International pricing policy by Habanos SA


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I encourage everybody to ignore that request 

Yeah - “Smoking these may lead to bankruptcy!”

Except for the fact that there are no Cohiba,Behike/Fundadores in Shanghai,Beijing,Tianjin, Guangzhou, Shenzhen, Chengdu.  If they were rolling around in boxes  of Behike etal, I would believe ha

It's indeed bad...but as Prez said, don't freak out & give up this glorious hobby that easy. Something tells me this thing will turn around in certain regards & might level out some.

But Hiba & Trini are different- if they price these 2 brands out of all of our budgets, then it is what it is. None of us drink Dom P, Salon or Krug Champagnes on a weekly basis either, that's how luxury brands go.

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33 minutes ago, Tstew75 said:

None of us drink Dom P, Salon or Krug Champagnes on a weekly basis either, that's how luxury brands go

Very true, though with the possible exception of Salon those wines are already a better value than Cohiba when you consider the costs of production, quality and consistency.

$2500 Siglo VI are more on the level of Louis Vuitton or Gucci - veblen goods whose heightened price is largely unrelated to any greater value or quality. 

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10 hours ago, JohnS said:

It all just makes you think, "Aah...the good 'ol days!"

If I may borrow a line from Billy Joel, "The good ole days weren't always good, and tomorrow ain't as bad as it seems".

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I'm still confused about this "Hong Kong pricing." Retail pricing is higher than average in HK because of duties. HK isn't a distribution region--it's one country. PCC distributes to HK. Pricing is between HSA and PCC. 

If HSA raised their prices to PCC HK prices would still be higher than everywhere else because of the duties.

Am I missing something? 

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2 hours ago, NSXCIGAR said:

I'm still confused about this "Hong Kong pricing." Retail pricing is higher than average in HK because of duties. HK isn't a distribution region--it's one country. PCC distributes to HK. Pricing is between HSA and PCC. 

If HSA raised their prices to PCC HK prices would still be higher than everywhere else because of the duties.

Am I missing something? 

Yeah I got stuck here too. Most high pricing worldwide is due to duties, having a global msrp would require country by country tinkering; I have no idea if HSA would be able to push such pricing thru the distributors or try to control duty free sales (not just airports, but essentially online sales). I guess we'll see how far into regular production this pricing will go. I can't imagine they'd totally price themselves out of the greater cigar market,  but they'll do what they want...

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Almost in line with Bourbon pricing to be honest. Blantons as a benchmark Instagram-promoted-trendy bottle in many parts of the country is unobtainable or close to 2.5x msrp. I don’t drink much Blantons personally but it’s a comparison nonetheless.

I reckon Cuba may just put themselves backwards 10 years on their current practices. Throw in a US or even global recession and they could conceivably become extinct (or so expensive they will turn into something of Social media posings with watches). Stranger things have happened. 

Like most here I’ve got more cigars than I know what to do with but I already have sadness everytime I enjoy my favorite cigars, knowing there won’t be another replacement box of SLR Serie A/LGC anything/Sancho Molinos  coming my way. 

Oh well. 

 

 

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At the end of the day, if I can afford it. I will continue to smoke habanos. If I cannot then I will smoke NC's.

I'm envious of the members here who've been doing this long enough or had the resources to stock up for a long dry spell. I started purchasing CC's about 2 1/2 years ago with a monthly budget that I've stuck to (well mostly). I'm pretty much a daily smoker and at current consumption I've got about 2 1/2 years worth of stock. With recent pricing increases I'm already anticipating adding in some quality NC weekday smokes and stretching my habanos stock by making them weekend or special occasion smokes. 

IMO- The only way this new pricing policy works is if they get a handle on QC. A luxury brand cannot be established with occasionally plugged, inconsistently rolled, flavor/wrapper varies from box to box cigars. 

