Weekend discussion: Has the Habanos crown slipped? Can it be reclaimed?

[Kaptain Karl]

I think this is going to keep getting worse and worse for Habanos until they start accepting outside investments into their tobacco farming and processing. Honestly, I think at some point Habanos is going to dissolve itself, and the Cuban market will be opened up to the free market. Then we should see far more Cuban tobacco starting to hit the market, with planted hectares drastically increasing 

[BrightonCorgi]

The crown is easily reclaimed. Produce more cigars of the same quality. Every LCDH and authorized retailer should be full to the gills. Don't even let the competitors get shelf space. At this point, that's the only way to get the crown back is by gaining shelf space and availability. Not an easy task when the other products are selling and better wholesale experience.

[chasy]

We should 100% just buy a small plot in Cuba and let Hamlet go crazy. It could be like wine country. Buy a small plot or just buy grapes from a vineyard and then blend our own stuff.

[dan05]

From what I have read and what I have seen with limited exposure to Cuban cigars, consistency seems to be the biggest killer. 

[helix]

I agree with the points made. Personally, I no longer feel the same 'FOMO' regarding Cuban cigars. I’ve been enjoying many Non-Cuban options lately and have found that my palate has evolved; I now look for different characteristics in a cigar, whereas before, I felt it strictly had to be the classic Cuban twang. The dismal QC is frustrating.

[dan05]

14 hours ago, helix said:

I agree with the points made. Personally, I no longer feel the same 'FOMO' regarding Cuban cigars. I’ve been enjoying many Non-Cuban options lately and have found that my palate has evolved; I now look for different characteristics in a cigar, whereas before, I felt it strictly had to be the classic Cuban twang. The dismal QC is frustrating.

I’m diving into Cubans simply because I know very little about them. Most of my smoking experience has been on the non-Cuban side of the fence. That being said, there are plenty of nice non-Cuban cigars for all tastes. 
 

 

[Demitri]

All the farmers must sell to Tabacuba which funnels all tobacco to Habanos which owns the production, branding and sales. Please correct me if I got that wrong. If true, this setup relies on a monopoly that is reliant on the regime to maintain. I never thought there would be regime change but now I have doubt. If there is change, the farmers can sell the land and/or their product to whomever they wish. If the leaf is where the value is, what value does Habanos really have? Asked another way, how can Habanos remain intact unless the regime survives? I guess I see this from a different angle. It is not about pricing, market positioning etc. It is more existential. There is a potential for destabilization to the point that Habanos does not survive in its current form. FYI, I am a Habanos snob and smoked them exclusively up to the pricing apocalypse. The best cigars I have ever smoked and ever will smoke are Cuban. That said, the leaf is where the value is and it probably is not being optimized with Habanos running things. Therefore, would it be better if there was change or if it stayed status quo?

[El Presidente]

8 hours ago, Demitri said:

All the farmers must sell to Tabacuba which funnels all tobacco to Habanos which owns the production, branding and sales. Please correct me if I got that wrong. 

Farmers are officially permitted to retain 10% of the tobacco they yield. 

To clarify. 

TABACUBA and Cubatabaco are closely related but serve different functions within Cuba's state tobacco industry. TABACUBA (Grupo Empresarial Tabacuba) is the government enterprise responsible for the production of Cuban tobacco and cigars, overseeing the entire process from seed development and tobacco cultivation through curing, fermentation, manufacturing, and quality control in Cuba's cigar factories. Cubatabaco, by contrast, is the legal owner of many of Cuba's cigar trademarks, including Cohiba, Montecristo, Partagás, Romeo y Julieta, and H. Upmann, and is responsible for managing and protecting these brands and their intellectual property. Internationally, premium Cuban cigars are marketed and distributed by Habanos S.A., which works in partnership with the Cuban state to export these brands around the world. In short, TABACUBA is responsible for producing Cuban cigars, Cubatabaco owns the brands, and Habanos S.A. markets and distributes them internationally.

[ATGroom]

8 hours ago, Demitri said:

All the farmers must sell to Tabacuba which funnels all tobacco to Habanos which owns the production, branding and sales. Please correct me if I got that wrong.

What Rob said, but also worth noting is that 70%+ of the Cuba tobacco crop by volume is produced on state owned collective farms. It was 90% before the 2008 reforms. The people who work on the state farms are government employees.

The best high quality wrapper etc is produced on the small private farms, but if one were trying to privatise the Cuban tobacco industry at any scale, you would also need to privatise the collective farms (the collective farms have their origins in the massive US corporation owned plantations prior to the revolution).

Also, all the seed for all the farms private or otherwise is produced by the Tobacco Research Institute, who are a division of Tabacuba. They also perform various technical tasks to related to the whole island crop strategy (ensuring that the right mix of plants are being grown in the right places). So you'd need to find some way of privatising their services.

And finally, the private farms at the moment are mandated to grow tobacco based on the government set guidelines for their fields. If they didn't have to grow tobacco, most of the private farmers at the moment would be growing food crops. Likewise, in a world where the tobacco price is higher, there would probably be farmers who currently grow other crops that would want to get into tobacco.

I could see a scenario Tabacuba/Cubatabaco/MinAg is privatised as a corporation including the state farms, ancillary facilities like sorting and stripping houses, warehouses etc, the current state factories and the current Habanos brands. The private farmers are allowed to grow whatever they want and to sell it to whoever they want at whatever price they can achieve. 

Tabacuba still exists with their brands and the bulk of their supply is maintained by the state farms. 

Private individuals are able to open new factories with their own brands and compete with Tabacuba for the best tobacco from the private farms.

You therefore have a bunch of smaller Cuban cigar brands that are private competing with the Tabacuba brands.

For Habanos S.A. in this world, they are the distributor who have a global network of well established sub-distributors and a massive global retail chain. If the private brands were owned by established Non-Cuban brands they might want to distribute themselves, but for any new startup brands it would probably be a good idea to cut a deal with Habanos S.A. for distribution.

[xiangnan]

I've spent the past year seriously exploring New World cigars. There are clearly some excellent cigars being made, but for my palate the hit rate has been very low. It is surprisingly difficult to find something that genuinely suits me rather than simply being well made or highly rated.

Many New World cigars lean too heavily toward pepper, strength and intensity for my taste. With Habanos, despite the shortages, construction issues and pricing, the underlying flavour profile still lands closer to what I enjoy — sweetness, creaminess, balance and a more natural progression of flavours.

So Habanos S.A. has certainly pushed me to look elsewhere, but it has not yet been replaced as my personal benchmark. The real danger for Habanos cigars is that every customer they force to explore the New World stock is given the opportunity to form a new loyalty. Some will find exactly what they want and may never return. After a year of trying, I haven’t found that replacement yet.