Adios Castro?

[Jimmy2]

Adios Castro? Fears grow for veteran leader's health

Another no-show from the Cuban leader sparks serious fears for his health

By Phil Davison

Published: 03 December 2006

With fireworks over Havana harbour and the first military parade of this century, hundreds of thousands of Cubans turned out yesterday for Fidel Castro's belated 80th birthday party, but the veteran leader did not appear.

No one had said he would, but there had been hints, including one from vice-president Carlos Lage, who said in advance that "we will have him among us" but left it open as to whether he meant yesterday or simply for ever. The Comandante's absence strongly suggested that his illness was serious, possibly even terminal, and that he was unlikely to grasp the reins of power again.

Most of those on the streets were pro-Castro Cubans, some bussed in by local communist groups, who had hoped the Comandante would make a surprise appearance, which would have been his first in public since intestinal surgery in July. His opponents, including the so-called Ladies in White, wives and mothers of imprisoned dissidents, had also hoped he would show himself, just so they could check on his condition - indeed, whether he was still alive.

European diplomats said Mr Castro would have loved nothing more than to appear at such an occasion, beamed around the world, with leftist leaders such as Evo Morales of Colombia and Daniel Ortega of Nicaragua, as well as old friend Gabriel García Márquez among the dignitaries. (His closest regional ally, Hugo Chávez, was kept away by today's election.)

As ageing Soviet-made tanks, MiG jet fighters and anti-missile launchers trundled through Havana's Revolution Square, it was a bit like the old days of Kremlin-watching to see who would be on the podium, in which order, and who would take the salute. In the end, it was Mr Castro's younger brother Raul, acting president since Fidel's illness, who played the role of Jefe Máximo, or Maximum Chief.

Fidel was said to be watching on TV under medical supervision at home. Hence, it was seen as significant when Raul, 75, said in his speech: "We are willing to resolve at the negotiating table the long-standing dispute between the United States and Cuba, so long as this is based on the principle of equality, reciprocity, non-interference and mutual respect."

In his nearly 48 years in power, Fidel Castro always used such rallies to slam the superpower 90 miles to the north. For Raul to offer an olive branch suggested either that Fidel had used his brother to push a softer line, or that the younger brother was asserting himself. Either way, it was seen as heralding a possible turning point in US-Cuban relations.

Fidel's 80th birthday was on 13 August, not long after his surgery, which caused the postponement of celebrations. At that time, on the apparent assumption that he would be well by now, it was announced that his birthday celebrations would be held on 2 December, 50 years to the day since Fidel and Raul Castro, along with Che Guevara and 79 other comrades, came ashore in Cuba to launch their revolution against dictator Fulgencio Batista.

With fireworks over Havana harbour and the first military parade of this century, hundreds of thousands of Cubans turned out yesterday for Fidel Castro's belated 80th birthday party, but the veteran leader did not appear.

No one had said he would, but there had been hints, including one from vice-president Carlos Lage, who said in advance that "we will have him among us" but left it open as to whether he meant yesterday or simply for ever. The Comandante's absence strongly suggested that his illness was serious, possibly even terminal, and that he was unlikely to grasp the reins of power again.

Most of those on the streets were pro-Castro Cubans, some bussed in by local communist groups, who had hoped the Comandante would make a surprise appearance, which would have been his first in public since intestinal surgery in July. His opponents, including the so-called Ladies in White, wives and mothers of imprisoned dissidents, had also hoped he would show himself, just so they could check on his condition - indeed, whether he was still alive.

European diplomats said Mr Castro would have loved nothing more than to appear at such an occasion, beamed around the world, with leftist leaders such as Evo Morales of Colombia and Daniel Ortega of Nicaragua, as well as old friend Gabriel García Márquez among the dignitaries. (His closest regional ally, Hugo Chávez, was kept away by today's election.)

As ageing Soviet-made tanks, MiG jet fighters and anti-missile launchers trundled through Havana's Revolution Square, it was a bit like the old days of Kremlin-watching to see who would be on the podium, in which order, and who would take the salute. In the end, it was Mr Castro's younger brother Raul, acting president since Fidel's illness, who played the role of Jefe Máximo, or Maximum Chief.

[n2advnture]

» Hence, it was seen as significant when Raul, 75, said in his speech: "We

» are willing to resolve at the negotiating table the long-standing dispute

» between the United States and Cuba, so long as this is based on the

» principle of equality, reciprocity, non-interference and mutual respect."

Interesting

[Jimmy2]

No one could ever fill Fidels shoes the way he would give speeches or just the way he carried himself he was very colorfully character.

The way I see him is he could make you believe in something that you would never ever believe in the first place.

With out Fidel the people Cuba and his brother will be lost as he is there father.

As I and others have been reading in the news in the last 3 months a lot of the Cuban higher up's including Fidels brother have said they are open to talks with America.

