What will it take for Cuba to produce enough cigars to consistently meet the demand.

[CigarCulture09]

I’m curious to hear everyone’s opinion on the current state of the tobacco industry in Cuba? I’d like to hear everyone’s thoughts on what needs to be done in order to meet the growing demand for cuban cigars. 

[NSXCIGAR]

Privatization of the tobacco industry is the only way.

[CigarCulture09]

The Cuban tobacco industry like any other sector/business has its up’s and down’s. However not being able to consistently keep up with demand is a problem. I’m not an expert on the production side of the Cuban tobacco industry. I read and learn as much as I can about it simply because I love Cuban cigars and I want the Cuban tobacco industry to flourish. I’m sure there are a lot of very well connected and educated people on this forum that have a much better understanding of what the specific problems are pertaining to this issue. Again I’m no expert myself. You probably have a lot more knowledge than I do regarding this topic. 

[Andy04]

It would require a nuclear warhead to take out 4/5th of the world's population for Cuba to produce enough cigars to consistently meet the demand. As its highly unlikely for Cuba to ever increase supply, a reduction in the worlds population is the only way for supply and demand to reach equilibrium. 

 

[CigarCulture09]

That seems extreme but I get what you’re saying. The demand continues to rise but only so much output from a production standpoint. Consistently might not have been the best word for me to use. However I still think with the little knowledge I have on this specific topic that something can be done going forward to increase production. Or at least it’s my hope. 

[NSXCIGAR]

13 minutes ago, CigarCulture09 said:

that something can be done going forward to increase production.

Production pre-Rev was at least 3-4 times higher than it is today. I believe close to 100,000 hectares were being planted whereas today they struggle to reach 20,000. Demand for Cuban tobacco and cigars in general was much higher in the early 20th century than it is even close to being today.

No fuel, fertilizer and infrastructure (barns, equipment) is the issue in additon to low remuneration for the farmers which incentivizes farmers to grow other crops. That is a direct consequence of state control. If they provide those things production will rise. Simple equation. 

[Arabian]

2 hours ago, NSXCIGAR said:

Production pre-Rev was at least 3-4 times higher than it is today. I believe close to 100,000 hectares were being planted whereas today they struggle to reach 20,000. Demand for Cuban tobacco and cigars in general was much higher in the early 20th century than it is even close to being today.

No fuel, fertilizer and infrastructure (barns, equipment) is the issue in additon to low remuneration for the farmers which incentivizes farmers to grow other crops. That is a direct consequence of state control. If they provide those things production will rise. Simple equation. 

Word on the streets, it’s too late, the soil is exhausted/ degraded. 

[CigarCulture09]

Yes I have heard from other Cuban cigar aficionados that the farmers are facing dire issues. The little that I know about farming is that in order to keep the soil content right you need what farmers call a fallow year. In my opinion Cuban cigars are hands down the best in the world to me. I still buy boxes regularly and will continue to. However I want to see a lot of things change for the better. The offering of New World cigars has improved tremendously over the last several years. Nicaragua and the Dominican Republic are booming. Again Cubans are the best for me. Competition is a good thing for the industry as a whole. Your comment regarding production pre-rev being 3-4 higher was interesting to learn. I knew it was higher than now, but did not know it was 3 to 4 times higher. 

[NSXCIGAR]

1 hour ago, Arabian said:

Word on the streets, it’s too late, the soil is exhausted/ degraded. 

That is certainly a factor as well. In the private sector tobacco typically produces enough revenue for the farmer to allow for crop rotation or even skipping seasons to replenish the soil. These farmers are being pushed to the brink of poverty and have no choice, not to mention the lack of fertilizers. Depleted soil is generally a temporary problem but in Cuba it's become a permanent nuisance. 

But your point is well taken. I believe soil depletion is a significant problem that is rarely discussed. My personal opinion after visiting Cuba for several years now and becoming more knowledgeable about tobacco cultivation is that Cuban cigars have been suffering from severe soil depletion for at least a decade. This is just my opinion but based on what I've learned and several experiments I've been involved in I believe the richness of flavor and distinctness between marcas and models owes a great deal to fertility of the soil. The blander or more generic tasting a cigar is the more likely it is to have been grown in depleted soil. 

