Power Struggle?

[El Presidente]

Interesting aticle. The rumours have been around since November/December 2024 

 

Who Really Owns Cuban Cigars? The Habanos S.A. Power Struggle

RumoursHabanosCuban CigarsCohiba

29 Aug 

Written By Ray Prodanov

 

The world of Cuban cigars has always thrived on mystique. The haze of secrecy, the whispered stories of plantations in Pinar del Río, the allure of Cohiba and Montecristo… it all feeds into the romance. But there’s another smoke-filled room, far from the rolling tables and curing barns of Cuba, where the real game is played: the boardroom of Habanos S.A., the global distribution powerhouse behind every Cuban cigar sold worldwide.

And right now, that boardroom is at the center of one of the biggest corporate mysteries in the cigar world: who actually owns Habanos S.A. today, and who is about to take over tomorrow?

 

CONTINUED

 

[ha_banos]

An unmitigated disaster for the regular Cuban cigar smoker. No more will Rob be able to say all walks of life in regards to Cuban cigars. We're already there in many regards. This will surely make things more so. 

Now where can I find an oil field no one's discovered yet?

[BrightonCorgi]

There's an assumption in the article that Gulf ownership of Habanos means higher prices.  Is that a 100% certainty? Pretty cavalier to assume that. 

New ownership could have new direction.  Shedding customers to NC's will eventually have an impact.  After a while, consumer preferences could change and that's not good in the long run.

 

[ha_banos]

8 hours ago, BrightonCorgi said:

There's an assumption in the article that Gulf ownership of Habanos means higher prices.  Is that a 100% certainty? Pretty cavalier to assume that. 

New ownership could have new direction.  Shedding customers to NC's will eventually have an impact.  After a while, consumer preferences could change and that's not good in the long run.

I assumed the same. I'm guessing these powers want Cuban cigars accessible only to the U/HNW. I don't think middle to low level product profits matter. I expect the major Habanos earnings come from the premium lines and the festival earnings. 

[BrightonCorgi]

7 hours ago, ha_banos said:

I assumed the same. I'm guessing these powers want Cuban cigars accessible only to the U/HNW. I don't think middle to low level product profits matter. I expect the major Habanos earnings come from the premium lines and the festival earnings. 

Duty Frees are darn near close to ripping out walk-ins. There could a better use of space at this point. Catering to only high-end buyers is going to jeopardize their relevance (Habanos) as a whole. Will be interesting decade to see where Habanos ends up.   

In the US, fine wine for a long time was considered only from France. Not so today. The consumer can be swayed and it's hard to win them back.

[El Presidente]

7 hours ago, BrightonCorgi said:

 Catering to only high-end buyers is going to jeopardize their relevance (Habanos) as a whole. Will be interesting decade to see where Habanos ends up.   

Hermès, Chanel, Patek Philippe, Rolls-Royce, Ferrari. The high end success marketing path is well trodden. Habanos owns this spectrum as well as the next one down: Porsche, Rolex, Montblanc, Prada, Gucci, Maserati etc., they have doubled profits in under 6 years (with approx 35% less production) by hitting this strategy hard.

They don't want / need you. They don't want / need me. They have literally opened the door and said, "if you don't like it, GTF out" 

 

[Hoosh]

1 hour ago, El Presidente said:

They don't want / need you. They don't want / need me. They have literally opened the door and said, "if you don't like it, GTF out" 

No hate intended here but The rest of the world already has. 😆 The “record revenue” for Cuba cigars is legitimately a drop in the bucket in comparison to those worldwide purchasing NCs. Real world facts actually count. 

[El Presidente]

1 hour ago, Hoosh said:

No hate intended here but The rest of the world already has. 😆 The “record revenue” for Cuba cigars is legitimately a drop in the bucket in comparison to those worldwide purchasing NCs. Real world facts actually count. 

No dispute. Rocky makes half of the Habanos production by volume. Drew Estate far exceeds it. Not sure what your point is? 

Think of the cigar market as a triangle. The tip of that triangle is the high end cigar demographic. Habanos owns that market almost exclusively. 

That is their strategy. They are more than happy for the Rocky's/DE's/Plasencia etc to play in the bulk market at the base of the triangle.

HSA want to own the top third tip high ROI section. 

 

[Chas.Alpha]

I wonder how long until we see “HRH MbS” regional releases…

[Hoosh]

33 minutes ago, El Presidente said:

No dispute. Rocky makes half of the Habanos production by volume. Drew Estate far exceeds it. Not sure what your point is? 

