International pricing policy by Habanos SA

[Shrimpchips]

I’m seeing a few grey market dealers reducing prices on Cohiba and Trinidads already. So much for insatiable demand at any price.  Wonder how that’ll shake out for retailers worldwide. Maybe a time is coming soon where they’ll have to buy a certain amount of Cohiba/Trinidad so that they can buy RyJ tubos as well.

[NSXCIGAR]

1 hour ago, Shrimpchips said:

I’m seeing a few grey market dealers reducing prices on Cohiba and Trinidads already.

Yep, some 10% lower already. Right now much of what is being sold is existing stock from months ago that they're now trying to maximize profit on so there's wiggle room. That will push prices down until new product with a higher cost comes in in a few months and prices will have to rise just to make margins. And when that doesn't sell things are going to get mighty interesting...

[Fugu]

It’s a sign already that the grey market is even holding Cohiba. If demand would sustain under the new pricing regime, grey market would dry out of Cohiba and Trinidad.

[NSXCIGAR]

7 minutes ago, Fugu said:

It’s a sign already that the grey market is even holding Cohiba. If demand would sustain under the new pricing regime, grey market would dry out of Cohiba and Trinidad.

Clearly these vendors were hoarding Cohiba since early this year. Why I don't know but I for one found it very peculiar there was virtually zero Cohiba since about Feb. The whole pandemic there had been at least reasonable supply. Rob seemed to get a little of everything pretty regularly but nothing elsewhere? So obviously the distributors were moving it yet none could be found.

I was thinking maybe the Chinese were scouring the globe scooping up everything until this explosion of product in the gray market last week--literally hours after the price increases were official. 

Naturally they would have stopped selling when word of the price hikes broke in early Apr but the hoarding between Jan-Mar I can't explain. 

The only conclusion at this point is that the "shortage" of Cohiba this year is nowhere near what we thought it was which further casts doubt on the success of these price hikes. 

$1,400 CoRo and $2,200 Esplendidos ain't moving let alone $700 Esmeralda and Topes. Anyone surprised?

This is going to blow up in HSA's face and it should for thinking they can treat customers like the Cuban and Chinese people that are forced to eat their crap sandwich and like it. 

[Fugu]

45 minutes ago, NSXCIGAR said:

Naturally they would have stopped selling when word of the price hikes broke in early Apr but the hoarding between Jan-Mar I can't explain. 

The only conclusion at this point is that the "shortage" of Cohiba this year is nowhere near what we thought it was which further casts doubt on the success of these price hikes. 

Or they had info on it sooner.

It will be interesting to see whether they’ll be able to restock. And any bet they will. They’ll be glad to be able to move all that stock once it breaks to the last ‘Heeba-whore that the emperor goes naked.

[NSXCIGAR]

37 minutes ago, Fugu said:

Or they had info on it sooner.

It will be interesting to see whether they’ll be able to restock. And any bet they will. They’ll be glad to be able to move all that stock once it breaks to the last ‘Heeba-whore that the emperor goes naked.

I thought about whether they had the info sooner. That would explain it but I'm not sure how possible it is. None of us knew. Rob didn't know and it follows PCC didn't know. Would that knowledge have been shared among at least half a dozen major vendors? I would think that would have been held close to the vest by any individual vendor. It looks like only about half of the biggest gray market vendors have stock now. So only half had the info? Of the three biggest vendors one has stock and the other two don't.

As far as restocking this next wave will resupply most of the official retailers and those gray market vendors who don't have stock of which there are a few. So the distributors will move most of this next wave. But that won't sell and the problems will come when the retailers tell the distributors they don't want any more product towards Q4 and the distributors tell HSA not to send any more. HSA starts swimming in product in Cuba and that is when the poo hits the fan. They can't even sell it in Cuba at the new prices which are above world prices in many cases. The new price for CoRo in Cuba is $1,578. 

[Fugu]

4 hours ago, NSXCIGAR said:

I thought about whether they had the info sooner. That would explain it but I'm not sure how possible it is. None of us knew. ...

Ok, perhaps let’s better put it „early rumours“ - some may have bought into it / saw an opportunity, some/most did not (just like most of us when we heard it).

Well, I guess we’ll soon see how that all plays out.

[SCgarman]

7 hours ago, NSXCIGAR said:

Clearly these vendors were hoarding Cohiba since early this year. Why I don't know but I for one found it very peculiar there was virtually zero Cohiba since about Feb. The whole pandemic there had been at least reasonable supply. Rob seemed to get a little of everything pretty regularly but nothing elsewhere? So obviously the distributors were moving it yet none could be found.

I was thinking maybe the Chinese were scouring the globe scooping up everything until this explosion of product in the gray market last week--literally hours after the price increases were official. 

Naturally they would have stopped selling when word of the price hikes broke in early Apr but the hoarding between Jan-Mar I can't explain. 

The only conclusion at this point is that the "shortage" of Cohiba this year is nowhere near what we thought it was which further casts doubt on the success of these price hikes. 

$1,400 CoRo and $2,200 Esplendidos ain't moving let alone $700 Esmeralda and Topes. Anyone surprised?

