A message to you from the Habanos sa VP

[tjkoala]

42 minutes ago, El Presidente said:

Imperial sold their 50% to the Chinese. The other 50% is still owned by the Govt. 

You know, we’re somewhat of aficionados ourselves. Maybe if we hold off on buying cigars for two… maybe three weeks, we too can save enough to make a bid for 50% of Habanos.

[JohnnyO]

50% of what the Cuban government says is BS

50% of what the Cuban government says are just straight lies

Class Dismissed. John

[Cairo]

1 hour ago, BrightonCorgi said:

Habanos is more like luxury brands like Louis Vuitton, Gucci,etc

As you know well there is a wide range of Habanos--this undermines the "luxury" merchandising approach.

(Imho) This will be a great case study for a future MBA class--of how not to market your product.

Hint:  If you are going to make major changes in your marketing plan the first thing you do is make sure you fully understand your customers.  That requires such approaches as focus groups as well as test marketing, advertising and pricing in small markets (which gives you the opportunity to tweak your plans as needed).   These decisions should not be "top down" from the board room but rather data driven "bottom up" to make sure customer satisfaction is the result of the proposed changes.

 

[JohnS]

"All decisions concerning Habanos are made jointly by both companies"...

😂🤣

[Perla]

8 hours ago, chris12381 said:

While those interviewed may be under the assumption that their duty-free channel is "growing quite well", there would appear to be room for significant growth.  Below photos taken by my girlfriend from Cabo San Lucas Airport Duty Free last week.

You only have to increase the price and it will match the marketing forecast of habanos et al that the decision is right. 
Marketing from the 1950-er. 
 

[Duxnutz]

Don’t know who I trust less, Chinese or Cuban govt.

[ha_banos]

26 minutes ago, Duxnutz said:

Don’t know who I trust less, Chinese or Cuban govt.

Russian? UK? US? {<insert ANY government here>}? ...

[BrightonCorgi]

7 hours ago, Cairo said:

As you know well there is a wide range of Habanos--this undermines the "luxury" merchandising approach.

(Imho) This will be a great case study for a future MBA class--of how not to market your product.

Hint:  If you are going to make major changes in your marketing plan the first thing you do is make sure you fully understand your customers. 

There are products from luxury brands that cater aspirational consumers.  Think of fragrances, key fobs, sunglasses, etc...  The have little to do with making horse saddles or shoes, but still offer the opportunity for consumers to be a part of the brand.

Do you have an inside line on what marketing research they had done before the new pricing and distribution?  You really think Habanos does not know their consumer?  Who do you think their consumer is if Habanos has this wrong?  Is there data to support Habanos or your definition on who their consumer is?

Unfortunately, I think they have it mostly right.  I think Habanos is fine if mom and pop stores no longer carry Habanos.   Just like how Gucci slimmed down their portfolio and distribution in the 80's. 

[Fugu]

“... Leopoldo Cintra Gonzalez, commercial vice president of Habanos, and Jose Maria Lopez Inchaurbe, vice president of development, insisted that there was “no such basis” for any of those rumors.”

 

Rumours?! I’d say, rumours a 100 percent confirmed by this interview...

[Cairo]

1 hour ago, BrightonCorgi said:

Do you have an inside line on what marketing research they had done before the new pricing and distribution?

I don't know for sure--but we have hints.

It looks like the smaller Cohiba and Trini vitolas are priced much too high.    If they did the marketing research it may have been only on the high end Cohibas and not on the rest of the portfolio.

[ha_banos]

1 hour ago, Cairo said:

I don't know for sure--but we have hints.

It looks like the smaller Cohiba and Trini vitolas are priced much too high.    If they did the marketing research it may have been only on the high end Cohibas and not on the rest of the portfolio.

Everything Cohiba still selling out on 2424.....

[BrightonCorgi]

9 minutes ago, ha_banos said:

Everything Cohiba still selling out on 2424.....

Just about everything regardless of the marca is selling out.  LCDH's cannot keep any kind of stock on the shelf. 

If there is one failing of the Habanos new strategy is that it's not keeping their best ambassadors for the product in a good state.  If they want to portray Habanos as a luxury item, the buying experience needs to be luxury.  Empty walk-in's are not it.

[djrey]

5 minutes ago, ha_banos said:

Everything Cohiba still selling out on 2424.....

Exactly. People are still buying at the highly inflated prices. I can't see why prices will come back down. Even if they can figure out how to get production back to where it was, I'd be shocked to see a dip in prices. They seem to be content producing less and charging more and still making more and more money. It's been shown that many smokers don't care what the cost is. Hopefully at some point that will drop off.

[ha_banos]

34 minutes ago, therealrsr said:

I hate that I can't disagree with this.