Think of the cigar market as a triangle. The tip of that triangle is the high end cigar demographic. Habanos owns that market almost exclusively. 

That is their strategy.  They are more than happy for the Rocky's/DE's/Plasencia etc to play in the bulk market at the base of the triangle.

HSA want to own the top third tip high ROI section. 

“Owning the higher end is a fair assessment,” but what happens when China/Asia is taken out of that market? Purely hypothetical of course, but my point was that the market for Cuban cigars isn’t at all what our little bubble here believes it to be. That is just fact. While pricing itself out of all marketshare except for the very top (Habanos is something like the 10th largest tobacco company in terms of revenue), NC cigars have become much better cigars than what the Wheeling Marsh smoking great grandpa’s of yesteryear smoked. That’s all. 🙂

[bmac]

Let’s make the LIV Golf and PGA Tour analogy.

[El Presidente]

2 minutes ago, Hoosh said:

but what happens when China/Asia is taken out of that market?

Where exactly are they going?   

Throw in Middle East. Top end Western Europe has already bought in. Eastern Europe top end demographic same.  Nigeria, Ivory Coast....demand for CC insane. 

We may not like it, but stepping back, one can see the play and it has been well executed. 

[zacca]

25 minutes ago, El Presidente said:

Where exactly are they going?   

Throw in Middle East. Top end Western Europe has already bought in. Eastern Europe top end demographic same.  Nigeria, Ivory Coast....demand for CC insane. 

We may not like it, but stepping back, one can see the play and it has been well executed. 

Exactly. Qatar or IHC will light that fuse in the Gulf the same way PP, Chanel, Hermès, RR, Lambo, Ferrari, etc. did years ago. Over there you’ve got people with stupid money and they lap up the marketing.

So you take the demand we already see, then add a wave of ME luxury buyers piling in just because it’s “luxury.” And since Cuba has proven they’re incapable of cranking up supply, prices will only have one way to go.

[Hoosh]

15 hours ago, El Presidente said:

Where exactly are they going?   

Throw in Middle East. Top end Western Europe has already bought in. Eastern Europe top end demographic same.  Nigeria, Ivory Coast....demand for CC insane. 

The Ivory Coast? No. Crazy. I’m sure the demand for CCs in The Gambia is right up there. 

My point I think still stands just as much as yours; The small amount of ultra wealthy that want CCs is absolutely tiny, regardless of increased revenue after one year or two. More people want NC than want CC. When China fully owns Habanos, don’t expect them to not play in the cigar world the same way they play in the rest of the real world. 

Besides, I’d posit that in America, the real perception isn’t that CC are for the ultra wealthy. I’d suggest the fact we “cannot” buy them makes up the largest desire to having them. There’s zero denying CC are a great cigar when they’re on. The key is, did you get a good one? Did you get a good box? How long to wait before smoking? How many bad Padróns are out there versus bad Cohibas? During a not so past presidential term, US citizens could legally bring CC into the US. How much was the Habanos increase in revenue then? I’d posit that the needle barely moved, if at all. Here, in our forum bubble, CC is where it’s at. Outside though, the real world is impatient. It will eventually show. 

[El Presidente]

14 hours ago, Hoosh said:

The Ivory Coast? No. Crazy. I’m sure the demand for CCs in The Gambia is right up there. 

My point I think still stands just as much as yours; The small amount of ultra wealthy that want CCs is absolutely tiny, regardless of increased revenue after one year or two. More people want NC than want CC. When China fully owns Habanos, don’t expect them to not play in the cigar world the same way they play in the rest of the real world. 

Besides, I’d posit that in America, the real perception isn’t that CC are for the ultra wealthy. I’d suggest the fact we “cannot” buy them makes up the largest desire to having them. There’s zero denying CC are a great cigar when they’re on. The key is, did you get a good one? Did you get a good box? How long to wait before smoking? How many bad Padróns are out there versus bad Cohibas? During a not so past presidential term, US citizens could legally bring CC into the US. How much was the Habanos increase in revenue then? I’d posit that the needle barely moved, if at all. Here, in our forum bubble, CC is where it’s at. Outside though, the real world is impatient. It will eventually sh

I think we are playing on separate fields 

No one argues far more NC are sold than CC worldwide.  100:1....+ 

However, it is difficult to argue that HSA doesn't control the ultra premium cigar market. They control that top level and the "aspirational" level next floor down. 

There are no challengers. 

[Hoosh]

14 hours ago, El Presidente said:

I think we are playing on separate fields 

No one argues far more NC are sold than CC worldwide.  100:1....+ 

However, it is difficult to argue that HSA doesn't control the ultra premium cigar market. They control that top level and the "aspirational" level next floor down. 

