Habanos Reducing Supply to Switzerland

[Taco]

Article by Halfwheel

Interesting move. Money motivated.
 

Big ups to Charlie at half wheel for article.
 

Curious of yalls thoughts.

[SCgarman]

Most of the online grey vendors with warehouses located in Switzerland will likely dry up and shutter. They are barely hanging onto life now due to virtually zero excess stock which used to be sold off to the grey market. Any way you size this situation up it is bad. Oh, and all the Europe based La Casa del Habano stores......what are they going to sell? Coffee? How do you operate a business with nothing to sell??!!

[VeguerosMAN]

16 hours ago, SCgarman said:

Most of the online grey vendors with warehouses located in Switzerland will likely dry up and shutter. They are barely hanging onto life now due to virtually zero excess stock which used to be sold off to the grey market. Any way you size this situation up it is bad. Oh, and all the Europe based La Casa del Habano stores......what are they going to sell? Coffee? How do you operate a business with nothing to sell??!!

Perhaps they could sell mostly NCs, but then again I don't know how that will impact the prices of NCs for consumers. 

[Marco_011t556]

6 hours ago, SCgarman said:

Most of the online grey vendors with warehouses located in Switzerland will likely dry up and shutter. They are barely hanging onto life now due to virtually zero excess stock which used to be sold off to the grey market. Any way you size this situation up it is bad. Oh, and all the Europe based La Casa del Habano stores......what are they going to sell? Coffee? How do you operate a business with nothing to sell??!!

Maybe they will source the CC from Spain, Laguito, etc?

[MrBirdman]

So the fellow over at Habanos News had it right, apparently - HSA moving distribution to countries where they own a bigger share (or all) of the distributor. Reeks of an order from the top to deliver every single cent of currency possible. Presumably they figure that if supply is so poor that everything besides Trini will sell, why share the wholesale profits with anyone? I'm sure it will please their new partners in Asia as well. 

There can't be many other companies in the world that could get away with treating their customers and retail network with such open contempt. Almost have to marvel at it, though I suppose in desperate times loyalty goes out the window. 

[Greenhorn2]

11 minutes ago, MrBirdman said:

So the fellow over at Habanos News had it right, apparently - HSA moving distribution to countries where they own a bigger share (or all) of the distributor. Reeks of an order from the top to deliver every single cent of currency possible. Presumably they figure that if supply is so poor that everything besides Trini will sell, why share the wholesale profits with anyone? I'm sure it will please their new partners in Asia as well. 

There can't be many other companies in the world that could get away with treating their customers and retail network with such open contempt. Almost have to marvel at it, though I suppose in desperate times loyalty goes out the window. 

Yep, my loyalty has gone out the window! Lol.

[BrightonCorgi]

What happens when HSA's preferred distributors are sitting on excess stock? 

Is the retail market in those regions strong enough to support that volume of cigars?

[El Presidente]

41 minutes ago, BrightonCorgi said:

Is the retail market in those regions strong enough to support that volume of cigars?

What volume? 

Currently, Tabacuba production is 2.5 X Rocky Patel. 

Let that sink in 

[VeguerosMAN]

7 hours ago, El Presidente said:

What volume? 

Currently, Tabacuba production is 2.5 X Rocky Patel. 

Let that sink in 

Cc is becoming like Bitcoin. The less supply the greater the price.

[SCgarman]

1 hour ago, BrightonCorgi said:

What happens when HSA's preferred distributors are sitting on excess stock? 

Is the retail market in those regions strong enough to support that volume of cigars?

Do you honestly think any Habanos distributors will have " excess stock"? Sir, with all due respect those days are likely gone for good. The pre Covid days of cheap abundance are out the window. 

[BrightonCorgi]

6 hours ago, SCgarman said:

 Sir, with all due respect those days are likely gone for good. The pre Covid days of cheap abundance are out the window. 

People said that about used cars a couple of years ago. Tides change and economic situations can be a different reality in 5-10 years.

[NSXCIGAR]

4 hours ago, BrightonCorgi said:

What happens when HSA's preferred distributors are sitting on excess stock? 

Is the retail market in those regions strong enough to support that volume of cigars?

The only excess stock is going to be HU Coronas Major and Partagas Habaneros. In fact that's largely been the only gray market stock for the last 2 years along with Vegueros and overpriced Trini. 

China could consume 100% of regular production Cohiba I'm quite sure. They seem to be slightly balking at the Siglo de Oro at the moment but I'm sure they'll move by the end of the year. And they also seem to not really be crazy about the Maduros either. But the Esplendidos GRs will fly over there faster than you can believe just like the Ideales books did. 

Maybe there'd be a few boxes of Panetelas and Siglo I left for the rest of the world. I'm aware of several LCDHs that are shipping the majority of their stock to China at top dollar. 

[NSXCIGAR]

9 minutes ago, BrightonCorgi said:

People said that about used cars a couple of years ago.  Tides change and economic situations can be a different reality in 5-10 years.

Totally agree. Hence why this is a very bold move putting all of their eggs in the China basket. I'm no business genius but I wouldn't recommend it as a long-term strategy and it does seem to me this wouldn't be happening without the Chinese interests in HSA. 

