Supply Update 24/9/21

[Bijan]

On top of supply and demand, and prices from HSA, there are economies of scale. Fewer boxes but similar overhead (staff, rent, etc.) means that vendors need to increase prices more too.

[MrBirdman]

2 minutes ago, NYgarman said:

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.

Exactly. It makes sense when you’ve got greatly diminished stock and an unpredictable supply line to jack up prices. If 80% of your prior customers aren’t willing to pay the higher price but you’ve only got 15% of your previous supply, you’d be a fool not to. 

I’m not saying I know what prices will do over the next few years. Assuming supply returns to normal eventually, it will ultimately be determined by whether vendors can move their pre-COVID volumes at their COVID level prices. 

Speaking as but one consumer, both the total amount I buy, and the amount of Cohiba/Trini I buy, are not inelastic (despite my loving both those brands). Can I afford the new prices? Yes. But cigars are not the only thing that I like to spend my money on. And while I lie about my cigar spending more often than I do about anything else, I’m not entirely reckless on the subject 🙂 

[SCgarman]

1 minute ago, MrBirdman said:

Exactly. It makes sense when you’ve got greatly diminished stock and an unpredictable supply line to jack up prices. If 80% of your prior customers aren’t willing to pay the higher price but you’ve only got 15% of your previous supply, you’d be a fool not to. 

I’m not saying I know what prices will do over the next few years. Assuming supply returns to normal eventually, it will ultimately be determined by whether vendors can move their pre-COVID volumes at their COVID level prices. 

Speaking as but one consumer, both the total amount I buy, and the amount of Cohiba/Trini I buy, are not inelastic (despite my loving both those brands). Can I afford the new prices? Yes. But cigars are not the only thing that I like to spend my money on. And while I lie about my cigar spending more often than I do about anything else, I’m not entirely reckless on the subject 🙂 

I smoked a Cohiba robusto last night, received from a trade with a member here. While it was good, it wasn't $350/box good which was the going rate a couple years ago. And certainly not $600/box good which seems to be the current pricing. I can still get 3 boxes of Monte4 for that amount of coin, and for myself is the better value.

[MrBirdman]

12 minutes ago, Bijan said:

This is what I was talking about 🙂

Gotcha, but I can’t help but point out that @NYgarman’s example also reflects a 40% increase in price. Again, unless HSA increases are far, far in excess of what’s been reported here, there's more at play. 
 

 

8 minutes ago, Bijan said:

On top of supply and demand, and prices from HSA, there are economies of scale. Fewer boxes but similar overhead (staff, rent, etc.) means that vendors need to increase prices more too.

No question - and I don’t mean for a second to suggest a belief that vendors are raking it in by gouging people on prices. Most are probably doing what’s necessary to get by.

[MrBirdman]

1 minute ago, NYgarman said:

I smoked a Cohiba robusto last night, received from a trade with a member here. While it was good, it wasn't $350/box good which was the going rate a couple years ago. And certainly not $600/box good which seems to be the current pricing. I can still get 3 boxes of Monte4 for that amount of coin, and for myself is the better value.

Agree entirely. I’ll take two good boxes of Choix with a c-note to spare over an SLB of CoRo any day. 

[Bagman]

If prices don't adjust downwards to what it would have been without the covid supply issue (standard 3-5% annual adjustments going back to May of 2020), a lot of us will walk away.  I'm being understanding to the vendors given their drop in sales volumes, but when that corrects and they don't adjust, then things will get interesting.  Not all of us can afford these new prices in the long term.

[Bijan]

@MrBirdman I think that if you take 25% HSA increase plus the issue of overhead on fewer boxes that explains that 40%.

Cohiba and super premiums are different because it's so expensive you can flip boxes, so if the vendor doesn't do it they'll sell out to flippers instantly who'll take the profits anyways. I don't think anyone is flipping other Robustos.