There are no challengers. 

There really are no challengers, but from my (statistically insignificant) POV, I’d rather spend $40 on that Padrón Black 97 and get a spectacular cigar every time I buy it then spend $100 on a Cohiba and pray to Jeebus that it’s not plugged, or rolled wrong or whichever of the myriad of “difficulties” pops up that tend to follow CC production. Heck, after I smoke one of these Ninfas I have coming, I may be swayed to them for good! I’ll never stop smoking CCs, but I’m certainly not like the fellow that wrote the other day he’d give up cigar smoking if didn’t have CCs. My smoking experience is about so much more than just the cigar.

So here’s to hoping China doesn’t ever majority own HSA. Life will be so different for so many folks on this forum…

[El Hoze]

Super interesting conversation. To me, a lot depends on the ability to move from merely a “luxury item” people want to consume for their own pleasure to “status symbol.” I think getting to status symbol is a tough one to execute with cigars in any real scale, even for Cohiba. 

I remember being at the Four Seasons in Geneva sipping on my $40 beef broth noticing that of 4 people smoking on the front terrace, 3 of them were smoking BHKs. 

[zacca]

14 hours ago, Hoosh said:

There really are no challengers, but from my (statistically insignificant) POV, I’d rather spend $40 on that Padrón Black 97 and get a spectacular cigar every time I buy it then spend $100 on a Cohiba and pray to Jeebus that it’s not plugged, or rolled wrong or whichever of the myriad of “difficulties” pops up that tend to follow CC production. Heck, after I smoke one of these Ninfas I have coming, I may be swayed to them for good! I’ll never stop smoking CCs, but I’m certainly not like the fellow that wrote the other day he’d give up cigar smoking if didn’t have CCs. My smoking experience is about so much more than just the cigar.

So here’s to hoping China doesn’t ever majority own HSA. Life will be so different for so many folks on this forum… 

Still not sure what point you’re trying to make. Saying you’d rather have a $40 Padron that’s consistent than a $100 Cohiba with risk is like saying you’d rather drive a Lexus than a Ferrari because it starts every morning. Yeah, nobody’s arguing that — but it’s not the point. The Ferrari still holds the luxury crown, still commands the price, and still has buyers lining up even if it’s temperamental. Same with CCs.

Your personal preference is totally fair, but it doesn’t change the reality of how the market values Cuban mystique, scarcity, and brand power. 

[El Hoze]

13 hours ago, zacca said:

Still not sure what point you’re trying to make. Saying you’d rather have a $40 Padron that’s consistent than a $100 Cohiba with risk is like saying you’d rather drive a Lexus than a Ferrari because it starts every morning. Yeah, nobody’s arguing that — but it’s not the point. The Ferrari still holds the luxury crown, still commands the price, and still has buyers lining up even if it’s temperamental. Same with CCs.

Your personal preference is totally fair, but it doesn’t change the reality of how the market values Cuban mystique, scarcity, and brand power.  

I am genuinely just asking this question, as I effectively agree with all of your points, just trying to help the thread. Interesting conversation. How would you compare/contrast this same argument if we said Porsche vs. Ferrari? I have owned many of both - so I really have no strong axe to grind either way - but I have never had kids chasing a Porsche down a street. 

I just feel like Habanos is trying to move into an area few legitimately occupy. Ferrari is clearly one. 

[LordAnubis]

What I find funny in the whole price game is that people always ask “why is the price so high” and not “how can African, Asian (from south to north), Eastern European markets pay more than I’m willing to pay for these cigars”. It’s the pure definition of capitalism, but somehow this time it's not right because certain regions and consumers are being driven out of the market by those who have the means to pay much more 🤷🏽‍♂️

[Hoosh]

13 hours ago, zacca said:

Still not sure what point you’re trying to make. Saying you’d rather have a $40 Padron that’s consistent than a $100 Cohiba with risk is like saying you’d rather drive a Lexus than a Ferrari because it starts every morning. Yeah, nobody’s arguing that — but it’s not the point. The Ferrari still holds the luxury crown, still commands the price, and still has buyers lining up even if it’s temperamental. Same with CCs.

Your personal preference is totally fair, but it doesn’t change the reality of how the market values Cuban mystique, scarcity, and brand power.  

