Supply Update 24/9/21

[El Presidente]

The good news is that all major factories are back to 100%. FD at PDR is an exception along with Holguin. 

Covid is still rampant but 41% of the population are fully vaccinated and they are aiming for 90% by mid December. 

One of the major bottlenecks is freight flights but with tourism officially opening from November 15, the worst of the freight issues should resolve themselves shorly afterward. 

We are starting to see a smattering of Esplendidos, Lancero's, Ramon Allones Gigantes, VI, Esmeralda, Galanes etc. No emails please as there are no lists being taken.  Expect supply to remain poor for the remaining of Q4. It will pick up throughout 2021 but it is not expected to get back to normal (read "patchy") until 2023.  They have no money and a lot of priorities. Packaging material bottlenecks is another current  headache. 

We will recommence grading a % of stock from next week. 

Is the worst behind us all? I think it is best said that we can see the light at the end of the tunnel and it doesn't appear to be tooting.  Let's be realistic however........the whole production fiasco can go off the rails very easily. Pun intended. 

Have a great weekend!

[yossie]

So, When the pricing on Cohiba will be as regular?😘

[Bigpink]

So excited to bring back booze-fueled impulse purchases. I’m far too responsible between the hours of 3-6pm pacific. 

[Kaptain Karl]

1 hour ago, Bigpink said:

So excited to bring back booze-fueled impulse purchases. I’m far too responsible between the hours of 3-6pm pacific. 

I may need to up my drinking so I can talk myself into snagging more Esmeraldas 😂

[MrBirdman]

5 minutes ago, Kaptain Karl said:

I may need to up my drinking so I can talk myself into snagging more Esmeraldas 😂

I must have had terrible luck with my Ezzie boxes because I still haven’t had one that knocked my socks off, or even done better than a good Coloniales. Not giving up yet though, hopefully my third box will be the charm. 

[Kaptain Karl]

1 hour ago, MrBirdman said:

I must have had terrible luck with my Ezzie boxes because I still haven’t had one that knocked my socks off, or even done better than a good Coloniales. Not giving up yet though, hopefully my third box will be the charm. 

Yikes!!! I have that problem with Punch Short de Punch. 
The first Ezzie I had was from the Christmas sampler and didn’t do much for me, but my current box of TLE DIC 20’s have been amazing. Last one was a 95 pointer. 

[augster123]

Thank you for these updates.  Very helpful and informative. 

[El Presidente]

11 hours ago, yossie said:

So, When the pricing on Cohiba will be as regular?😘

I expect HSA to put Cohiba up another 5% in May

[El Presidente]

Just now, El Presidente said:

I expect HSA to put Cohiba up another 5% in May

On that note, now is the perfect time for big NC brands to make serious inroads in traditional HSA markets such as Spain/France let alone China. 

Demand for NC cigars in those markets is unprecedented......booming in response to the breakdown in the HSA supply chain. 

retailers have discovered they can make a much higher margin selling NC's.

Small snag. Supply restraints have meant that NC companies have largely been unable to meet the european and Asian demand. Their own production lines have been compromised over the past 18 months. 

[El Presidente]

12 minutes ago, Lrabold89 said:

I’m assuming prices will stay where they’re at or still continue to increase ? I feel like many folks were assuming things would lighten up but I fear not


Sent from my iPhone using Tapatalk

Global supply levels to pre pandemic numbers are not expected before 2023.  Without those levels you are unlikely to see any great level of discounting. 

[SCgarman]

2 hours ago, El Presidente said:

Global supply levels to pre pandemic numbers are not expected before 2023.  Without those levels you are unlikely to see any great level of discounting. 

If buyers are willing to pay $200 for a box of PC's, $275 for a box of Robustos, and $350 for a box of Piramides then this is the new normal. As little as 4 years ago I was buying up boxes of RASS for $189 and boxes of Monte4 for less than $150. Glad I'm stocked up!

 

[Bagman]

3 hours ago, NYgarman said:

If buyers are willing to pay $200 for a box of PC's, $275 for a box of Robustos, and $350 for a box of Piramides then this is the new normal. As little as 4 years ago I was buying up boxes of RASS for $189 and boxes of Monte4 for less than $150. Glad I'm stocked up!

 

Not true.  Not everyone is doing that.  With less stock, a smaller amount of people are buying at these prices.  When supply goes up, prices will have to decrease.  Not everyone is buying at current prices.   Pricing is just a result of simple supply and demand.

[ChuckMangione]

8 hours ago, Monterey said:

Not true.  Not everyone is doing that.  With less stock, a smaller amount of people are buying at these prices.  When supply goes up, prices will have to decrease.  Not everyone is buying at current prices.   Pricing is just a result of simple supply and demand.

If enough people are buying at these prices and demand proves to be somewhat inelastic with new world cigars not seen as a comparable substitution good, price does not have to necessarily decrease with an increase in supply. It’ll be interesting to see how it plays out. 

