50% Stake in Habanos SA to be Sold to Chinese Cigarette Firm

[Guest Nekhyludov]

https://halfwheel.com/huabao-international-expected-to-purchase-imperial-brands-cigar-divisions/367699/

[CaptainQuintero]

  I wonder if we will look back at this moment in a decade and wonder how profound it was to the CC world as we know it.

  Just looking back at how much the CC world has changed since Imperial bought it's stake in CCs it's hard to see things staying the same

[MooseAMuffin]

Considering the love for CCs in China, I am wondering if this causes a hefty price jump.

[Guest Nekhyludov]

24 minutes ago, CaptainQuintero said:

  I wonder if we will look back at this moment in a decade and wonder how profound it was to the CC world as we know it.

  Just looking back at how much the CC world has changed since Imperial bought it's stake in CCs it's hard to see things staying the same

Agreed. I can't imagine that this won't foster some change, but who knows what that will be. The thing that I find curious is that such a seemingly obscure company won the bidding. I'm not at all surprised that it went to a Chinese firm, but I would have thought that Chinese National Tobacco Co. would have been the one to pursue it. Not some under-the-radar flavored cigarette company.

[TBird55]

Put away as much as you can...

[El Presidente]

2 minutes ago, Nekhyludov said:

Agreed. I can't imagine that this won't foster some change, but who knows what that will be. The thing that I find curious is that such a seemingly obscure company won the bidding. I'm not at all surprised that it went to a Chinese firm, but I would have thought that Chinese National Tobacco Co. would have been the one to pursue it. Not some under-the-radar flavored cigarette company.

Wheels within wheels within wheels. 

[kalibratecuba]

I predict a baijiu-cigar pairing feature in Cigar Aficionado's future.

Sent from my GM1917 using Tapatalk

[Guest Nekhyludov]

11 minutes ago, TBird55 said:

Put away as much as you can...

Ugh. I hadn't even thought of that yet. Are all of us OCD, FOMO-afflicted hoarders gonna go on a panicked spending spree now? 

[Habana Mike]

11 minutes ago, Nekhyludov said:

Ugh. I hadn't even thought of that yet. Are all of us OCD, FOMO-afflicted hoarders gonna go on a panicked spending spree now? 

Not the ones that have overstocked beyond their grandchildren's life spans...

[Tstew75]

What alternate universe do we live in???

[NSXCIGAR]

Had been wondering about this. I had heard it was going to be revealed at Intertabak but no word.

I guess the only people left that haven't been screwed by the Cubans are the Chinese. They may be the only ones left foolish enough to go into business with the Cuban government and the Cubans the only ones desperate enough to go into business with the Chinese government.

[El Presidente]

27 minutes ago, NSXCIGAR said:

Had been wondering about this. I had heard it was going to be revealed at Intertabak but no word.

I guess the only people left that haven't been screwed by the Cubans are the Chinese. They may be the only ones left foolish enough to go into business with the Cuban government and the Cubans the only ones desperate enough to go into business with the Chinese government.

Nothing to do with it. 

If you have associated business in the USA, you were largely ruled out. 

You need to transfer money globally in and out. You need to be able to operate outside of traditional US fund transfer/banking markets. 

That left the Chinese as the favourites. They don't give a fig and have developed quite a sophisticated market outside of US control. They also don't give a hoot about the Helms Burton act. 

Nice long term play. 

 

 

[GWG]

Any ideas how this will effect the cigar market in general? Who will control distribution of the cuban product?

[aircooled]

My two centavos- I would wait and see.  If they do something similar to what Geely is doing with Volvo- I'm all for it.

[NSXCIGAR]

2 hours ago, El Presidente said:

Nothing to do with it. 

If you have associated business in the USA, you were largely ruled out. 

You need to transfer money globally in and out. You need to be able to operate outside of traditional US fund transfer/banking markets. 

That left the Chinese as the favourites. They don't give a fig and have developed quite a sophisticated market outside of US control. They also don't give a hoot about the Helms Burton act. 

Nice long term play. 

I suppose they were one of the only options but that doesn't necessarily make it a smart decision. Do we know why Imperial is selling?

[NSXCIGAR]

1 hour ago, GWG said:

Any ideas how this will effect the cigar market in general? Who will control distribution of the cuban product?