Soil is particularly critical when growing tobacco as opposed to other crops that aren't as dependent on flavor nuances. I can't imagine a potato grown in depleted soil would really taste all that different than one grown in rich soil although the point of crop rotation is to grow crops that utilize different nutrients allowing the nutrients needed for other crops to replenish. 

[MagicalBikeRide]

3 hours ago, NSXCIGAR said:

I can't imagine a potato grown in depleted soil would really taste all that different than one grown in rich soil although the point of crop rotation is to grow crops that utilize different nutrients allowing the nutrients needed for other crops to replenish. 

As a proud Irishman, I am pretty sure that this is actually true 😊

There are certain areas in Ireland with sandy / nutrient rich soil and the potatoes from there are considered a seasonal delicacy - they taste completely different from the same seed planted in a different part of the world.  

[Hammer Smokin']

Maybe I'm misunderstanding the question but, by substantially increasing their prices, Cuba has substantially reduced the demand, creating more profit from less sales. So they did it. They produce enough cigars to meet the current demand. (Which is evident by most 24:24's and stock found around the world at the moment). 

[BrightonCorgi]

Cuba is sandbagging the potential of tobacco farming on purpose. They're smart people who know how to farm.  The government knows the resources required for success. Why they go this path is something you'd have to ask them.

[SCgarman]

6 hours ago, BrightonCorgi said:

Cuba is sandbagging the potential of tobacco farming on purpose. They're smart people who know how to farm.  The government knows the resources required for success. Why they go this path is something you'd have to ask them.

Farmers are not getting paid for their efforts. The incentive to plant/farm is diminishing. Who wants to bust their a$$ and basically work for free? Then get threatened by the government. The whole ecosystem is broken, and they don't have the resources to fix it. Couple this with the mass exodus of Cubans who have left/are leaving the island for other countries to live/work. Prices will continue to increase into the stratosphere, because that's all they can do!

[CigarCulture09]

In one regard you are correct, Cuba is meeting the current demand. However there are so many sizes of different brands that you can’t find at all or in very limited quantities. All of us can agree that we want the tobacco industry in Cuba to flourish. I know I certainly do. There has always been really good periods and really bad periods through the years. Even though sales for Cuban cigars are at record numbers, shortages continue to be a major problem. Again I’m not saying this to bash the industry. Again I want to see these problems get fixed.

[SCgarman]

1 hour ago, CigarCulture09 said:

In one regard you are correct, Cuba is meeting the current demand. However there are so many sizes of different brands that you can’t find at all or in very limited quantities. All of us can agree that we want the tobacco industry in Cuba to flourish. I know I certainly do. There has always been really good periods and really bad periods through the years. Even though sales for Cuban cigars are at record nIumbers, shortages continue to be a major problem. Again I’m not saying this to bash the industry. Again I want to see these problems get fixed.

I used to buy boxes of Monte4 for $148usd and boxes of RASS for $189usd all day long prior to cigarmegeddon. Now, Monte4 are $370, soon to be $400 with the next price increase. RASS are $440/box now soon to be roughly $480 with the next price increase. Only a portion of the Habanos current portfolio is even being produced. Nothing wrong with "glass half full" logic, but the current dysfunction in Cuba doesn't support it. BTW, out of principle I refuse to pay current HSA prices. I could but feel R.O.I. is no longer there and I have a healthy stockpile which has been supplemented with NC cigars.

[Fugu]

You may not look at it (tobacco) isolated. The whole agricultural sector is in shambles. And that not just recently. Castro-Cuba has been on a downward spiral since the beginning. Tobacco is only but one challenge. They need to feed the people.

What will it take, you ask? To be frank, I see no other way than major changes before things will have any chance of getting better. And with major changes I mean major changes...

[El Presidente]

They have stumbled upon the strategy of creating and maintaining product "scarcity".

