International pricing policy by Habanos SA

[NSXCIGAR]

17 hours ago, Bijan said:

essentially this whole price homogenization is Habanos SA's realization that some number of cigars do sell at duty paid prices in some of the high duty countries. So HSA thinks to sell close to those prices duty free and "pocket" the duties.

Yes, they believe if people are willing to pay $1,400 for CoRo they should get that money. But they never can. They still have the same margins in the high-duty markets as prices (and therefore profit) haven't changed there. They're just assuming the rest of the world is willing to pay those same prices and I can assure you they are not. 70% of their market is simply not going to pay those prices. They're trying to gouge low-duty countries and I don't think it's going to work. 

Somehow it's not surprising that China and Cuba--the two countries in charge of HSA--are treating people with different preferences, different cultures and different economic conditions in different markets like homogeneous automatons. 

[Bijan]

3 hours ago, NSXCIGAR said:

They're trying to gouge low-duty countries and I don't think it's going to work

I think they're going to cut supply to high duty countries and force high duty customers to pay duty prices at duty free and smuggle them back. That would be the idea (especially China) as according to anecdotal evidence there is a strong buying abroad and muling them back to flip system in place.

[NSXCIGAR]

6 hours ago, Bijan said:

I think they're going to cut supply to high duty countries and force high duty customers to pay duty prices at duty free and smuggle them back. That would be the idea (especially China) as according to anecdotal evidence there is a strong buying abroad and muling them back to flip system in place.

So H & F and Havana House are out of business? And they'd have to tell PCC not to sell to HK and China. I guess they could simply refuse to reimburse the duties for those countries and at that point no retailer could take possession of product unless they could sell $3,000 CoRo which ain't happening. 

As far as muling in China it is prevalent but I doubt it accounts for a large portion of cigars consumed there. First, any mule has to have special privileges from the CCP. And then how much can one person physically bring? If China is 10-15% of the market are they really muling 10 million cigars a year? 400,000 boxes? That's 21 people a day in Havana taking out 50 boxes each of premium product. That isn't happening nor has it been. More like once or twice a week a group comes in and buys a hundred boxes. 

The margins they'd have to have to profit from muling at that point would necessitate prices above the retail prices in China. Ok, eliminate retail there but then you have essentially mail order and small amounts. And imagine if caught--they'd have to pay 200% on the $1,400 CoRo! 

I suppose if the market for CoRo was $3,000 it could work but seriously, how many people are going to pay $3,000 for CoRo even in the wealthiest of countries? That is a seriously limited pool of buyers. 

This plan seems to virtually eliminate CCs from these markets. 

[Bijan]

5 hours ago, NSXCIGAR said:

So H & F and Havana House are out of business?

Not that they're out of business but that they won't give them more supply.

How much were they moving through Canada before worldwide Cohiba prices hit Canada prices? 1% of global supply? Less? Likely.

They'll just freeze them at something like that level, enough to supply the local market. But right now the UK vendors are actually happy (maybe even giddy) and sales are somewhat brisk because there's no benefit to buying Cohiba abroad.

As to the rest, we both know that a certain country has a total ban on Cuban cigars and that really hasn't stopped anyone that wanted them. Likewise Canada has crazy duties, and that hasn't stopped me or others completely either.

You are right that price will affect demand. We can argue how elastic or inelastic demand is, but it's not infinitely inelastic.

Anyways all that to say, yes likely demand will go down to 30% as you say. But if people want it (at these prices) and it's available abroad and not domestically it will get in. If no country on earth can stop heroin from getting in with jail time and even death penalties, etc. I don't think Cohibas are going to be hard to smuggle.

[GoodStix]

1 hour ago, Bijan said:

If no country on earth can stop heroin from getting in… I don't think Cohibas are going to be hard to smuggle.

The way some of that heroin is smuggled in, I don’t think I’d wanna smoke that Cohiba.  One’d really have to be a fan of barnyard 😉

[Miguel Gracias]

Putting cohiba on same level as heroin doesn't sound right. I've never thought that I would spend my whole savings and get loans for getting more cohiba after smoking one.

[Shaunster]

As to the rest, we both know that a certain country has a total ban on cuban cigars and that really hasn't stopped anyone that wanted them. Likewise Canada has crazy duties, and that hasn't stopped me or others completely either.
You are right that price will affect demand. We can argue how elastic or inelastic demand is, but it's not infinitely inelastic.
Anyways all that to say, yes likely demand will go down to 30% as you say. But if people want it (at these prices) and it's available abroad and not domestically it will get in. If no country on earth can stop heroin from getting in with jail time and even death penalties, etc. I don't think Cohibas are going to be hard to smuggle.

That country with a total ban also has access to Cubans at some of the cheapest prices in the world. (I always found that ironic). I wonder if demand will stay the same now that they have a very small dose of the high price a lot of the world has to pay for Cuban cigars.

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[Bijan]

3 minutes ago, Miguel Gracias said:

Putting cohiba on same level as heroin doesn't sound right. I've never thought that I would spend my whole savings and get loans for getting more cohiba after smoking one.