My original point started with the “We don’t need you, if you don’t like it…” quote from @El Presidente by saying that the point is , the world *has* left-nobody need to tell them to. The folks buying CC on the reg are clearly not in the same class as the absolute majority of cigar buyers anywhere in the world - except for the Ivory Coast (😉). I’m saying the world doesn’t care. CC are now clearly a luxury item but even that designation is statistically insignificant despite more sales than the year before. I smoke CC on occasion because I enjoy the change of pace during “my time.” 

I suspect this will change though if HSA were to ever be fully run by China. There will still be the top end, rich person buying Habanos, but China will always be China-they can’t help themselves. They will change HSA I believe. I read another article linked on this forum that was talking about Cuban companies buying of more machines to take away from hand rolled cigars. The upper echelon of spenders certainly won’t buy those. It’s coming though -apparently. That’s why it is so important to know who actually owns HSA.

Hope nobody’s offended here. I am still the FNG. 

[Hoosh]

13 hours ago, El Hoze said:

I am genuinely just asking this question, as I effectively agree with all of your points, just trying to help the thread. Interesting conversation. How would you compare/contrast this same argument if we said Porsche vs. Ferrari? I have owned many of both - so I really have no strong axe to grind either way - but I have never had kids chasing a Porsche down a street. 

I just feel like Habanos is trying to move into an area few legitimately occupy. Ferrari is clearly one.  

No kid has ever chased the Porsche down the street because it’s like the machine rolled Cuban cigar - yeah, it can be really good but it’s no hand-rolled Partagas Serie E No. 2. That’s the Ferrari. Well, plus the Porsche is being driven by a middle-age man who still wants to be relevant and the Ferrari’s being driven by the guy who has it made with the hot side piece in the passenger seat. 🙂

If China were full owners of HSA, do you think they (HSA) would still be the same? Do you think their image would not change with anybody if they did change (i.e., put out more, less luxurious, machine made cigars)?

[Hoosh]

13 hours ago, El Hoze said:

Super interesting conversation. To me, a lot depends on the ability to move from merely a “luxury item” people want to consume for their own pleasure to “status symbol.” I think getting to status symbol is a tough one to execute with cigars in any real scale, even for Cohiba. 

I remember being at the Four Seasons in Geneva sipping on my $40 beef broth noticing that of 4 people smoking on the front terrace, 3 of them were smoking BHKs.. 

What would they be smoking at the Four Seasons in, say Washington DC? Hypothetically, of course, but those same people staying at that hotel probably could afford a CC, but would they actually be smoking one?

Which, of course, brings up another point…Does taste translate into money? Perception is reality for everyone, myself included, and we already know that I wouldn’t spend $100 daily on a hope and a prayer when I could spend the $40 knowing I was good.

I certainly don’t know about the increase in CC consumption while a previous president was in office and okayed it, but as I stated before, I would be willing to bet that CC consumption didn’t really move the needle. Generically, I feel that more people worldwide enjoy the taste of NC over CC. 

Blasphemy!! 😁

[El Presidente]

12 hours ago, Hoosh said:

What would they be smoking at the Four Seasons in, say Washington DC?

If they were the same people they would still be smoking Behike 

12 hours ago, Hoosh said:

If China were full owners of HSA, do you think they (HSA) would still be the same? Do you think their image would not change with anybody if they did change (ie, put out more, less luxurious, machine made cigars)?

Allied group out of HK (Chinese JV partners) have been calling all the shots since 2020/2021. Somehow between having an anaemic JV partner, Covid, crop volume collapse etc they have managed a trebling of profit and through an audacious brand/product repositioning gamble where they jettisoned 50%-60% of old customers...without a care in the world...and somehow managed to pull it all off. Eggs have been broken (some non moving cigar lines) but over all they would be tickled pink. Their background was travel retail and luxury retail so in retrospect none of this should come as a surprise. 

ICT and machine made cigars have always been part of Tabacuba. It makes complete sense to package machine made cigars in say 5 packs for price sensitive demographics. It is a different division to Habanos S.A. 

[zacca]

13 hours ago, El Hoze said:

I am genuinely just asking this question, as I effectively agree with all of your points, just trying to help the thread. Interesting conversation. How would you compare/contrast this same argument if we said Porsche vs. Ferrari? I have owned many of both - so I really have no strong axe to grind either way - but I have never had kids chasing a Porsche down a street. 

I just feel like Habanos is trying to move into an area few legitimately occupy. Ferrari is clearly one.  

It’s close enough that I’d say it depends on the Porsche and Ferrari in question 😂 

But all else equal and just talking about the “brand” (not say a GT3 vs a California or an F40 vs a 928), I’d say Ferrari is a tick above on the “luxury” scale.