Unless they are completely mad, they will maintain an element of product scarcity to eliminate bulk discounting in the gray market. They need only control the levers of supply. 

Thankfully they have a level of structural incompetence that has seen only a combined17,000 hectares planted in two years. In the meantime they have lost 30 ton of tobacco through fire and water damage during that time. 

They have built in scarcity from the ground up. 

[CigarCulture09]

The implementation of scarcity as a business strategy actually makes a lot of sense. While I prefer seeing stocked selves at retailers around the global I fully agree with your comment pertaining to scarcity in the business model. Again I personally will continue to buy boxes of Cubans. However I’ve started to try a lot of New World Cigars as well. I’m always trying to educate and further develop my palate. My whole reason for asking my initial question was to get different opinions from individuals who have a lot more experience and knowledge on this issue. I’m only looking at this issue from a business standpoint. The deeper issues that go beyond the business side of this question are something I’m personally going to stay away from. 

[VeguerosMAN]

10 hours ago, SCgarman said:

I used to buy boxes of Monte4 for $148usd and boxes of RASS for $189usd all day long prior to cigarmegeddon. Now, Monte4 are $370, soon to be $400 with the next price increase. RASS are $440/box now soon to be roughly $480 with the next price increase. Only a portion of the Habanos current portfolio is even being produced. Nothing wrong with "glass half full" logic, but the current dysfunction in Cuba doesn't support it. BTW, out of principle I refuse to pay current HSA prices. I could but feel R.O.I. is no longer there and I have a healthy stockpile which has been supplemented with NC cigars.

I feel you 100%. Cubans used to be my every day sticks due to their prices.

On 3/17/2024 at 12:48 PM, NSXCIGAR said:

Privatization of the tobacco industry is the only way.

I wasn't too far off long ago suggesting that NC companies like Fuente and Padron should buy out Habanos. 

[chasy]

Privatization could result in a wide array of outcomes. Take a look at Russia, pre-Yeltsin. No guarantees that a private tobacco industry would result in lower prices. It would simply result in different owners. Typically, privatization is the result of new leadership that is eager to usher in new economic oversight. The assets usually go to nationals that are plugged in with leadership. I doubt that if privatization occurred in Cuba, you’d see many fair auctions for assets, much more dealings to the inner circle.

[CigarCulture09]

6 hours ago, VeguerosMAN said:

I wasn't too far off long ago suggesting that NC companies like Fuente and Padron should buy out Habanos. 

New world cigars are definitely on the rise. I’d like to see some numbers/stats on NC sales from major markets other than the United States of course. There is no doubt that Nicaragua, Dominican Republic and Honduras are producing some amazing cigars. New World brands still don’t have that big of a market outside of the USA. New World brands have phenomenal QC. I’m a big believer in competition. It will be interesting one day when NC brands have the opportunity to purchase Cuban tobacco. If and when that actually happens is another story. I still want to see Cuba get back on track. 

5 hours ago, chasy said:

Privatization could result in a wide array of outcomes. Take a look at Russia, pre-Yeltsin. No guarantees that a private tobacco industry would result in lower prices. It would simply result in different owners. Typically, privatization is the result of new leadership that is eager to usher in new economic oversight. The assets usually go to nationals that are plugged in with leadership. I doubt that if privatization occurred in Cuba, you’d see many fair auctions for assets, much more dealings to the inner circle.

I must admit that you do make an interesting point. 

[NSXCIGAR]

5 hours ago, chasy said:

Privatization could result in a wide array of outcomes. Take a look at Russia, pre-Yeltsin. No guarantees that a private tobacco industry would result in lower prices. It would simply result in different owners. Typically, privatization is the result of new leadership that is eager to usher in new economic oversight. The assets usually go to nationals that are plugged in with leadership. I doubt that if privatization occurred in Cuba, you’d see many fair auctions for assets, much more dealings to the inner circle.

I'm not talking about a crony corporatist system. I'm talking about the means of production being owned by those who make the highest and best use of it. 