Yes it was a bit of an extreme example. I didn't mean to compare them as similar, in price, health effect, addictiveness, etc. Only to say that anything will make it across borders if there's a demand at the price.

Maybe alcohol import, sales and consumption during prohibition would be closer to the mark.

[SCgarman]

14 hours ago, Shaunster said:

That country with a total ban also has access to Cubans at some of the cheapest prices in the world. (I always found that ironic). I wonder if demand will stay the same now that they have a very small dose of the high price a lot of the world has to pay for Cuban cigars.

Sent from my SM-G986B using Tapatalk
 

Sounds a bit more resentful than ironic to me if you are talking about us in the usa. If I am mistaken, then disregard my comment. 

[MrBirdman]

9 minutes ago, SCgarman said:

Sounds a bit more resentful than ironic to me if you are talking about us in the usa. If I am mistaken, then disregard my comment. 

It’s almost the definition of ironic. It could very well be said resentfully too, but the situation is definitely ironic. 

[Shaunster]

Sounds a bit more resentful than ironic to me if you are talking about us in the usa. If I am mistaken, then disregard my comment. 

It's not resentful it is an observation based on the reality of the situation.

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[Rhinoww]

Saw my neighbor for the first time in months. He was  smoking a sig IV and asked why he couldn’t find anymore cohibas. I didn’t have the heart to tell him what was going on as he just booked a trip to cuba in October. Just said new pricing policy was rough and supply was waaaay down.  
I’ll break the news to him slowly. 

[Homer]

9 hours ago, Rhinoww said:

Saw my neighbor for the first time in months. He was  smoking a sig IV and asked why he couldn’t find anymore cohibas. I didn’t have the heart to tell him what was going on as he just booked a trip to cuba in October. Just said new pricing policy was rough and supply was waaaay down.  
I’ll break the news to him slowly. 

If your neighbor belongs to the new Cohiba target group the price should be meaningless.

[JohnnyO]

In T2 this weekend there was MC #1/Edmundos in the 11 Euros range, TTT Esmeraldas 16+ Euros, TTT Coloniales 10+ Euros. No Cohiba unless you want super small sized mini, short, club. Water was very difficult to find. Power went out 3-4 times in the middle of the night in a casa particular. At one point it was me vs 1000 mosquitos. Had to walk around the block chugging Bucaneros at 2am to keep them off me. John

[Deezwho]

Prices were artificially low in the US due to the nature of the grey market.

Personally finding it much harder to swallow $1500 for a box of CoRos than I thought I would considering they were 600 just a few months ago. Ill probably smoke through my stockpile and if prices are still this ludicrous I guess Ill have to experiment with some NC brands or just quit for a while.

[Rhinoww]

7 hours ago, Homer said:

If your neighbor belongs to the new Cohiba target group the price should be meaningless.

He is not. Just a guy who likes cigars and has had a steady supply since the 80’s when he was in the navy. Has a friend that owns a trucking company who would get him coro from Mexican and Canadian LCDH. I showed him some reputable online sources a few years ago and he has been eternally grateful. He smoked what he has had for years. No stockpile. Guys like him will be out of the CC market when their stock is all smoked. For him, it’s about three more months. He has always had a few nice sticks and smoked them, but he’s not a $70/stick kinda guy. 

[SCgarman]

6 hours ago, Rhinoww said:

He is not. Just a guy who likes cigars and has had a steady supply since the 80’s when he was in the navy. Has a friend that owns a trucking company who would get him coro from Mexican and Canadian LCDH. I showed him some reputable online sources a few years ago and he has been eternally grateful. He smoked what he has had for years. No stockpile. Guys like him will be out of the CC market when their stock is all smoked. For him, it’s about three more months. He has always had a few nice sticks and smoked them, but he’s not a $70/stick kinda guy. 

Many here may be out of the game including myself after the stockpile is gone. Not the end of the world by any means. I have other hobbies to keep me busy. Cigars are not a necessity for survival in life. If you don't have food, clothing, shelter and transportation those are far bigger fish in the sea to worry about. 

 

13 hours ago, Deezwho said:

Prices were artificially low in the US due to the nature of the grey market.

Personally finding it much harder to swallow $1500 for a box of CoRos than I thought I would considering they were 600 just a few months ago. Ill probably smoke through my stockpile and if prices are still this ludicrous I guess Ill have to experiment with some NC brands or just quit for a while.

They were $350/box no more than 5 years ago. I thought that was a ridiculous price. as I was buying boxes of RASS for $190 and Monte4 for less than $150. 

[mcicvara]

Prices at Cayo Coco still unchanged, selection is poor. Grabbed the last box of Trinidad Reyes at $6.75 (2018).

[NSXCIGAR]

On 6/18/2022 at 11:07 PM, Deezwho said:

Prices were artificially low in the US due to the nature of the grey market.

If by artificially low you mean the gray market kept prices down due to competition I'd agree, but then the prices aren't "artificially" low, they're naturally low. The entire reason the gray market exists is because of a surplus of product at the retail level. Distributors buy more product than they can move in their region and wholesale it out to the gray market.

