Market insights: The current state of play. July 30 2024.

[El Presidente]

Musings from the front desk 

Anecdotal evidence suggests the premium cigar market appears to be softening in various markets for CC. Mainland China has come off the boil, the talk is HSA has softened its position regarding distributors, distributors are finding it harder to move their top end product, supply is gearing up to a sustainable level across a wider range of lines. Again, anecdotal with publicly available hard numbers non-existent but July demand internationally was perhaps the softest month in several years.

The next six months will show if this is a “blip” or a proper sliding door moment for the CC world. Those doing well within the industry, continue to do well. BR has had its strongest six months in 5 years. FOH same. Similarly global retailers pivoted early from 100% CC reliance are being rewarded. They can thank Habanos for the “push”. 😉

To be fair it is not only CC’s. From high end liquor to luxury handbags, clothing, and cars.

“After the booming recovery of luxury spend post-Covid, a normalisation in the pace of growth is not surprising, especially considering the current subdued economic environment in Asia. However, as soon as the economic environment improves, we should expect an acceleration of the luxury spend,”

Mario Ortelli, managing partner of luxury advisory firm Ortelli&Co 

Travel on the other hand is booming with business class travel the most in-demand sector. People appear to be chasing experiences as opposed to product.

Crystal balling is often a mugs game. However, feel free to give it a crack. 😉

[benfica_77]

I expect next summer a rebrand / change in pricing model for Trinidad is my guess after rubbing my crystal balls...😎

Globally interest rates are high and people will pay their mortgages before buying another box of Siglo VI. I expect the CC market to be continue to slow down...

[El Presidente]

9 hours ago, benfica_77 said:

I expect next summer a rebrand / change in pricing model for Trinidad is my guess after rubbing my crystal balls...😎

I am looking forward to end September in relation to Trinidad. I think it will take that period of time to gauge the level of needle movement resulting from the promotional push by HSA.

Make no mistake, their marketing philosophy for Trinidad is two tier:

              1. Develop new markets not previously engaged with Trinidad (Asia/Middle East)

              2. Reposition the brand through the release of new high end/high price and "in demand" Trini product. 

[Li Bai]

9 hours ago, El Presidente said:

Mainland China has come off the boil, the talk is HSA has softened its position regarding distributors, distributors are finding it harder to move their top end product, supply is gearing up to a sustainable level across a wider range of lines. Again, anecdotal with publicly available hard numbers non-existent but July demand internationally was perhaps the softest month in several years.

I've been talking with many retailers for a couple of months in France and Switzerland (and I AM very talkative especially when it comes to cigars) to try to figure out if HSA-owned distributors were beginning to be favoured in terms of supply and they are not.

It is slowly improving everywhere but France and Spain (I'm talking about former big markets for CCs), or maybe it is but at an even slower pace.

[dicko]

Thanks for the update. Not holding out for price stabilising but at least more of the favourites are becoming available for sale again!

Sent from my SM-G986B using Tapatalk

[gormag38]

I too have thought that the 'secondary market' for cc's has slowed a decent amount, really noticeably the last month or two. Maybe folks are just tired of being priced out or there aren't enough 'newbies' to buy up the typical personal postings. I've also noticed alot more stock for the grey market vendors as well, even some harder to find stuff that just sits around due to pricing (in most cases)

[Marco_011t556]

I think one of the major reason is...PRC custom authority and China Tobacco knock down a lot of cigar sellers in China. People are not allowed to sell cigars without license. A lot of people are arrested, sentenced due to illegal cigar selling.

[Arabian]

15 hours ago, Li Bai said:

It is slowly improving everywhere but France and Spain (I'm talking about former big markets for CCs), or maybe it is but at an even slower pace.

Not sure about France, but I think in Spain the profit margins for cigars are fixed by the government at 9%. Empty store/regular customers aren't showing up is a problem. 

[Li Bai]

7 hours ago, Arabian said:

Not sure about France, but I think in Spain the profit margins for cigars are fixed by the government at 9%. Empty store/regular customers aren't showing up is a problem.

It's more or less the same in France, the problem is the supplies that are at an all-time low in both countries.

Switzerland, that should be in more trouble since Intertabak isn't HSA owned, seems to be in better shape.

[Arabian]

35 minutes ago, Li Bai said:

It's more or less the same in France, the problem is the supplies that are at an all-time low in both countries.

Switzerland, that should be in more trouble since Intertabak isn't HSA owned, seems to be in better shape.

Strange indeed, my local Habanos specialist has a better stock than the LCDH store. The latter has to fight with his distributor over the phone to get some stock. 

[Li Bai]

46 minutes ago, Arabian said:

Strange indeed, my local Habanos specialist has a better stock than the LCDH store. The latter has to fight with his distributor over the phone to get some stock. 

I guess there's nothing to figure out, everything HSA touches turns into chaos 🤔

[RDB]

We can see by what doesn’t sell out on 24:24 how the market is softening a bit. Looks to me like the relentless price increases have pretty much saturated demand for ‘midrange’ CCs, and for the less popular ‘premium’ offerings at least here. Still near empty shelves at b&m retailers, which is a shame. And still way worse for consumers than pre-2020 of course. But it does feel a bit more stable.

[ha_banos]

Feck all in most places I've been into in Basque country. And asking about Leones gets a laugh. Pamplona, an old lady behind the till was muttering something about no contrato.