This is going to blow up in HSA's face and it should for thinking they can treat customers like the Cuban and Chinese people that are forced to eat their crap sandwich and like it. 

Wasn't the game plan to have large format Cohiba at $100/stick? That would be $2500 usd/box. So far I don't see these prices happening. This whole thing just may blow up in their face.

[Rhinoww]

With regard to grey market sellers, they have always seemed to hold some stock back. Even the one that I was aware of that periodically shared its stock list had things that would roll off after a two years or so. They still had the stock, just not for sale right now. Seems it is a bit of the industry practice. Now how much is left is a different issue, pandemic changed that practice for some I’m sure, but my guess is that at the current prices a lot of falls are smoking their stash so demand is light. 
How long these prices can hold is anyones guess. My sense is that Cohiba and Trin will have sales. The rest w a 20 odd percent increase won’t have much of a discount. But that’s my guess. I’ll wait and see. In the meantime kudos to FOH for keeping a supply coming for those here who need to resupply. 

 

[SCgarman]

On 6/23/2022 at 12:58 AM, 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. 

How many in 2022 actually smoke double coronas on a regular basis? I would venture to say this vitola is a relic of the past and has only a small niche of fans. I personally have zero interest in a 2-3 hour duration cigar. 

[Tstew75]

51 minutes ago, SCgarman said:

How many in 2022 actually smoke double coronas on a regular basis? I would venture to say this vitola is a relic of the past and has only a small niche of fans. I personally have zero interest in a 2-3 hour duration cigar. 

There's still very loyal groups of 'size hounds' out there that love DCs...that said, I'm with you, I haven't smoked a DC in over 2 years...mainly b/c of constant construction problems with them, but also the almost 3hr commitment. 

[Bijan]

14 hours ago, NSXCIGAR said:

Clearly these vendors were hoarding Cohiba since early this year.

It's not just that. Some of it is higher duty grey market supply. Siglo V popped up for the first time in the last 3-4 years at one vendor, for $1,999 a box this past week. But there was Siglo V available $1,000+ at duty-inclusive prices pre-covid. I got a box in Greece last September/October.

[NSXCIGAR]

7 hours ago, SCgarman said:

Wasn't the game plan to have large format Cohiba at $100/stick? That would be $2500 usd/box. So far I don't see these prices happening. This whole thing just may blow up in their face.

I never heard a per stick figure. I heard homogenization of prices to the Apr 2022 HK level for Cohiba, Trinidad, 1935 and RyJ LdO. So far for Cohiba it looks to be about right.

Duties in HK are $2.45/g. CoRo 11.6g. Duty per stick $28.42, duty per box $710.50. Duty free price of CoRo Apr 2022 was ~$650. $650 + $710 = $1,360. There may also be local taxes or retail costs as well--that figure is just to get the box into HK. Best prices right now on CoRo are ~$1,400. Pretty darn close. 

[LLC]

1 hour ago, SCgarman said:

How many in 2022 actually smoke double coronas on a regular basis? I would venture to say this vitola is a relic of the past and has only a small niche of fans. I personally have zero interest in a 2-3 hour duration cigar. 

I had one last night and RAG is my favorite DC but I would call me have one occasional not regular. Yesterday I wasn’t able to have a cigar during the day because work was crazy. In fact the whole week was crazy so I felt it was a good time to break one out. It was an outstanding cigar. 

[NSXCIGAR]

7 hours ago, Rhinoww said:

How long these prices can hold is anyones guess. My sense is that Cohiba and Trin will have sales.

Prices aren't holding and clearly Cohiba and Trini aren't having more than marginal sales from the whales that have to have them at any cost. A 10% drop after only one week is massive. You really don't need to run an experiment to find out if $900 Trini Coloniales or $500 Cohiba Panetelas are going to sell. Spoiler alert: they won't. 

[KCCubano]

2 minutes ago, NSXCIGAR said:

Prices aren't holding and clearly Cohiba and Trini aren't having more than marginal sales from the whales that have to have them at any cost. A 10% drop after only one week is massive. You really don't need to run an experiment to find out if $900 Trini Coloniales or $500 Cohiba Panetelas are going to sell. Spoiler alert: they won't. 

I was just recently checking out vendor prices from an online shop I haved used in the past. $700 for Panatelas!! 

[NSXCIGAR]

52 minutes ago, Bijan said:

It's not just that. Some of it is higher duty grey market supply. Siglo V popped up for the first time in the last 3-4 years at one vendor, for $1,999 a box this past week. But there was Siglo V available $1,000+ at duty-inclusive prices pre-covid. I got a box in Greece last September/October.

I'm talking about gray market only. No doubt there are B & Ms all over the world with stock. Siglo V 25s have always been the rarest of all Cohiba anyway so they tend to be on the high side anywhere you go. 

2 minutes ago, KCCubano said:

I was just recently checking out vendor prices from an online shop I haved used in the past. $700 for Panatelas!! 

I'm sure they're having fun changing all the price tags in Cuba on Panetelas and Exquisitos. I don't think I saw a shop with less than 30 boxes of both collecting dust. And I've always liked Exquisitos but I refused to pay even $277 for them. 