[Bagman]

7 hours ago, ChuckMangione said:

If enough people are buying at these prices and demand proves to be somewhat inelastic with new world cigars not seen as a comparable substitution good, price does not have to necessarily decrease with an increase in supply. It’ll be interesting to see how it plays out. 

Agree to disagree.  Both on supply/demand and new world cigars not being comparable.  While I'm for sure more into Cubans, there are so many high quality non-cubans.  An increasing price to Cubans will shift more and more of us to non-cubans  Part of it is knowing how much more supply there will be in a few years.  And with more and more countries clamping down (New Zealand with their new age restriction proposal, plain packaging, Countries/states making it nearly illegal to smoke anywhere, etc . . .) it shall be interesting if China will fill the eventual drop in world wide consumption. . Just a theory of mine.

Even I have started to cross some cigars off my list.  Cohiba's were the first to go. 

Will shall see.

 

[ChuckMangione]

8 minutes ago, Monterey said:

Agree to disagree.  Both on supply/demand and new world cigars not being comparable.  While I'm for sure more into Cubans, there are so many high quality non-cubans.  An increasing price to Cubans will shift more and more of us to non-cubans  Part of it is knowing how much more supply there will be in a few years.  And with more and more countries clamping down (New Zealand with their new age restriction proposal, plain packaging, Countries/states making it nearly illegal to smoke anywhere, etc . . .) it shall be interesting if China will fill the eventual drop in world wide consumption. . Just a theory of mine.

Even I have started to cross some cigars off my list.  Cohiba's were the first to go. 

Will shall see.

 

That’s fair. I guess I was coming in from more of an angle of cigars being luxury goods and a $2 to $4 increase in price per stick not being enough to significantly lower demand in a demographic with money to spend. However I may very well be wrong on my assumption that a large portion of the demand is supported by a demographic with higher income levels, and I realized I probably have based a large part of my argument on personal observations which may not be applicable to the population of cigar smokers as a whole. You bring up some good points that I hadn’t considered

[SCgarman]

15 hours ago, Monterey said:

Not true.  Not everyone is doing that.  With less stock, a smaller amount of people are buying at these prices.  When supply goes up, prices will have to decrease.  Not everyone is buying at current prices.   Pricing is just a result of simple supply and demand.

According to Rob, demand during the pandemic has never been higher. Couple demand with a tighter supply and hence you have inflated prices. Ever seen the price of a stainless steel Rolex Daytona or other professional series watch? They are selling for sometimes 3X msrp, and that is because Rolex authorized dealer's display cases are empty. There is a ton of money right now chasing all sorts of luxury goods including cigars. Have you ever seen the price of a box of Habanos go down? Or Rolex watches? Or Hermes Birkin handbags? Or a Ferrari? The answer is nope. This is the new normal unfortunately. Time may prove me wrong, but I seriously doubt it.

[Bagman]

4 hours ago, NYgarman said:

According to Rob, demand during the pandemic has never been higher. Couple demand with a tighter supply and hence you have inflated prices. Ever seen the price of a stainless steel Rolex Daytona or other professional series watch? They are selling for sometimes 3X msrp, and that is because Rolex authorized dealer's display cases are empty. There is a ton of money right now chasing all sorts of luxury goods including cigars. Have you ever seen the price of a box of Habanos go down? Or Rolex watches? Or Hermes Birkin handbags? Or a Ferrari? The answer is nope. This is the new normal unfortunately. Time may prove me wrong, but I seriously doubt it.

I guess you are counting on the pandemic lasting a long long time.  Also, your other items aren't under attack by the governments to reduce consumption.  So they are not comparable.  Further, prices (aside from the standard yearly May increase) out of Cuba is unchanged.  The price increases are coming from the Vendors having to stay afloat with dwindling supply.   So yes, once supply increases, prices can come back down, though I'm not expecting huge drops.  If Cuba was increasing costs, then your argument would make sense.  But that isn't the case.

[SCgarman]

1 hour ago, Monterey said:

I guess you are counting on the pandemic lasting a long long time.  Also, your other items aren't under attack by the governments to reduce consumption.  So they are not comparable.  Further, the increase of prices (aside from the standard yearly May increase) out of Cuba is unchanged.  The price increases are coming from the Vendors having to stay afloat with dwindling supply.   So yes, once supply increases, prices can come back down, though I'm not expecting huge drops.  If Cuba was increasing costs, then your argument would make sense.  But that isn't the case.

Any price decrease is certainly welcomed by my wallet. We shall see! I would love to see $199/box RASS, D4, Connie1.

[El Presidente]

The only way I could see global habanos prices dropping was if distributors/retailers ended up with stock unsold on the shelves or a significant CC market movement to NC. 

HSA has a built in 5% annual increase (average). Rolling back the clock 5 years means cigars were 25% cheaper for distributors/retailers. 

