Distributor Squeeze and Price Increases.

[SCgarman]

2 hours ago, VeguerosMAN said:

Given the dire situation Cuba is in right now, I don't know how long they can sustain their tobacco business before hitting the wall. Of course, Habanos can make money by shifting their clients to ultra rich in China for a while, but that only works when the state of CC industry is healthy and the workers are happy. In the long run, I believe NCs will have their significant market share in China as Cuba struggles to deal with worker shortage and massive exodus of population. 

Add to the worker shortage and exodus a shortage of fertilizer for tobacco, farmers that aren't getting paid for their work, many drying barns that were leveled by hurricanes not being rebuilt, on and on. They will just keep raising prices into the stratosphere until it all collapses onto itself. 

[NSXCIGAR]

3 hours ago, SCgarman said:

Add to the worker shortage and exodus a shortage of fertilizer for tobacco, farmers that aren't getting paid for their work, many drying barns that were leveled by hurricanes not being rebuilt, on and on. They will just keep raising prices into the stratosphere until it all collapses onto itself. 

They can sustain everything except the farms. You can train rollers in a few months. Farmers not so much. And convincing others to take over tobacco production after seeing how they treat the current farmers won't be easy although they'll probably promise them the moon and stuff some cash in their pockets for the first few years. 

My personal belief is that the lack of fertilizer and soil depletion has been a serious problem for a while. But those issues affect flavor and you still need to grow nice leaf with high yields which isn't easy. 

[Habanoschris]

On 5/24/2024 at 11:13 PM, Uwiik said:

This is downright ridiculous, but as long as the Chinese market still has money this craziness will never subside. I used to feel stupid spending all that money on 2023 highly inflated price, but now I am feeling lucky, with my current stock and current consumption rate I am safe for the next 19 years 😝. I surely hope my sticks quality can last that long.

19 years! 🫡

[VeguerosMAN]

23 hours ago, SCgarman said:

Add to the worker shortage and exodus a shortage of fertilizer for tobacco, farmers that aren't getting paid for their work, many drying barns that were leveled by hurricanes not being rebuilt, on and on. They will just keep raising prices into the stratosphere until it all collapses onto itself. 

When you say "collapse", do you think there will be a price collapse as they go out? Contrary to what @Li Bai thinks, my conscious is clear and not delusional 😁. NCs will come after Habanos in the Chinese market in my humble opinion with reasonable prices. At that point either Habanos have to lower their prices or go out swinging by raising prices. In most cases, when a business is going out it usually offers fire sale to get rid of their stocks. 

[Li Bai]

5 hours ago, VeguerosMAN said:

Contrary to what @Li Bai thinks, my conscious is clear and not delusional 😁.

I meant no offense Vman, I just share @El Presidente's opinion, you're waiting for something that never happened in Cuban History. 

Fwiw, I wish you were right...

[VeguerosMAN]

4 hours ago, Li Bai said:

I meant no offense Vman, I just share @El Presidente's opinion, you're waiting for something that never happened in Cuban History. 

Fwiw, I wish you were right...

No offense taken. I just think this time is different with nonsense going on in Cuba.

[josie67]

My wife and I were in Singapore last month, and on the way out, at Changi Airport, I went to a few duty free shops looking for some Cuban cigars to bring home. None of the shops had any except for one. I asked if they had Cuban cigars, and they said YES!, over this way. I walked into the walk-in humidor and I saw rows and rows of Cuban cigarillos. 🤨  I asked if that was all the Cubans they had, and that was it.  They hadn’t been able to get anything else.  

[Bijan]

3 hours ago, VeguerosMAN said:

NCs will come after Habanos in the Chinese market in my humble opinion with reasonable prices. At that point either Habanos have to lower their prices or go out swinging by raising prices.  In most cases, when a business is going out it usually offers fire sale to get rid of their stocks. 

If Cuban cigars go bust, the most likely scenario will be that production from the farm up will be broken beyond repair.

Why would prices go down when supply would be hitting zero?

[VeguerosMAN]

2 hours ago, Bijan said:

If Cuban cigars go bust, the most likely scenario will be that production from the farm up will be broken beyond repair.

Why would prices go down when supply would be hitting zero?

To compete with NCs. 

[El Presidente]

 

8 hours ago, VeguerosMAN said:

NCs will come after Habanos in the Chinese market in my humble opinion with reasonable prices.

Chinese cigars are coming after both. They are well on their way and the lower to mid tier NC brands who have just grasped (or are near grasping) a foothold have the most to fear. 

If you have no cache, you will be swept aside in the tide. 

 

8 hours ago, VeguerosMAN said:

 At that point either Habanos have to lower their prices or go out swinging by raising prices. In most cases, when a business is going out it usually offers fire sale to get rid of their stocks. 

Habanos increased profits  in the financial year 2023 by 50% with 50% less product. 

Folk have been talking about an imminent reduction in pricing for coming on 4 years now. The only thing Habanos are kicking themselves about is not doing it a decade ago. 

They have a lot of issues in relation to their manufacturing partner. They pivoted their supply/pricing model to accommodate that shortcoming. 

[Jerryvonkramer]

3 hours ago, El Presidente said:

Habanos increased profits by in the financial year 2023 by 50% with 50% less product. 

Greedy capitalists! Workers of the world unite! Oh wait, hold on ...

[vladdraq]

Wondering how much is the profit of a NC producer compared to Habanos. Are they in the same ballpark?