But as I said earlier there's a lot of pressure on the west in terms of economy and anti-smoking legislation and the US isn't opening up any time soon. NCs are growing in Europe due in no small part to HSA's own price increases. 

So while it's not the move I would make and it does tie them to China's economic fortunes there are certainly some logical factors that make it not completely senseless. 

[Marco_011t556]

The future concern is not about supply changes, but the authenticity...with due respect, some stocks from Spain are always "doubtful" of its authenticity. So the Habanos increase the supply to Spain, it makes the market more confusing. For positioning-wide, CC is already positioned as Hermes and Chanel.

[Li Bai]

3 hours ago, Marco_011t556 said:

The future concern is not about supply changes, but the authenticity...with due respect, some stocks from Spain are always "doubtful" of its authenticity. So the Habanos increase the supply to Spain, it makes the market more confusing. For positioning-wide, CC is already positioned as Hermes and Chanel.

Spain and France have yet to see an increase on supplies, I don't expect a big change in those markets (I hope that I'm mistaken) but rather more scarcity everywhere else.

I have a friend in Andorra right now and their distributor, Maori Tabacs SA isn't HSA majority-owned so I'm eager to know the situation there. The place had been heaven for French and Spanish CC lovers for decades but it might soon be over. I'll keep you posted.

[LigSecVol]

To me, it looks like HSA is purposely reducing supply to shake down a decades-long co-owner/partner to own 100% of it.

Which begs the question: if successful, will HSA do the same with other distributors?

 

 

[Li Bai]

13 hours ago, Li Bai said:

Spain and France have yet to see an increase on supplies, I don't expect a big change in those markets (I hope that I'm mistaken) but rather more scarcity everywhere else.

I have a friend in Andorra right now and their distributor, Maori Tabacs SA isn't HSA majority-owned so I'm eager to know the situation there. The place had been heaven for French and Spanish CC lovers for decades but it might soon be over. I'll keep you posted.

Well i just got news from Andorra and it's appalling...Cohiba, Trinidad, RYJ Linea de Oro and Cupidos, not much more.

The owners of The Cigar Shop are very concerned about their future 🥲🥲

[VeguerosMAN]

19 hours ago, MrBirdman said:

So the fellow over at Habanos News had it right, apparently - HSA moving distribution to countries where they own a bigger share (or all) of the distributor. Reeks of an order from the top to deliver every single cent of currency possible. Presumably they figure that if supply is so poor that everything besides Trini will sell, why share the wholesale profits with anyone? I'm sure it will please their new partners in Asia as well. 

There can't be many other companies in the world that could get away with treating their customers and retail network with such open contempt. Almost have to marvel at it, though I suppose in desperate times loyalty goes out the window. 

Exactly what I was thinking. Seems like the fellow over at Habanos News had it right all along. The theory that HSA is sending most of their supplies to China is debunked in the forum a few months back. But it appears that the debunked theory has become the reality. 

[El Presidente]

6 hours ago, VeguerosMAN said:

Exactly what I was thinking.  Seems like the fellow over at Habanos News had it right all along. The theory that HSA is sending most of their supplies to China is debunked in the forum a few months back. But it appears that the debunked theory has become the reality. 

Except for the fact that LCDH shelves in China are as empty as anywhere else in Europe.

This move appears to be a vertical integration power play. Perhaps one of several.

[VeguerosMAN]

14 hours ago, BrightonCorgi said:

People said that about used cars a couple of years ago. Tides change and economic situations can be a different reality in 5-10 years.

That's why I am patiently waiting for CC prices to come back to EARTH. I made a mistake of not saving/aging my CCs in the past so am out of all CCs. 

[SCgarman]

3 hours ago, VeguerosMAN said:

That's why I am patiently waiting for CC prices to come back to EARTH. I made a mistake of not saving/aging my CCs in the past so am out of all CCs. 

Supply vs. Demand= Price. The only thing you can hope (pray) for is demand to wane, and people to stop buying cigars. We can logically conclude that "supply" will never achieve pre-Covid levels ever again. Not with the Cuban cigar industry infrastructure so dysfunctional and broken. 

[VeguerosMAN]

2 hours ago, SCgarman said:

Supply vs. Demand= Price. The only thing you can hope (pray) for is demand to wane, and people to stop buying cigars. We can logically conclude that "supply" will never achieve pre-Covid levels ever again. Not with the Cuban cigar industry infrastructure so dysfunctional and broken. 

Eventually I think CC demand will wane as people will look for better options in NCs. 

[Marco_011t556]

Hmmm...interesting thing is, China Tobacco and Custom Authority has knocked a lot of private CC channel (no authorized license). All those people are with millions dollar stock. As for authorized channel, supply of CC is extremely limited, because CT is promoting its own cigars..

So, the very weird dynamics - largest demand country has its own domestic made cigar, while people are still fancy Cuban cigars. Will the shipment restriction (all will be taxed with 50%, max of 1 box allowed each time, etc) be tight? Who knows...

[VeguerosMAN]

Looks like all the CC supply is going to Asia. This store in Vietnam is very well stocked.

 

[teamrandr]

On 5/9/2024 at 1:59 PM, VeguerosMAN said:

Eventually I think CC demand will wane as people will look for better options in NCs. 

History would dispute that.