As CEO, What would you do with Non/Slow Selling lines?

[El Presidente]

 

 

One wonders where Habanos is going to go with the “Linea” series of Monte/R&J/Partagas? 

 

All three guises have some very good cigars within the range, all are in the Bugatti range of pricing, all but one or two individual lines are struggling to sell worldwide.  Global CC humidors may not be bursting at the seams right now, but they will generally have plenty of the Linea range in all three Marques. 

Drop the price? Drop production to a trickle? Relaunch? Retire the non performing lines? Do nothing? Combination?

I had a CC industry exec explain to me recently his thoughts:. “ The Cuban cigar world now is split between the high-end cigars which are doing nicely, and the bottom end such as mini/purito/Jose Pietra etc which are also doing very nicely. The world in between, the mid end, is largely struggling bar the Robusto saviours such as D4/RASS.”

 So let’s assume you are running Habanos. You have a tricky situation in that you have never made more money than you are making now, but 60% of your portfolio is not moving.  On the surface that may appear alarming, but is it? If we look at the Pareto Principle, then one could assume it is normal that 80% of Habanos sales come from 20% of the product portfolio.

 From the options provided in the POLL…as CEO which trigger/s are you more likely to pull? 

 

[JohnS]

I would tie-in a 'Buy 1, get 20& or 30% off the second box' deal. Make the first box a box that sells well and second one a box amongst the brands that don't sell well. I know that sounds simple, and is commonplace in First-World Western Capitalist countries, but I suspect that such a strategy is beyond the likes of Habanos S.A.

[JDoughty]

I would just keep them all and smoke them. This is why I suck as a businessman. 😆

More seriously, if it's not selling, continuing to use the finite resource of Cuban tobacco to produce them seems a bad bet. Reblend and rebrand. 

[LizardGizmo]

I voted for both relaunch and discontinue, depending on the marque's history with consumers and the potential 'new' story that can be told.

Off the cuff, I think relaunching La Gloria Cubana could be an interesting rebrand opportunity. I'm not sure what to say about lines like Sancho Panza, Fonseca, San Cristobal or Juan Lopez...I just don't think the story is that interesting on any of them to prop up a relaunch. 

I'd discontinue or make exclusive any line that isn't selling, refocus that tobacco and energy onto products that are selling and get the shelves stocked worldwide with product consumers want. Maybe release a "paused" marque's line every two to three years in very limited quantity?

 

[cnov]

6. Reduce the cost of those lines that aren't moving, while leaving premium as is. 

Why not price everything so it keeps flying? There are a wide range of buyers to appease, might as well take everyone's money. 

[CaptainQuintero]

If the 'middle class' of CC buyers have been squeezed out totally or dropped down to that Piedra/Purito price bracket, I'd expect this would be the result

If it was me I'd examine the idea of relaunching a mid-tier cigar for those brands struggling at a lower price, or have one cigar per brand that is a sacrificial lamb: limited production but lower priced (e.g. a RyJ Cazadores) so your old loyal customers can still get the odd box, but the smaller production it's not biting into the profits.

  

[NYGuido]

9 hours ago, LizardGizmo said:

I'm not sure what to say about lines like Sancho Panza, Fonseca, San Cristobal or Juan Lopez...I just don't think the story is that interesting on any of them to prop up a relaunch. 

Gizmo, do you think they could or ever would create something of an umbrella marca for these--say a Heritage label or something--and give each cigar its full name. So, for example, create the umbrella line and then have the SP Belicoso, listed as such, in the umbrella brand's portfolio. Some of the cigars from SP, SC, etc., are pretty damn tasty, so I'd hate to have those disappear from the world. But it does seem those marcas aren't getting the attention from both the production side and the consumer side.

8 hours ago, CaptainQuintero said:

  If the 'middle class' of CC buyers have been squeezed out totally or dropped down to that Piedra/Purito price bracket, I'd expect this would be the result  

Do we think they even care about this market, though? Seems like they want to cater to the Asian, Middle Eastern, and other luxury markets such that Cuban cigars take on the same kind of monied ethos that handbags, watches, and other such accessories have. I don't even think they WANT to retain the "middle class" market, since retaining them would limit supply to the markets they DO care about.

I am SO frustrated I didn't get into the CC game YEARS ago.