[Bijan]

5 minutes ago, NSXCIGAR said:

I'm talking about gray market only. No doubt there are B & Ms all over the world with stock. Siglo V 25s have always been the rarest of all Cohiba anyway so they tend to be on the high side anywhere you go. 

What I meant is that the grey market may take unsold supply from retail. When CC prices for were lower, that was just Spain and similar low duty places. But now a lot of markets with duties can supply old stock.

[El Presidente]

53 minutes ago, NSXCIGAR said:

Prices aren't holding 

Outside of price regulated markets such as Spain, I am not sure what the end price for Cohiba and Trinidad will be.

For online, 10% off RRP is more than normal for those that actually follow.  It may get to 20%+ on cohiba trinidad with stock as retailers make a choice between a traditional fixed margin and a cash return. Trini still won't float. Some Cohiba won't either. 

The price and supply picture will become clear by end of July.

As for Cuba, they didn't hold back 

[NSXCIGAR]

1 hour ago, Tstew75 said:

There's still very loyal groups of 'size hounds' out there that love DCs...that said, I'm with you, I haven't smoked a DC in over 2 years...mainly b/c of constant construction problems with them, but also the almost 3hr commitment. 

There just isn't a DC I really like or I would have no issue smoking them. I mean Lusi and Punch are decent but not cigars I would buy regularly and not quite good enough on average for the 3 hr commitment for me. 

I've gotten quite a bit more comfortable with Churchills but the only one I really would buy is the SW, although I certainly like Esplendidos.

 

23 minutes ago, Bijan said:

What I meant is that the grey market may take unsold supply from retail. When CC prices for were lower, that was just Spain and similar low duty places. But now a lot of markets with duties can supply old stock.

I'm not aware that they do. Retailers typically don't want to take a haircut on lots of product. They would rather have no stock than too much. As far as I know the gray market has only ever sourced their product from distributors wholesale in bulk excluding maybe the rare exception of a retailer going out of business and liquidating, etc. 

23 minutes ago, El Presidente said:

Outside of price regulated markets such as Spain, I am not sure what the end price for Cohiba and Trinidad will be.

For online, 10% off RRP is more than normal for those that actually follow.  It may get to 20%+ on cohiba trinidad with stock as retailers make a choice between a traditiinal fixed margin and a cash return. Trini still won't float. Some Cohiba won't either. 

The price and suply picture will become clear by end of July.

As for Cuba, they didn't hold back 

Agree that things will be in flux until end of July. I do think prices will settle--how much I don't know. I think 20% is a pretty reasonable guess. Might be more. But when new stock comes in later in the year price flexibility is going to vanish and prices are going to have to go back up for a time. There won't be downward pressure again until stock starts piling up in Cuba and they relent.

In the price fixed markets they'll be hurt this summer but when prices float back up everything will be about the same. Vendors are not going to be able to really break too low. Maybe they'll get some wholesale scraps from the distributors but it won't be much. They're only going to sell at a loss for that cash return once and then they will stop taking product. 

As for these Cuba prices, I have no explanation. Just flat-out bizarro land. 

[Rhinoww]

I’m not so sure end of July will be the end of the transition. Lots of guys like me sitting on the sidelines for now. How long I or anyone else stays on the sidelines and smokes our respective stash and at what point we need to restock compared to when supplies normalize- who knows. 

[NSXCIGAR]

53 minutes ago, Rhinoww said:

I’m not so sure end of July will be the end of the transition. Lots of guys like me sitting on the sidelines for now. How long I or anyone else stays on the sidelines and smokes our respective stash and at what point we need to restock compared to when supplies normalize- who knows. 

No, of course not. It should be the end of the first phase of transition as prices settle from the initial shock. I expect another gyration before the end of the year. It'll take at least 3-6 months for stock to start piling up to concerning levels. After that is when things are going to get interesting. Buckle your seatbelts for 2023...

[joeruby]

Wow- Lucky I stocked up on Rolex when their prices dropped on competition fears from Cuban  cigar luxury market..😁

[KnightsAnole]

11 hours ago, NSXCIGAR said:

After that is when things are going to get interesting. Buckle your seatbelts for 2023...

I’ve heard that things will get “interesting” in 2023 several times now, I’m imagining that HSA will have to come to some sort of serious self-reflection concerning price to quality to it’s place in the luxury market. I’ve never seen a company face it so dramatically though. If you had to guess, what options will finally be there for them in 2023, assuming the stock piles up in Cuba. (Thanks for your superb analysis thus far NSX) 

[Fugu]

On 6/25/2022 at 9:41 AM, NSXCIGAR said:

I thought about whether they had the info sooner. That would explain it but I'm not sure how possible it is. None of us knew. Rob didn't know and it follows PCC didn't know.

There had been rumours and announcements of price hikes seeping in from European distributors as well as PCC as early as February, AFAIR. Even topical here on the forum. While it’s unclear to me as to how detailed that info had been at that time, and whether it yet included a rough sketching of the the new Trinihiba-scheme, there certainly was talk as early as beginning of 2022.