All you have to do is look at the state of Cuban tobacco pre-Rev to see what's possible. Perhaps the clear Havana trend would come back. Who knows. 

5 hours ago, CigarCulture09 said:

New World brands still don’t have that big of a market outside of the USA.

There are many reasons for this and I think marketing is a big one. Too many lines, too many models. Too many fly-by-nighters. Too many gimmicks. Too much sizzle and no steak. 

And while NCs have always had a box-to-box consistency advantage over CCs NCs have always struggled with year-to-year consistency in a way CCs rarely have. The same NC model from 2020 can taste like a totally different cigar than a 2022, and in fact may never taste like that 2020 version again. 

I think NCs have a huge opportunity with price right now but they have to clean up a lot of things if they want to make inroads in the world markets. 

[CigarCulture09]

2 hours ago, NSXCIGAR said:

There are many reasons for this and I think marketing is a big one. Too many lines, too many models. Too many fly-by-nighters. Too many gimmicks. Too much sizzle and no steak. 

And while NCs have always had a box-to-box consistency advantage over CCs NCs have always struggled with year-to-year consistency in a way CCs rarely have. The same NC model from 2020 can taste like a totally different cigar than a 2022, and in fact may never taste like that 2020 version again. 

I think NCs have a huge opportunity with price right now but they have to clean up a lot of things if they want to make inroads in the world markets. 

You are spot on. Do you think the rise of New World cigars in the market will have any impact at all on Cuba starting to change things for the better? This will obviously take time but competition has a way of making businesses take a closer look at their own internal problems. 

[NSXCIGAR]

1 hour ago, CigarCulture09 said:

You are spot on. Do you think the rise of New World cigars in the market will have any impact at all on Cuba starting to change things for the better? This will obviously take time but competition has a way of making businesses take a closer look at their own internal problems. 

Other than taking some market share from cost-conscious buyers not really. HSA had a 31% revenue gain in the first full year of their new price realignment strategy so I'm fairly sure they're not thinking twice about the budget smokers they're leaving behind. 

I do think NCs were at least partly responsible for much of the premium packaging, brand overhauls and new lines that have appeared since 2016 or so. Whether that was due to market influence or simply Imperial executives involved in both NCs and CCs I don't know. 

What's interesting is that the NC producers used the sizzle of flashy packaging and new lines to introduce and help sell the cigars. Cuba uses it to sell already demanded cigars for exponentially more. 

CCs and NCs are two different worlds with totally different approaches. Over the last 20 years it looks to me like aspects of NCs have been more influenced by CCs than vice versa. HSA might take some cues from NCs but when Cuba does anything NCs are quick to imitate. 

[CigarCulture09]

1 hour ago, NSXCIGAR said:

Other than taking some market share from cost-conscious buyers not really. HSA had a 31% revenue gain in the first full year of their new price realignment strategy so I'm fairly sure they're not thinking twice about the budget smokers they're leaving behind. 

I do think NCs were at least partly responsible for much of the premium packaging, brand overhauls and new lines that have appeared since 2016 or so. Whether that was due to market influence or simply Imperial executives involved in both NCs and CCs I don't know. 

What's interesting is that the NC producers used the sizzle of flashy packaging and new lines to introduce and help sell the cigars. Cuba uses it to sell already demanded cigars for exponentially more. 

CCs and NCs are two different worlds with totally different approaches. Over the last 20 years it looks to me like aspects of NCs have been more influenced by CCs than vice versa. HSA might take some cues from NCs but when Cuba does anything NCs are quick to imitate. 

I agree with that analysis. I guess I’m just to optimistic about these problems regarding shortages/production getting fixed in Cuba. I guess all we can do is hope for the best. I hate that a lot of people have been priced out of the market. I love and enjoy smoking and collecting CC’s to much to give them up. As I said earlier I buy and smoke NC’s as well but CC’s are my passion. I have family in the UK and spend a lot of time there and the NC market is growing like crazy. From what I hear it’s really hard for NC brands to expand and take off in new Markets outside of the USA.