[JohnnyO]

Reduce and discontinue slow production lines. No self respecting Habanos CEO is ever going to discount anything (Sorry Giz and JohnS) as HavanaU marketing schools don't teach that. It's gauge and gouge, schtupp or get schtupped. The Purito/Mini/Piedra success is tied to the unaffordability of the medium range cigars. Habanos SA is marketing it heavier in Havana and Varadero so they are probably doing it world wide. The biggest problem they face is the future of Prince Holding Group as OFAC has their sights on their assets. John

[joeypots]

I’d drop prices across the board and like a good socialist fund production of poorly selling cigars and sell them at prices that will move the inventory. In other words, it’s a communist country so I’d use the famous product as an employment engine for the benefit of Cuba and Cuban citizens. 

Ok, in the box below all are invited to make sport of my moon bat radical leftist idea but man, it’s a real s**t show in Cuba and people are suffering. If I was the boss, I’d work for my people rather than affluent Cuban cigar aficionados. 
 

[Fuzz AI]

Discontinue and redirect tobacco to other lines, then when they furore over the discontinuation has gone on for about 2-3 years, bring them back as a "We have listened to our customers and brought these lines back as a special 'Revival' series of cigars".... with a 30% mark up.

[LizardGizmo]

Gizmo, do you think they could or ever would create something of an umbrella marca for these--say a Heritage label or something--and give each cigar its full name. So, for example, create the umbrella line and then have the SP Bellicoso, listed as such, in the umbrella brand's portfolio. Some of the cigars from SP, SC, etc., are pretty damn tasty, so I'd hate to have those disappear from the world. But it does seem those marcas aren't getting the attention from both the production side and the consumer side.

I don’t think the classification changes much - if it’s the same cigar, branded the same way I don’t think the consumer will see it differently, especially at these prices.

I agree with JohnnyO that discounts/price reduction will never happen from Habanos - unless it’s quietly allowed through retail markdown. Rolex and Ferrari don’t do discounts and I think Habanos views themselves in that same category of elite luxury.

[zacca]

This could be interesting to follow — we may end up with a real-time brand case study on our hands.

If I’m running HSA, the move I’d make is very different from the one I want to see as a customer.

My choice: Reduce production.

It’s the cleanest luxury-aligned lever — it protects brand equity, absorbs excess inventory, and restores desirability without the signaling damage of price cuts or the capital cost of relaunches.

Why this is the best single move:

-Preserves brand positioning

-Avoids price drops (luxury 101: never discount)

-Lowest operational risk

-Tightens supply → strengthens desirability

-Clears retailer backlogs

-Signals discipline without killing lines

-Leaves the door open for future relaunches

Why not price?
I’m not in the retail industry, but what I’ve observed as a consumer is there’s a rule with luxury goods: if demand drops, you cut supply—not price

Price drops are long-term brand equity destroyers, especially for prestige goods. Once price credibility erodes, it’s extremely hard to rebuild.

Absolut Vodka tried this in 2010s— after years of chasing volume via discounting, the brand lost much of its premium aura. Once a prestige brand starts competing on price, the status ladder only goes down.

[03Hemi]

I don't see Rolex as a luxury line of superb quality watches, they mass produce 1 to 1.5 million units per year. It's their brilliant marketing by holding back inventory, creating a fake wait list and AD's trained to sell to inflated egos that jacks the price up. Ask the next Rolex owner what mvt. his watch has, you'll see what I mean, but I digress...

I've been watching and have noticed some Cuban lines have actually come down in price since the huge inflation after Covid, I think in time they'll come down even more.

[LizardGizmo]

6 hours ago, 03Hemi said:

I don't see Rolex as a luxury line of superb quality watches, they mass produce 1 to 1.5 million units per year. It's their brilliant marketing by holding back inventory, creating a fake wait list and AD's trained to sell to inflated egos that jacks the price up. Ask the next Rolex owner what mvt. his watch has, you'll see what I mean, but I digress...

I am admittedly not a watch guy at all - forgive my ignorance referencing them if it doesn’t make sense.

 

[03Hemi]

6 hours ago, LizardGizmo said:

I am admittedly not a watch guy at all - forgive my ignorance referencing them if it doesn’t make sense.

 You had referenced Rolex as being an "elite" line which is merely based on marketing was my only point. But you are correct, that's how they're viewed, Rolex has the best marketing in the world.

[BrightonCorgi]

You need a complete portfolio to validate the higher end. Concentrate on quality, educating the consumer, and promoting the legacy. If it's a good product (the slow selling lines), marketing can do wonders as the product will speak for itself when put in the correct light. 

[chasy]

Discontinue and sell through remaining inventory is the only correct answer.

[Li Bai]

I have a question for you @El Presidente, how representative of the typical CC smoker are we FOHers?