[SCgarman]

1 minute ago, MrBirdman said:

Gotcha, but I can’t help but point out that @NYgarman’s example also reflects a 40% increase in price. Again, unless HSA increases are far, far in excess of what’s been reported here, there's more at play. 
 

 

No question - and I don’t mean for a second to suggest a belief that vendors are raking it in by gouging people on prices. Most are probably doing what’s necessary to get by.

These are not HSA price increases. As been said, they are vendor increases which obviously reflect the high demand/low supply situation. The current situation with Rolex timepieces mirrors the Cuban cigar shortage. Just try to go purchase a steel Rolex sport model watch at msrp from an official jeweler. Nothing but empty display cases. But you can buy one from a reseller and have it next day FedEx for 2-3X msrp. 

[Rhinoww]

Appreciate the updates. 
 

It is challenging to normalize the price increases. I feel fortunate to have stocked up and have a decent collection and can “coast” by picking up a box or so a month to keep my rolling supply in good shape.

I feel lucky.

Can’t imagine jumping into the game now. 

[MrBirdman]

3 hours ago, Bijan said:

25% HSA increase

I think if HSA had increased prices to distributors by that much in that past year we would've heard about it. Now whether grey market sellers are seeing a 25% increase or more on what they pay for boxes, that's another story. Supply and demand affects their cost of goods too, presumably. 

 

I will just add that even with Cohiba I don't think one can assume demand will never stop building. Even the Chinese are subject to changing tastes over time.

And finally I would like everyone to stop arguing with me because I have my dream of Cohiba prices coming back to earth (somewhat) and I won't let you all kill it! 😁

[SCgarman]

37 minutes ago, Rhinoww said:

Appreciate the updates. 
 

It is challenging to normalize the price increases. I feel fortunate to have stocked up and have a decent collection and can “coast” by picking up a box or so a month to keep my rolling supply in good shape.

I feel lucky.

Can’t imagine jumping into the game now. 

Same here. Have a generous inventory built up over the years prior to the pandemic 

[Bijan]

1 hour ago, MrBirdman said:

I think if HSA had increased prices to distributors by that much in that past year we would've heard about it. Now whether grey market sellers are seeing a 25% increase or more on what they pay for boxes, that's another story. Supply and demand affects their cost of goods too, presumably. 

Look at some of these prices from FOH in 2011:

50 cab HQ BPC $299 

50 cab HQ epi 2 $449

24:24 prices are maybe up just over 25% from there now.

Mag 46 HQ 50 cab $430 (that one is up over 25%, maybe 40%).

Might be exchange rate or otherwise but HSA prices are 25% up in last 5 years according to Rob.

Also 50 cab HQ SLR DC $565 (I guess Rob is right that you couldn't give the discontinued stuff away).

[MrBirdman]

3 minutes ago, Bijan said:

Might be exchange rate or otherwise but HSA prices are 25% up in last 5 years according to Rob

I specified I was referring to the last year or so. Also, I’m based these numbers off other online vendors.

[El Presidente]

There are a lot of good NC cigars.......I plan to smoke more of them 

Supply won't come back until 2022 (late) 2023 likely. That is two more price increases from HSA. Prices aren't coming back. 

Discounting is a volume game requiring three things......volume , a deep market, confidence in pipeline supply (that the discounted goods sold can be replaced in similar quantities). 

The first and last conditions have been missing for 16 months.   

[Bijan]

52 minutes ago, MrBirdman said:

I specified I was referring to the last year or so. Also, I’m based these numbers off other online vendors.

Fair enough. I ran across a thread on another forum where about $250 for a cab of plpc was a great deal at another vendor back in 2003! I got that price last year.

But yeah, you're right prices are up in the last 6-12 months. Biggest change is several vendors offered bulk/multi box discounts and those are gone.