[Partyshrts]

 

Excuse my ignorance. China is making Cigars? It doesn't surprise me. They have cheap labor and can reverse engineer anything.

"Chinese cigars are coming after both. They are well on their way and the lower to mid tier NC brands who have just grasped (or are near grasping) a foothold have the most to fear. 

If you have no cache, you will be swept aside in the tide."

[El Presidente]

22 minutes ago, Partyshrts said:

Excuse my ignorance. China is making Cigars? It doesn't surprise me. They have cheap labor and can reverse engineer anything.

Great Wall is China's largest domestic manufacturer. They started producing cigars in 1918. They are a monolith. 

[El Presidente]

1 hour ago, vladdraq said:

Wondering how much is the profit of a NC producer compared to Habanos. Are they in the same ballpark?

Good question. I don't have a definitive answer. 

Cuban labour is cheaper. However infrastucture (pre/post industry) is nowhere near as streamlined. Distribution costs (direct and indirect) would also be significantly higher with CC.

 

[NSXCIGAR]

4 hours ago, vladdraq said:

Wondering how much is the profit of a NC producer compared to Habanos. Are they in the same ballpark?

Profit, no idea. Don't know what HSA's profit is either. Tabacuba controls HSA profits through input costs. That's why I wouldn't touch HSA with a 10-foot pole. They'll always be slaves to Tabacuba. But if you're Chinese and want to divert to the Chinese market it might be worth the $1.2B just to lock it up. As a straight investment it's a loser. Altadis/Imperial would have been better off putting their $500M in an index fund from 2000-2021 than owning 50% of HSA. 

We do know US imports of NCs are about 467 million units. Then there's world imports. No idea on those but say another 100M units. That's ~570M units at an average price of say $10 each. You've got a nearly $6B industry. 

[NSXCIGAR]

10 hours ago, El Presidente said:

The only thing Habanos are kicking themselves about is not doing it a decade ago. 

I'm not sure if it was possible 10 years ago. It seems this insatiable Chinese demand is only about 5 years old. They're certainly the primary drivers of the ultra premium market which is what's allowing 50% growth with 50% less product. I can't recall the last box of BHK I saw for sale anywhere and I know they've been consistently making it. They must be sending 90% of it to China. 

[Li Bai]

9 minutes ago, NSXCIGAR said:

I can't recall the last box of BHK I saw for sale anywhere and I know they've been consistently making it. They must be sending 90% of it to China.

I recall seeing one box of 52 and one box of 54 in the last four years in Paris.

Still more than Partagas 898 😩 

[Arabian]

8 hours ago, Partyshrts said:

Excuse my ignorance. China is making Cigars? It doesn't surprise me. They have cheap labor and can reverse engineer anything.

"Chinese cigars are coming after both. They are well on their way and the lower to mid tier NC brands who have just grasped (or are near grasping) a foothold have the most to fear. 

If you have no cache, you will be swept aside in the tide."

They also make their own wine and I believe they export it as well. With China's massive region and growing tobacco all over the country, I wonder if different climates in each region will result in different end-products, taste wise. 

[Partyshrts]

6 hours ago, Arabian said:

They also make their own wine and I believe they export it as well. With China's massive region and growing tobacco all over the country, I wonder if different climates in each region will result in different end-products, taste wise. 

I wonder what type of pesticides they are using on the tobacco and grapes? Not sure I want to find out. Hopefully it isn't laced with Fentanyl.

[Puros Y Vino]

Is there a risk of Chinese tobacco finding its' way into Cuban marcas?  China probably makes a lot of the packaging already.  Why not slip some tobacco in there too? Maybe not officially but the way I see it, the opportunity is there, big money to be made, etc. I think back to that shady venture many years ago that Hiroshi Robaina was somehow embroiled in. Whether it was willingly or not, I'm not sure. But I do remember cigars bearing an "H" where the Vegas Robaina "R" would be.  As a big investor in Habanos, it's probably not likely, but money makes people do bad things.  

[ha_banos]

9 minutes ago, Puros Y Vino said:

Is there a risk of Chinese tobacco finding its' way into Cuban marcas?  China probably makes a lot of the packaging already.  Why not slip some tobacco in there too? Maybe not officially but the way I see it, the opportunity is there, big money to be made, etc. I think back to that shady venture many years ago that Hiroshi Robaina was somehow embroiled in. Whether it was willingly or not, I'm not sure. But I do remember cigars bearing an "H" where the Vegas Robaina "R" would be.  As a big investor in Habanos, it's probably not likely, but money makes people do bad things.  

The H was him producing in Nicaragua no? 

 

https://www.cigaraficionado.com/article/hirochi-robaina-blends-nicaraguan-cigar-17699

[Puros Y Vino]

4 hours ago, ha_banos said:

The H was him producing in Nicaragua no? 

https://www.cigaraficionado.com/article/hirochi-robaina-blends-nicaraguan-cigar-17699

Nope, this was back in 2014. It was discussed here.  Original site is gone. But a news piece on it still exists. Read here.

 

[ha_banos]

4 hours ago, Puros Y Vino said:

Nope, this was back in 2014. It was discussed here.  Original site is gone. But a news piece on it still exists.  Read here.

Thanks. That's a bit before my time here. Same time though as the US releases https://halfwheel.com/hr-habano-debuts-tonight/74753/

 

 

[JohnS]

And interestingly enough, the Vegas Robaina marca has not had a special release since 2014. How quaint!