In other words, what was the percentage of genuine connoisseurs among CC buyers before 2022 and what is it now (give or take)?

 

 

[ha_banos]

6 hours ago, 03Hemi said:

 You had referenced Rolex as being an "elite" line which is merely based on marketing was my only point. But you are correct, that's how they're viewed, Rolex has the best marketing in the world.

You need to have the demand to begin with. As Ryan pointed at elsewhere...it's The Great Ens**ttening...

[El Presidente]

17 minutes ago, Li Bai said:

I have a question for you @El Presidente, how representative of the typical CC smoker are we FOHers?

In other words, what was the percentage of genuine connoisseurs among CC buyers before 2022 and what is it now (give or take)?

Let me get my thoughts together as it is an interesting topic. I will answer in a little detail over the weekend. 

[JohnS]

8 hours ago, JohnnyO said:

No self respecting Habanos CEO is ever going to discount anything (Sorry Giz and JohnS) as HavanaU marketing schools don't teach that. John

Of course, that's right John and I always appreciate your comments on all things coming from the Island. But herein lies the problem. It shouldn't even come to this. In other words, this topic shouldn't exist, and we shouldn't be having this discussion. If things were managed properly on the Island, there would be no need for discontinuations and slow-sellers wouldn't be a 'thing'.

As a comparison, I've just spent a few days in Bordeaux, France. The Bordeaux Wine industry protects its product under AOC rules (i.e. 'controlled designation of origin' in English) because they are aware of the terroir which makes their product distinctive. There are 65 appellations currently and each area around Bordeaux is designated for producing either Red wines (which tend to be Cabarnet Sauvignons or Merlot), White wines, Rose wines or even Cremants (i.e. sparkling wine). Each has its place and its managed very well. There are a plethora of different options available when it comes to Bordeaux wine.

I wish I could say the same for the distinctive tobacco region of the West Coast of Cuba. The terroir makes Habanos cigars distinctive and in my view, it's quite possible to designate the allocation of leaf for different brands and vitolas and market it successfully. Of course, it's not possible as things are now.

[BassMass]

A couple of years ago, the french had to destroy millions of wine bottles because they could not move them. The solution was simple. Get close to CA cab in price and they would have sold them all. "I would have bought them." All they need is 15% to 20% price drop and they would never sell a volume brand again.

[gormag38]

I selected the two most viable/realistic options (in my opinion). Discontinuation and re-launches. 

@LizardGizmo's reasoning was actually pretty spot on with how I was thinking. Some of the brands with some history/stories to tell get a relaunch. Others get the axe. 

For example: SCdlH would likely get the axe but VR would get a relaunch focusing on Don Alejandro, his farm, his importance etc; maybe there'd be a special release accompanied with the relaunch. 

I do have to wonder (even if it is unrealistic) if habanos dropped their prices on the 'mids' by 10-15%% would the natives go wild on them? They'd still have met their original objective of getting PLENTY more money than say 5 years ago. But the consumer would see prices that look a lot more attractive in comparison. 

[Namisgr11]

19 hours ago, Fuzz AI said:

Discontinue and redirect tobacco to other lines, then when they furore over the discontinuation has gone on for about 2-3 years, bring them back as a "We have listened to our customers and brought these lines back as a special 'Revival' series of cigars".... with a 30% mark up.

I second this. There's a finite amount of high quality tobacco every year. By discontinuing the slow/non sellers, more of that finite amount going forward can be directed to producing good selling brands/vitolas. The remaining stock of the slow movers, at some point, will have to be discounted in order to be moved, even if ultimately priced closer and closer to the line of profitability.

[JDoughty]

15 hours ago, cnov said:

6. Reduce the cost of those lines that aren't moving, while leaving premium as is. 

Why not price everything so it keeps flying? There are a wide range of buyers to appease, might as well take everyone's money. 

Because then you lose the perception of Cuban cigars as a high end, hard to get luxury item. It is a better fit for Cuba's circumstances and limited resources to sell a smaller amount of cigars for more money to the very wealthy and status seeking, keeping prices artificially high, than it is to ever allow any to be sold at a discount. It sucks, but the financial reality for them is that I do not think they have the resources to put out consistent mid range product to the average consumer, and they will make more money with less production if they keep prices artificially high and supply artificially low. Even if it means they have to destroy some cigars. Which is very unfortunate, but it is the economic reality for them as it stands with a damaged infrastructure and constant brain drain outside of prison labor. I suppose we can volunteer to set all those unwanted cigars on fire to help them out, but it probably won't get us anywhere.