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15 hours ago, JohnS said:
As an Australian, I feel I can't add much to what has already been said other than I went through a gradual 'squeeze' over the last five years or so due to excessive 15% to 16% annual tax increases by the Australian Government on tobacco. This current situation kind of feels the same, only it's happened in a much shorter time frame. So where to from here?
Most likely, a greater majority of you will continue to smoke Habanos cigars but at a much lesser rate than what you are used to. Similarly, new acquisitions will be done in lower volumes; either by purchasing less regularly or purchasing 10-count boxes etc. Personally, speaking I'm extremely grateful that our host offered quarter-box options years ago. That has at least allowed me to continue to sample and gauge a wider variety of Habanos cigars in the time prices were increasing for Australian consumers.
Some of you have got into this hobby at the right time and stocked up years ago when you first got into it. I did the same and I tell you what, in light of these price increases, it feels good doesn't it?.. I must say.
On a lighter note, the exorbitant increases on Cohiba and Trinidad will make me reminisce somewhat within the Daily Smoking thread because it's quite possible that [mention=31951]SigmundChurchill[/mention] may have to cut back on his delightful posts smoking Cohiba and Trinidad cigars in exotic locations (e.g. in his car, on the beach, at the snowfields etc).
It all just makes you think, "Aah...the good 'ol days!"


John, it’s nice you always seem to find some positives out of this.
But this truly sucks! Like really bad. I love CCs and have a very good stock to last a while but going forward, I will always hesitate when I grab a cohiba or Trinny or any CC for that matter.
I said this a while ago, and it looks like it might just happen. Cuba/HSA is screwing themselves in the long run. As you have seen, many with quit smoking all together or jump on the NC train. NC producers/owners/retailers are absolutely loving this.

NCs will be on the horizon I guess. There are some good ones out there. I just love CCs too much however.
But 260 for M4, and 300 for MPE and almost 800 for fundi made me sad the way things are going. Remember early 2020 when you could get a box or rass or Mag46 for 169 from rob? Those were the days!! Not sure HSA sees the long term future because if prices jump from here, they might have issues selling PLMC for North of 200


Sent from my iPhone using Tapatalk

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16 hours ago, Kaptain Karl said:

China just has to ruin everything don’t they? 
 

Unfortunately this is going to truly become a rich man’s game. It’ll be much harder for the regular guy to accumulate a great collection over the years. 
 

As many boxes that you have beat me to the draw on 24:24, you should be able to open your own store with your collection!😂😂😂😂

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8 hours ago, NSXCIGAR said:

I'm still confused about this "Hong Kong pricing." Retail pricing is higher than average in HK because of duties. HK isn't a distribution region--it's one country. PCC distributes to HK. Pricing is between HSA and PCC. 

If HSA raised their prices to PCC HK prices would still be higher than everywhere else because of the duties.

Am I missing something? 

What I assumed was that they would price wholesale distribution such that the price in a target market would be roughly homogenized across the country after duties are factored in. But there are a lot of issues with that model, so it doesn't really make any sense. For liquor or handbags it might, because few (if any) markets have confiscatory tax rates on them like there are with tobacco. 

If that isn't the plan, and the idea is just to use PCC's wholesale pricing, then nothing would change here. So we're either missing something or the idea is simply to jack up the wholesale prices outside of AP so that the retail price matches Hong Kong. But again, for FOH there what would change??

Whatever they do it seems they may be resigning themselves to diminished capacity, and doubling the prices of Cohiba and Trinidad might make the most sense if they plan to keep that production at current low levels and focus production growth elsewhere. 

Unmentioned so far is what role, if any, HSA's new ownership may be playing in this.

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12 minutes ago, MrBirdman said:

What I assumed was that they would price wholesale distribution such that the price in a target market would be roughly homogenized across the country after duties are factored in. There are a lot of issues with that model though, so it doesn't really make sense. For liquor or handbags it might, because few (if any) markets have confiscatory tax rates on it like with tobacco. 

I think the logical thing to do would be to raise prices to what their most profitable market is, and then (potentially) discount to distributors/retailers in that market so the price locally in that market remains the same. That will cut down on people buying in cheaper elsewhere and re-selling in that market.

Thus logically make Cuba prices and FOH prices match China/HK prices.