I would imagine HSA's current system should remain intact initially and possibly forever. I always saw Altadis/Imperial as behind-the-scenes players anyway having input mainly in the marketing and development area. I guarantee they were responsible for virtually every special release in the last 19 years. Almost nothing had changed in Cuban cigars since the Revolution until Altadis came along. They cut production by 50% and increased revenues by 100% within 10 years. In the business world that's simply astounding.

And they also have nothing to do with the production of the cigars. That's all Cubatabaco. Other than commissioning certain cigars from Cubatabaco. 

[El Presidente]

2 hours ago, NSXCIGAR said:

I suppose they were one of the only options but that doesn't necessarily make it a smart decision. Do we know why Imperial is selling?

It is largely about the transfer of money. No use making profits if you can't transfer them due to the financial system that Trump has made immeasurably harder. The Chinese operate largely outside of that system.

Imperial have a relatively high debt ratio. This is a nice offload of an increasing headache. 

[Meklown]

5 hours ago, NSXCIGAR said:

They may be the only ones left foolish enough to go into business with the Cuban government and the Cubans the only ones desperate enough to go into business with the Chinese government.

Pardon my ignorance, but why would it be "foolish" to go into business with Cuban govt and why do you need to be "desperate" to go into business with the Chinese govt?

[El Presidente]

5 minutes ago, Meklown said:

Pardon my ignorance, but why would it be "foolish" to go into business with Cuban govt and why do you need to be "desperate" to go into business with the Chinese govt?

Cuban govt as JV partners have proven to be (in many endeavours) a folly. They do not have the commercial rigueur that is expected. 

Many companies/countries do business with Chinese corporations without a problem.  In our experience over 8 years they are quite excellent. 

[Duxnutz]

Oh snap. All I need is a 50 cab of Hoyo DCs and some Esplendidos with Oct 2019 box date and I’m golden. 
 

 

[El Presidente]

6 hours ago, GWG said:

Any ideas how this will effect the cigar market in general? Who will control distribution of the cuban product?

The sphere of influence is about to move from Madrid to Beijing. 

Well, as much influence as you can have on the Cuban Govt. 

[WABOOM]

I hate to say it but this ain't good.

 

 

[Puros Y Vino]

Is there any chance of the product being affected?  I recall reading that China was setting up large tobacco plantations. Probably for the local cigarette trade.  I also recall a website popping up that claimed Hiroshi Robaina was part of a new Chinese cigar company. It turned out to be BS, but given how easily products get "replicated" in China it has a potentially negative aspect.  There's rumors of fake French wines being mass produced there.  I remember you could also buy tons of fake cigar boxes on alibaba.com.  Perfect looking Behike boxes with all the components, right down to the smelly slip cover.  And most troubling, "old" Cuban Davidoff boxes.  Even if any of that is true to a degree, one would have to ask why buy a 50% stake in a company whose products you might be trying to counterfeit??  

[Reuben]

This is definitely worrisome

[El Presidente]

8 hours ago, bundwallah said:

Is there any chance of the product being affected?  I recall reading that China was setting up large tobacco plantations. Probably for the local cigarette trade.  I also recall a website popping up that claimed Hiroshi Robaina was part of a new Chinese cigar company. It turned out to be BS, but given how easily products get "replicated" in China it has a potentially negative aspect.  There's rumors of fake French wines being mass produced there.  I remember you could also buy tons of fake cigar boxes on alibaba.com.  Perfect looking Behike boxes with all the components, right down to the smelly slip cover.  And most troubling, "old" Cuban Davidoff boxes.  Even if any of that is true to a degree, one would have to ask why buy a 50% stake in a company whose products you might be trying to counterfeit??  

I understand China is the largest individual producer of cigars in the world and they are 100% domestic market. The market is owned by China Tobacco *

The buyers here are not China Tobacco but largely a luxury goods.ingredient trader.   They have just purchase themselves a global retail channel for tobacco. 

I am not sure why they would want to screw that up?

If the embargo does fall in the next decade, the value of this portfolio would be doubled+  Right now, because of  embargo banking/money transfer restrictions, the number of buyers who could make it work were limited.  Nice pick up. 

 

*China Tobacco

State Tobacco Monopoly Administration and China National Tobacco Corporation is a Chinese government agency responsible for tobacco regulation and a state-owned manufacturer of tobacco products, operated by the Ministry of Industry and Information Technology of China