El Presidente Posted June 19, 2023 Posted June 19, 2023 The good news is that there are some green shoots in the Habanos global supply situation. LCDH in most parts of the world are back to decent supply albeit the breadth of stock (number of lines) is patchy. Grey market still struggling. Anyone without a good and longstanding relationship with their (or a ) distributor is still in a pile of doo doo. Global Cuban demand is say 85m-100m sticks. Global wholesale and retail available supply got down to 20 million sticks in 2021. Cuba currently producing just a tick over 50 million sticks annually (on best informantion). Demand still exceeds supply by a significant margin. The capacity for Cuba to increase supply in the medium term is questionable. They are cash poor and rudderless. The brain drain exacerbates the challenge. Pricing changes by Habanos s.a has seriously affected demand of Trinidad and smaller format Cohiba. I, nor anyone else that I have spoken to has any idea what their proposed solution to this will be. The rest of the produced portfolio continues to move relatively well even at the new pricing regime. NC's in European and Asian markets continue to make significant inroads. There are roadblocks however as they need to ramp up production and properly cured tobacco + rollers are in short supply and scaleable infrastructure is a challenge + expensive. Slowly increasing NC prices are also causing headaches for those retailers/distributors in countries where tobacco import duties are based on weight. There is a race to educate the market in those locales as to the benefits of NC's. What a turnaround that is What does the next three years look like? Rarley do things remain the same. Will Habanos maintain their premium market hagemony? What cracks will appear? Will the secondary market in Cuban cigars continue apace? What happens to Trinidad and smaller Cohiba? Who will be the big winners from the NC market?.....if any? Paint a picture of the market in 2026/7. No doubt this thread will pop back up then 3
fokker4me Posted June 19, 2023 Posted June 19, 2023 I'm looking forward to updates on this, but I do hear many more Europeans these days that are more interested in non Cubans than ever before. I get questions from friends overseas, I'm in the United states, asking about various brands and what seems like endless line extensions in Marqus in the non Cuban world. I think the big winners end up being the people with huge tobacco stocks or cash to purchase tobacco and roll quality sticks. I think the likes of A. Fuente, My Father, as they seem to have an endless supply of tobacco. Padron certainly picks up but I believe they are capped more than others in volume. Think some of the very light brands that don't seem to do wonderfully in the US may end up being more popular in Europe. I don't see these boutique brands with their super limited production runs picking up much from the European market as they're so small and have very little to go around to begin with. I also believe most of those boutique brands make an okay product but it's inconsistent and difficult to replicate batch after batch as they are sourcing tobacco from many sources not in control of their own supply chain. 3
El Presidente Posted June 19, 2023 Author Posted June 19, 2023 3 minutes ago, fokker4me said: I think the big winners end up being the people with huge tobacco stocks or cash to purchase tobacco and roll quality sticks I agree but there are remarkably few of those. Oliva is kicking goals in Europe and Asia as are Drew Estate. Those who have the resources to scale. 1 1
fokker4me Posted June 19, 2023 Posted June 19, 2023 At this point I think those who have the ability to scale up will end up investing in property and good land to grow more tobacco I know the Pepins in Nicaragua are doing just that and purchasing up about every piece they can at this point as their market seems to grow both for their wholesale market as they roll for so many other people along with their own brands. My only issue with them is many of their products into being astonishingly similar, and one-dimensional while well made rarely to me end up being very interesting. I think some of the more interesting cigars coming out of that factory end up being in the Tatajue line but even that line is so busy with so many line extensions and sub brands that it gets confusing as to what the differences are between the varying brands. I think they're really tough part for other markets is going to be explaining the different tobacco use rather than Cubans which tend to have a blend that people like in each individual stick. I know I tend to like certain sticks and sizes because they're all individual in Cuba whereas the non Cubans make the same cigar in eight different sizes and they tend to eliminate all the sizes I like I eat petite Corona Corona lincero Lonsdale and all the other small cigars that nobody seems to like in the US. 2
LordAnubis Posted June 19, 2023 Posted June 19, 2023 Habanos are no chumps. Market is right where they want it. I think the market will look very similar to today. They are doing what they arguably should have done previously, do runs of cigars then do runs of other stuff. I think in short term (3 years) nothing is changing in mid term they will start culling cigars out lines and start replacing with the new NC style premiums. I think they see that as their future. The premium customer and not the every day customer. In 10 years it’ll all be 4 banders.
SCgarman Posted June 19, 2023 Posted June 19, 2023 Did any of you see the new factory Arturo Fuente is building in Nicaragua? With that type of cost and expansion, things seem to be all good for the bigger NC players. Of course with a factory that size which appears to be big, it will need to be staffed with skilled employees. Where will they come from? Cuba? Elsewhere?
Arabian Posted June 19, 2023 Posted June 19, 2023 7 hours ago, SCgarman said: Did any of you see the new factory Arturo Fuente is building in Nicaragua? With that type of cost and expansion, things seem to be all good for the bigger NC players. Of course with a factory that size which appears to be big, it will need to be staffed with skilled employees. Where will they come from? Cuba? Elsewhere? most likely they will hire/train their own workers from Estelí. 1
BrightonCorgi Posted June 21, 2023 Posted June 21, 2023 On 6/19/2023 at 8:53 AM, Arabian said: most likely they will hire/train their own workers from Estelí. El Salvador can send prisoners for next to free labor. 1
Cigarsmoker81 Posted June 21, 2023 Posted June 21, 2023 I think structurally the demand for nc is going to be higher regardless if cc is readily available. I, for one, never took nc seriously until the last 12 months and there are few ncs that I chase and look forward to having them as part of my rotation and I’m sure there are many that would share my experience. I agree with you trini will struggle ( I’ve received an email for Vigia at 399 dollars today ) they will probably sell heavily discounted or eventually discontinued unfortunately ( perhaps go back to 3 stick portfolio with few produced ) as far as production goes it’s very lucrative for them to produce more so I guess the Chinese will help them figure out how to increase production as time goes buy ( or enough demand destruction happen to reach equilibrium ) within 3-5 years. But honestly I think there are more knowledgeable people than me to comment on that. unfortunately I think it’s a game changer for price and as a whole it will not go back to where it was
Digi Posted June 21, 2023 Posted June 21, 2023 6 hours ago, BrightonCorgi said: El Salvador can send prisoners for next to free labor. Maybe an unlucky numbers collab between Asylum and MS 🙃
SCgarman Posted June 21, 2023 Posted June 21, 2023 With the dysfunction and high pricing in the Cuban cigar industry, I predict more retailers will offer custom rolled bespoke cigars like Rob and Hamlet's Nudie line. There is no way the world's LCDH shops will be able to stay afloat with the small world supply of Habanos unless they "diversify" the products they sell. I am glad we FOH'ers have an affordable alternative to choose from. 500+usd for a box of my beloved RASS simply is out of reach.
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