😢

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31 minutes ago, Bijan said:

I think the logical thing to do would be to raise prices to what their most profitable market is, and then (potentially) discount to distributors/retailers in that market so the price locally in that market remains the same. That will cut down on people buying in cheaper elsewhere and re-selling in that market.

Thus logically make Cuba prices and FOH prices match China/HK prices.

😢

Something still isn't clicking though - FOH sources their cigars from the same place as HK. Any price increases here will necessarily have to translate to higher prices in HK unless PCC decides to discount to HK only. Ultimately though, if they have more stock than they can sell at those prices three years down the line, they're going to discount to other retailers too. In any case, they can't withstand significantly higher wholesale prices if the expectation is that they will need to heavily discount them to their largest market for the premium sector. That would effectively mean subsidizing HK at the expense of the rest of PCC's market, which could only work if HK was relatively small share - which it isn't. It also doesn't explain their "homogenization" plan - which is the real source of confusion. Otherwise it's just a price hike. 

What would make some sense in this model is hiking prices on the island to cut down on reselling. Realistically travel based solely on buying cheaper Habanos is unlikely to be a significant segment of their tourism market.

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1 hour ago, MrBirdman said:

What I assumed was that they would price wholesale distribution such that the price in a target market would be roughly homogenized across the country after duties are factored in. There are a lot of issues with that model though, so it doesn't really make sense. For liquor or handbags it might, because few (if any) markets have confiscatory tax rates on it like with tobacco.

They're not going to do that.  Can you imagine a bigger slap in the face to their distributors & authorized agents?  Asking a distributor skew their pricing to punish customers that pay less tax. 

The article doesn't make a lot of sense or was written someone who isn't as familiar how a highly taxed global product works.  Other luxury items like handbags, shoes, and watches aren't taxed and verboten like tobacco.  It's much easier to maintain price uniformity globally.  Boutiques work as a franchise or a direct business of the brand.  Department stores that carry the brands are under an agreement on minimum pricing and discounts.  Cigars are a different animal.

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2 minutes ago, BrightonCorgi said:

They're not going to do that.  Can you imagine a bigger slap in the face to their distributors & authorized agents?  Asking a distributor skew their pricing to punish customers that pay less tax. 

The article doesn't make a lot of sense or was written someone who isn't as familiar how a highly taxed global product works.  Other luxury items like handbags, shoes, and watches aren't taxed and verboten like tobacco.  It's much easier to maintain price uniformity globally.  Boutiques work as a franchise or a direct business of the brand.  Department stores that carry the brands are under an agreement on minimum pricing and discounts.  Cigars are a different animal.

Exactly, that's why I feel this whole "homogenization" claim doesn't make much sense.

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16 minutes ago, BrightonCorgi said:

They're not going to do that.  Can you imagine a bigger slap in the face to their distributors & authorized agents?  Asking a distributor skew their pricing to punish customers that pay less tax. 

I don't think there are many actually duty free tax locations other than on the internet.

UAE is at 100% taxation now, cheapest in Europe is maybe 60%. Most places aren't at 200% like Canada and Australia. But raising prices on Cuba and the lowest places, isn't unthinkable.

Though I do agree it would be a giant slap in the face to their vendors, most are going to go under due to lack of supply anyways. So this might only apply to the few LCDH that stay afloat...

Again 😢

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3 hours ago, Bijan said:

But raising prices on Cuba and the lowest places, isn't unthinkable

But, again, for PCC this would suggest similar prices unless they try to force uniform pricing or maximum discounting onto retailers, which doesn’t seem to be viable given that HSA only deals with distributors and LCDH’s, some of whom already flout their rules on extra-territorial grey market sales. 

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1 hour ago, MrBirdman said:

But, again, for PCC this would suggest similar prices unless they try to force uniform pricing or maximum discounting onto retailers, which doesn’t seem to be viable given that HSA only deals with distributors and LCDH’s, some of whom already flout their rules on extra-territorial grey market sales. 

I don't know how independent distributors and LCDH are, or how independent Habanos envisions them being going forward.

