 6/7/2017 at 10:20 AM, NSXCIGAR said:

t theory, but again, my question is, is there really a shortage outside of some Cohiba and the absence of low-production cigars (HUSW, SLR DC, etc.)? Is there any regular production cigar that can't be had in sufficient quantities at the moment from pretty much any trusted vendor?

What you couldn't order last month from HSA (premium). Just some of the majors. 

BBF

BCG

Cohiba Esplendidos

Cohiba corona especiales

Cohiba Lancero

Cohiba Siglo VI

Cohiba Siglo V

Cohiba Siglo III

HDM DIEUX

HDM Prince 

Monte Especial

Monte Especial Number 2

Punch Double Corona (25)

Partagas 898

SLR Serie A 

SLR DC 

Upmann Winston

VR Don Alejandro

 

 

 

 

[NSXCIGAR]

14 minutes ago, El Presidente said:

What you couldn't order last month from HSA (premium). Just some of the majors. 

The only cigar that stands out to me on that list is the BBF. The rest are understandably Cohibas, normally low production cigars or cigars that have been slated for cut in 2017. And I would say BBF has always been a cigar that sells more than people think it does--in fact, it may be the best-selling Bolivar, and you could possibly confirm that.

I admit that quality is generally lousy despite many cigars still being generally available, and that goes to my point that they may be able to increase quality without increasing absolute production numbers which would be ideal for them and simply get Cohiba stock back to acceptable levels and the low-production cigars back in rotation, also with high quality. 

[JohnS]

15 hours ago, El Presidente said:

What you couldn't order last month from HSA (premium). Just some of the majors. 

BBF

BCG

Cohiba Esplendidos

Cohiba corona especiales

Cohiba Lancero

Cohiba Siglo VI

Cohiba Siglo V

Cohiba Siglo III

HDM DIEUX

HDM Prince 

Monte Especial

Monte Especial Number 2

Punch Double Corona (25)

Partagas 898

SLR Serie A 

SLR DC 

Upmann Winston

VR Don Alejandro

Great, just great! So many of those cigars I'd love to pickup. (But wouldn't most of us?)

[luvdunhill]

Great, just great! So many of those cigars I'd love to pickup. (But wouldn't most of us?)

Looks like Prez just cut and pasted my want list

[Randy956]

For us in Oz the HSA price rises are mere drop in the bucket a lot less than our govt/customs  imposes its the price we pay

Must be a sin tax.


Sent from my iPhone using Tapatalk Pro

[OZCUBAN]

On 05/06/2017 at 9:04 PM, TBird55 said:

The amount of  taxes in OZ, shouldn't be allowed. Do you think, that in the future, there is any chance of a reduction in the amount of taxes that the state has imposed on you all,

In a word No in twenty years or so if the government has its way no will be smoking anything let alone cigars they have the agenda of stopping the practice of smoking permanently 

[stunod]

The reality for me is , I have a few cigars I love to smoke. Luci, R &J Churchill,Monte PE,Monte 2. All are priced in the real world. Yes, I buy some LE"s , in 10"s, that peak my interest, but I will keeps stocking up on my goto's and be a happy camper.