[SCgarman]

7 hours ago, El Presidente said:

There are a lot of good NC cigars.......I plan to smoke more of them 

Supply won't come back until 2022 (late) 2023 likely. That is two more price increases from HSA. Prices aren't coming back. 

Discounting is a volume game requiring three things......volume , a deep market, confidence in pipeline supply (that the discounted goods sold can be replaced in similar quantities). 

The first and last conditions have been missing for 16 months.   

How available are NC's, and how much are they taxed by the powers that be in Oz? They have also gone up in price. Boxes of Padron 64's and 26's as an example are well into the $300+USD range. Good cigars, but pricing through the roof just like everything else in these weird times. 

[El Presidente]

14 minutes ago, NYgarman said:

How available are NC's, and how much are they taxed by the powers that be in Oz? They have also gone up in price. Boxes of Padron 64's and 26's as an example are well into the $300+USD range. Good cigars, but pricing through the roof just like everything else in these weird times. 

Becoming more readily available. Top end isn't cheap in countries that are taxed on weight. I mentioned before that margins on NC are superior to CC. Retailers are pushing them. 

 They are making significant inroads into Europe/Asia & expecially the Chinese market. This is a good thing for those who wish to see cuban prices stabilise. real competition in their biggest markets for the first time. 

 

 

[djrey]

I along with some others I know may very likely be looking back to NC cigars soon if things do not change. Many of us haven't made a purchase in months due to the prices of stock. I'm not sure how prices can stay at their level even without an increase in supply. Not ever cigar smoker can afford to spend $600 on COROs without thought, and to many of us the change from $200 D4's to $290 D4's is enough to send us packing. If its anything like the ammo scares that happens in the US every 4 years I believe it'll work itself out. After 15 or so years of being in that market, this looks very very familiar. There was the scare of supply and many people began to panic buy which artificially drove the prices up. Eventually this will burn out as people either get the supply they are confident with or they have ran out of money. Meanwhile people with larger stashes will sit back and wait for better prices to return. A brief look around online right now reveals most venders sitting on popular staple vitolas and they seemingly aren't moving, even when on "sale." I think the hysteria that we saw over the last few months is beginning to fade and prices will need to drop in order for a substantial customer base to return. 

[joeypots]

I wonder if we are going to see more ten count boxes that will soften the bite of 25 count boxes. Having a bunch of cigars resting seems like a great luxury now.

[gustavehenne]

On 9/24/2021 at 6:20 AM, El Presidente said:

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!

Did I see 'Lanceros' mentioned?!?!? Oh dear - that's me glued to my laptop at 1.30am every morning now until I can hopefully win a box

[djrey]

On 9/27/2021 at 8:57 AM, joeypots said:

I wonder if we are going to see more ten count boxes that will soften the bite of 25 count boxes. Having a bunch of cigars resting seems like a great luxury now.

Only issue with 10's are that the price per cigar is always higher. Usually at least a few bucks a stick. Id rather just take the hit and grab 25's or 50's when possible. Saves money in the long run. 

[havanaclub]

If prices don't adjust downwards to what it would have been without the covid supply issue (standard 3-5% annual adjustments going back to May of 2020), a lot of us will walk away.  I'm being understanding to the vendors given their drop in sales volumes, but when that corrects and they don't adjust, then things will get interesting.  Not all of us can afford these new prices in the long term.

But I thought Rob stated several times that the demand for cigars has skyrocketed especially the Asian market, so wouldn’t that suggest that vendors had an INCREASE in sales volume? I dunno. But I do agree, when stock starts flying in, and nobody is bitting on 710 Cohiba Corona Especial or 360 for M2s they will have to lower prices. Just my 2 cents.


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[Bijan]

16 minutes ago, havanaclub said:

But I thought Rob stated several times that the demand for cigars has skyrocketed especially the Asian market, so wouldn’t that suggest that vendors had an INCREASE in sales volume? I dunno.

They had less cigars to sell from the supply side. If they had more cigars to sell probably would have happened.