I will give you that there may be a certain measure of demand inelasticity with CCs meaning no matter how low the price is demand has a ceiling, i.e. you can't move more product by lowering prices. But when prices rise, particularly by many multiples you're necessarily eliminating people from the market. 

We had CoRo, etc. sitting on shelves for 20 years at prices of $300-500. Years when production was nowhere near 2019 levels. Doubling the price isn't going to move more product. Just wait until distributors can't move this next wave of product and HSA can't get them to take on more. By the end of the year they're going to need scuba gear in the HSA warehouse to get through the sea of product piling up.

HSA can always backpedal on this and save face by saying it was a temporary price policy due to whatever--pandemic, roller shortage, aliens and relax prices a bit (or a lot). 

The new prices I'm hearing about in Cuba this week are higher than duty free. Anyone think that's going to work? 

[SCgarman]

7 minutes ago, NSXCIGAR said:

If by artificially low you mean the gray market kept prices down due to competition I'd agree, but then the prices aren't "artificially" low, they're naturally low. The entire reason the gray market exists is because of a surplus of product at the retail level. Distributors buy more product than they can move in their region and wholesale it out to the gray market.

I will give you that there may be a certain measure of demand inelasticity with CCs meaning no matter how low the price is demand has a ceiling, i.e. you can't move more product by lowering prices. But when prices rise, particularly by many multiples you're necessarily eliminating people from the market. 

We had CoRo, etc. sitting on shelves for 20 years at prices of $300-500. Years when production was nowhere near 2019 levels. Doubling the price isn't going to move more product. Just wait until distributors can't move this next wave of product and HSA can't get them to take on more. By the end of the year they're going to need scuba gear in the HSA warehouse to get through the sea of product piling up.

HSA can always backpedal on this and save face by saying it was a temporary price policy due to whatever--pandemic, roller shortage, aliens and relax prices a bit (or a lot). 

The new prices I'm hearing about in Cuba this week are higher than duty free. Anyone think that's going to work? 

Who will buy these newly priced boxes in Cuba? Millions of tourists from the USA and Canada? Or will Chinese mules come and buy them all up for their wealthy "whales"? Personally I don't care, but I would like to request $200/box Monte 4 and other PC's. I know, call me delusional 🤪 

[NSXCIGAR]

1 hour ago, SCgarman said:

Who will buy these newly priced boxes in Cuba? Millions of tourists from the USA and Canada? Or will Chinese mules come and buy them all up for their wealthy "whales"? Personally I don't care, but I would like to request $200/box Monte 4 and other PC's. I know, call me delusional 🤪 

Well, US can't anymore. Maybe Canada to actually get the box and bands but 50 cigar limit. And how many Canadians are rushing down to get $2,200 Esplendidos? 

Part of the Chinese muleing was profit. That's gone now. This was government-sanctioned activity. You can find Esplendidos easily now.

The good news is I hear PCs, Minutos and Perlas haven't really gone up. And the DCs as well aren't too bad. 

But get this: RyJ Short Churchills now 10% higher than Wide Churchills. 

[SCgarman]

43 minutes ago, NSXCIGAR said:

Well, US can't anymore. Maybe Canada to actually get the box and bands but 50 cigar limit. And how many Canadians are rushing down to get $2,200 Esplendidos? 

Part of the Chinese muleing was profit. That's gone now. This was government-sanctioned activity. You can find Esplendidos easily now.

The good news is I hear PCs, Minutos and Perlas haven't really gone up. And the DCs as well aren't too bad. 

But get this: RyJ Short Churchills now 10% higher than Wide Churchills. 

Only Romeo I really enjoy is Exhibition #4. But not at these current prices. 

[El Presidente]

1 hour ago, NSXCIGAR said:

 

The good news is I hear PCs, Minutos and Perlas haven't really gone up. And the DCs as well aren't too bad. 

But get this: RyJ Short Churchills now 10% higher than Wide Churchills. 

Interesting. 

I heard 22% on DC or that may have been just the Lusi.  

Not that you can find one 

[NSXCIGAR]

2 hours ago, El Presidente said:

Interesting. 

I heard 22% on DC or that may have been just the Lusi.  

Not that you can find one 

RAG is now the most expensive DC by far. Punch is cheapest. Lusi and Hoyo in between.

All DCs up by about 60% but it could have been worse. DCs were always a great deal in Cuba. Now they're at what world price had been--$500-600.

Again, these are Cuba prices which we have seen may be above world price. If world price for Lusi goes from $500 to $600 that's a 20% hike which is consistent with what you saw. 

[El Presidente]

2 hours ago, NSXCIGAR said:

RAG is now the most expensive DC by far. Punch is cheapest. Lusi and Hoyo in between.

All DCs up by about 60% but it could have been worse. DCs were always a great deal in Cuba. Now they're at what world price had been--$500-600.

Again, these are Cuba prices which we have seen may be above world price. If world price for Lusi goes from $500 to $600 that's a 20% hike which is consistent with what you saw. 

I can't wait to see this shake out