Let's take for example grey market sales. It seems to me that before all this many cigars, especially less popular ones, would just languish on shelves in Spain or wherever and habanos was ok with distributors or stores or whoever shipping them to the grey market retailers and having them sold duty free and at a discount.

Now that there's literally no supply anywhere, and they don't need to do anything at all to move product they may have different ideas.

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14 minutes ago, Bijan said:

Let's take for example grey market sales. It seems to me that before all this many cigars, especially less popular ones, would just languish on shelves in Spain or whever and habanos was ok with distributors or stores or whoever shipping them to the grey market retailers and having them sold duty free and at a discount.

Since the gray market has been active and thriving for 20+ years it's clear the distributors have always had overstock in all areas. I know they're forced to buy certain things like Romeo tubos but gray markets always had Cohiba, etc. as well. Based on the frequent removal of barcodes from gray market stock it's clear the distributors prefer not to have HSA know about it but there's little HSA can do about it in most cases.

We can clearly see the distributors are moving most of their product through their direct retail clients as gray market vendors have been running on fumes for well over a year. There is definitely a overall shortage in all products getting to the distributor. Obviously things like Romeo tubos pile up so they're always dumping it in the gray market and I wouldn't be surprised if the duty free crap comprises a higher percentage of the stock being delivered to the distributors as well. 

1 hour ago, MrBirdman said:

But, again, for PCC this would suggest similar prices unless they try to force uniform pricing or maximum discounting onto retailers, which doesn’t seem to be viable given that HSA only deals with distributors and LCDH’s, some of whom already flout their rules on extra-territorial grey market sales. 

Right, this isn't making sense. There's no way a single country can be singled out for pricing. That would take the distributor out of the equation which we know can't happen. It is impossible to standardize prices across the world. How can HK or Canada pricing ever be the same as Spain. HSA has no idea what HK prices are--only the prices PCC pays. 

The entire concept of standardizing price around one country isn't holding water. I think the writer of that article misunderstood the info that was being provided or it was not communicated properly or lost in translation or something.

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24 minutes ago, NSXCIGAR said:

. I think the writer of that article misunderstood the info that was being provided or it was not communicated properly or lost in translation 

I can only hope this is the case. I personally can't buy any stock until the fall, I don't mind Trinidad Cohiba, Linea and 1935 prices, those and LE/RE are off my radar anyway. I'm more concerned with how much regular production prices are going to increase.

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In Havana, trucks are showing up at factories and pacas are being loaded up. No finished product. Asian drivers. No explanation to the workers. Mid to upper management is selling out the country getting ready for their Nicaragua trip. Just a small sample of what is happening to the world inventory. BTW, the article reminds me a lot of William Jefferson's Globalization plan. Everyone get gefickt except him. John

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3 hours ago, NSXCIGAR said:

Right, this isn't making sense. There's no way a single country can be singled out for pricing. That would take the distributor out of the equation which we know can't happen. It is impossible to standardize prices across the world. How can HK or Canada pricing ever be the same as Spain. HSA has no idea what HK prices are--only the prices PCC pays. 

The entire concept of standardizing price around one country isn't holding water. I think the writer of that article misunderstood the info that was being provided or it was not communicated properly or lost in translation or something.

i don't think It's impossible. It's not a constitutional issue, it's a business decision. If Habanos wants to dictate terms to distributors they can do it.

When I started buying in 2020, several retailers offered volume discounts of 10 or 15%. Everything that was actually produced was in stock all the time (including lanceros, esplendidos and Siglo VI). Until last year one retailer had all 3 behikes in stock at the same time. There were 2 box deals on C&C all the time.

When you bought unpopular vitolas you got 17 and 16 codes. I even got one 15 and one 13.

Now major retailers have 1/5 or less of regular production vitolas in stock.

Cuba the country and government might be in trouble and collapse any day but the power balance between Habanos and distributors in terms of how hard CCs are to sell is night and day different.

They could conceivably dictate national pricing to a distributor and threaten to cut them off if they don't follow through.

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  • JohnS changed the title to International pricing policy by Habanos SA

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