 

[MrBirdman]

6 hours ago, El Presidente said:

HSA has a built in 5% annual increase (average). Rolling back the clock 5 years means cigars were 25% cheaper for distributors/retailers. 

 

Makes total sense for the prices HSA sets, but the price increases we’ve seen in select cigars (most notably, but not exclusively, Cohiba) have been closer to 5% every other month during 2021/late 2020. Some vendors are increasing their prices on some cigars every 6 weeks. And it’s not just that promotions have disappeared, the regular retail prices from vendors outside FOH have increased by that amount.

So while HSA prices aren’t likely to change direction, their annual increases can hardly account for all of the sharp price spikes we’ve seen.

Just as one (admittedly high-end) example, at 8% annually it would take more than 8 years for Siglo V tubos to go from the price I paid last autumn (not on promotion) to the current price from the same vendor. Without wanting to offend forum rules, I’ll just add that the price for that cigar on one site is now nearly $50/stick. 

Bottom line: some of this has to been a result of supply/demand, and it’s that inflation that one could reasonably expect (hope) will subside as the situation improves, especially if NC manufacturers are able to eat into some of Cuba’s market share by the time supply returns to normal.  

[Bijan]

3 minutes ago, MrBirdman said:

Makes total sense for the prices HSA sets, but the price increases we’ve seen in select cigars (most notably, but not exclusively, Cohiba) have been closer to 5% every other month during 2021/late 2020.

Not exclusively Cohiba but mainly Cohiba. Cohiba and Trinidad have had separate higher price increases, and they have a market all their own. I'd look at staples like Monte 2/4 and PSD4.

 

 

[MrBirdman]

12 minutes ago, Bijan said:

Not exclusively Cohiba but mainly Cohiba. Cohiba and Trinidad have had separate higher price increases, and they have a market all their own. I'd look at staples like Monte 2/4 and PSD4.

 

 

I understand that as stated, but Cohiba nevertheless illustrates my point about supply/demand pressures driving some of the price increases in some cigars. No question that many cigars have only gone up a few percent, but those aren’t the increases that I think have most people concerned. It‘s the increases that are clearly in excess of any HSA-driven hike.

My point in using the Siglo V is just to illustrate the above - ie that supply and demand pressures must be playing a role to some extent. The word from FOH this May was that Cohiba went up about 8% - not not 20-60%. Naturally the disparity is going to be worst with Cohiba, but it seems unlikely to be limited to Cohiba and Trinidad given how bare the HSA cupboard is.

Also no HSA price increase can explain the magnitude and frequency of vendor price-hikes seen this year even compared to 2020, let alone prior years. 

[SCgarman]

8 minutes ago, MrBirdman said:

Makes total sense for the prices HSA sets, but the price increases we’ve seen in select cigars (most notably, but not exclusively, Cohiba) have been closer to 5% every other month during 2021/late 2020. Some vendors are increasing their prices on some cigars every 6 weeks. And it’s not just that promotions have disappeared, the regular retail prices from vendors outside FOH have increased by that amount.

So while HSA prices aren’t likely to change direction, their annual increases can hardly account for all of the sharp price spikes we’ve seen.

Just as one (admittedly high-end) example, at 8% annually it would take more than 8 years for Siglo V tubos to go from the price I paid last autumn (not on promotion) to the current price from the same vendor. Without wanting to offend forum rules, I’ll just add that the price for that cigar on one sit is nearly $50/stick. 

Bottom line: some of this has to been a result of supply/demand, and it’s that inflation that one could reasonably expect (hope) will subside as the situation improves, especially if NC manufacturers are able to eat into some of Cuba’s market share by the time supply returns to normal.  

Irrespective of HSA price increases, vendors have certainly increased their pricing in the last year or two. We've all seen it, and if we want cigars we ultimately pay what vendors choose to set their prices at. I can understand the onerous pricing for Cohiba, but never expected to pay $280 for a box of RASS or PSD4 when they were selling for $199/box in the not too distant past. Now almost all Marevas are priced like the Robustos used to be. If you can get a box of Monte4 for under $200/box, it is a bargain.

[Bijan]

2 minutes ago, MrBirdman said:

I understand that as stated, but Cohiba nevertheless illustrates my point about supply/demand pressures driving some of the price increases in some cigars. No question that many cigars have only gone up a few percent, but those aren’t the increases that I think have most people concerned. It‘s the increases that are clearly in excess of any HSA-driven hike.

The price sensitive pretty much left Cohiba a while ago, even before the recent ridiculousness.

It's at the point where some people are talking about PSD4 at $199 when they talk about the good old days. And just not buying anything.

[Bijan]

2 minutes ago, NYgarman said:

but never expected to pay $280 for a box of RASS or PSD4 when they were selling for $199/box in the not too distant past. Now almost all Marevas are priced like the Robustos used to be. If you can get a box of Monte4 for under $200/box, it is a bargain.

This is what I was talking about 🙂