True, but some well known grey market players have more Cohiba and Trini vitolas in stock than any other marca, (except RyJ perhaps)

I wonder if thats anything to do with fear of fakes (FoF) now?

[Cairo]

2 minutes ago, ha_banos said:

I wonder if thats anything to do with fear of fakes (FoF) now?

I am wondering if that fear is justified.   So far the Reddit folks have only identified one formerly trusted grey market vendor that has a problem--but there are rumors of more disclosures to come.

[Hoepssa]

 I knew he was lying through his teeth!

 （睜眼說瞎話）

 

[Cigar Surgeon]

Quote

The most important factor in producing Habanos cigars is quality, he insisted, and the company will not increase production at the expense of quality.

[Duxnutz]

10 hours ago, ha_banos said:

Russian? UK? US? {<insert ANY government here>}? ...

Sure. China and Cuba make up the 100% ownership so……. Hard to blame anyone else really.

[SCgarman]

4 hours ago, Cigar Surgeon said:

As a previous poster stated "tell that to my PerfecDraw!! All kidding aside, I finally broke down and bought one. Stopped buying cigars at these prices, so last thing I want to do is toss a cigar with a plugged draw. Gotta try to salvage it. 

[SpecialK]

6 minutes ago, SCgarman said:

As a previous poster stated "tell that to my PerfecDraw!! All kidding aside, I finally broke down and bought one. Stopped buying cigars at these prices, so last thing I want to do is toss a cigar with a plugged draw. Gotta try to salvage it. 

Bingo! CC's and PerfecDraw go hand in hand.. 

[NSXCIGAR]

11 hours ago, djrey said:

I can't see why prices will come back down. Even if they can figure out how to get production back to where it was, I'd be shocked to see a dip in prices.

If China could get Cohiba they wouldn't be flying to Cuba to get it and paying more than MSRP in China. 

It's all production levels right now. Supply and demand. Trini isn't flying off the shelf by any means nor are Cohiba Exquisitos and Panetelas and even Siglo I. Demand is not there at these prices. It wasn't there even before the price hikes as I saw all three piled high in the LCDHs in Cuba at $250 as late as June 10. Demand for CoRo, Esplendidos and Siglo VI is much higher than supply virtually everywhere. 

Production is at 40% and Cohiba probably lower. These prices are natural outcome of a diminished supply. When production increases things will change. 

I also expect HSA revenue to be well off it's 2020-2021 levels. If it's not they're lying. Despite the price increases a reduction in supply is almost never a recipe for high revenue. 

[Bijan]

28 minutes ago, NSXCIGAR said:

I also expect HSA revenue to be well off it's 2020-2021 levels. If it's not they're lying. Despite the price increases a reduction in supply is almost never a recipe for high revenue. 

Margins on the high end cohibas must be ridiculous.

What are they selling Siglo VI and Esplendidos for in Cuba? That minus old price is pure profit.

[NSXCIGAR]

3 hours ago, Bijan said:

Margins on the high end cohibas must be ridiculous.

What are they selling Siglo VI and Esplendidos for in Cuba? That minus old price is pure profit.

Sure, but at less than 40% production revenue would be about the same as before. 10 boxes at $2,000 is pretty much the same as 25 boxes at $700. 

And they're ostensibly selling far less Siglo III and smaller--I saw plenty of it there two weeks ago as well as quite a bit of CCE gathering dust. I haven't seen any Siglo IV and V. So it's CoRo, Siglo VI, Lanceros and Esplendidos which are no doubt all well below the 40% average production. 

So if they're at even 35% production they're losing revenue even with the price hikes and again, that's not factoring in the cratering of the more popular, smaller Cohibas. There's no doubt Siglo I and II outsell all other Cohiba worldwide 2:1. 

So while I wouldn't predict HSA's revenue will be halved or anything like that it's going to be off significantly whether they admit it or not. I would say 10-20% is realistic and more wouldn't shock me. A $100 million shortfall is nothing to sneeze at. But I'm sure a Chinese-Cuban venture will find a way to cook those books good. 

[LordAnubis]

I stopped reading at “quality is most important above all else…” he was clearly doing a standup comedy gig. 

[Bijan]

4 hours ago, NSXCIGAR said:

10 boxes at $2,000 is pretty much the same as 25 boxes at $700. 

Let's say margins were 50% before:

25 x $700 x 0.5 = $8,750 profit

Vs

10 x ($2000 - $700 x 0.5) = $16,500 profit

(Assuming cost remains $350 a box)

They have nearly doubled the profits selling 10 boxes instead of 25.

Edit: you can redo the above math with whatever margins you think they initially had. The lower the initial margins the higher the increase in profits. But even with 100% margins before:

25 x $700 = $17,500

10 x $2,000 = $20,000