Will see what happens but one thing I know this will be history in the making for us and I can wait to see what take's place.

[Tampa1257]

All I can say is that everyone that enjoys Cuban Cigars had better stock up NOW, they are going to get very expensive in the very near future!

[Jimmy2]

I think you are right Tampa there will be a BIG boom here if it opens up and the sharks over here in USA will try and make the most $$$ off of it.

[Colt45]

Do you think that Habanos s.a. will be jacking up their prices, or do

you think that retailers who are allowed to sell Havanas will be price

gouging?

I would hope that HSA would not have a huge price increase simply

because of a new market opening up.

And if there is retail level price gouging, there are other ways to

procure cigars :-)

[mr.harten]

» Do you think that Habanos s.a. will be jacking up their prices, or do

» you think that retailers who are allowed to sell Havanas will be price

» gouging?

» I would hope that HSA would not have a huge price increase simply

» because of a new market opening up.

» And if there is retail level price gouging, there are other ways to

» procure cigars :-)

I seem to remember reading something about a year ago where Altadis would likely buy them (HSA) out or sink a huge amount of money into them and then treat all Habanos as SUPER DUPER PREMIUMS pricing them alongside FFOX and stuff like that ($400-500) per box. It would be a very poor move as I could be wrong but I do not believe that there is enough extra demand just in the USA to continually feed those prices. Yes the USA will be a huge addition to the demand side of things once the embargo goes away but are there really that many folks out there willing to steadily pay those prices year after year? How will the rest of the world that is accustomed to paying a stable price for Habanos react? I am guessing that someone in any non-US country that has been able to walk down the street and purchase a box of Habanos will not be pleased if that price doubles or triples in a matter of weeks or months. I have no doubt that someone will try to make a ton of money off it but I also predict that there will be a year or two window where lots of people want to get their hands on them and then the novelty will wear off.

More than anything, I am interested to see what comes of blending Cuban tobacco with premium tobacco from other countries. That is the far more interesting aspect of the end of the embargo (IMHO).

Rob, I know this has been covered in other threads before but I would be very interested in any thoughts you have on the matter.

[Colt45]

» More than anything, I am interested to see what comes of blending Cuban

» tobacco with premium tobacco from other countries.

I'm not Rob, but this has been a fairly recent topic. I believe his

thought was that in the near future at least, it would never be

allowed to happen.

[PigFish]

I think that you will have to consider what brands will be sold in the US post embargo. It is my guess that H SA will have to ramp up brands such as Montecristo; brands where Altadis owns the non-Cuban trade names. Only those names where Altadis agrees to market both Cuban and non-Cuban brands together will be allowed in. The rest will be caught up in court for awhile.

[El Presidente]

» » Do you think that Habanos s.a. will be jacking up their prices, or do

» » you think that retailers who are allowed to sell Havanas will be price

» » gouging?

» » I would hope that HSA would not have a huge price increase simply

» » because of a new market opening up.

» » And if there is retail level price gouging, there are other ways to

» » procure cigars :-)

»

» I seem to remember reading something about a year ago where Altadis would

» likely buy them (HSA) out or sink a huge amount of money into them and

» then treat all Habanos as SUPER DUPER PREMIUMS pricing them alongside FFOX

» and stuff like that ($400-500) per box. It would be a very poor move as I

» could be wrong but I do not believe that there is enough extra demand just

» in the USA to continually feed those prices. Yes the USA will be a huge

» addition to the demand side of things once the embargo goes away but are

» there really that many folks out there willing to steadily pay those

» prices year after year? How will the rest of the world that is accustomed

» to paying a stable price for Habanos react? I am guessing that someone in

» any non-US country that has been able to walk down the street and purchase

» a box of Habanos will not be pleased if that price doubles or triples in a

» matter of weeks or months. I have no doubt that someone will try to make

» a ton of money off it but I also predict that there will be a year or two

» window where lots of people want to get their hands on them and then the

» novelty will wear off.

»

» More than anything, I am interested to see what comes of blending Cuban

» tobacco with premium tobacco from other countries. That is the far more

» interesting aspect of the end of the embargo (IMHO).

»

» Rob, I know this has been covered in other threads before but I would be

» very interested in any thoughts you have on the matter.

INMHO blending will not occur. It (excuse the pun) would dilute the and devalue the Habanos brand. There is no sales requirement to do so. Every stick able to be produced is already sold. Why give a sucker an even break? Why allow Fuente, Torano, Perdomo, CAO access to Cuban leaf? No benefit.

Prices will increase. Simply supply and demand. The rest of the world outside of the US already pays say $250 USD - $350 USD for a box of Montecristo No 4. This will also come to pass within the US in the years to come when CUban cigars are a legal product.

Habanos s.a is in a very strong position having spent the best part of the last 6 years vertically integrating. They have purchased a near 50% share of most of thier overseas licence distributors. They own Full Cuban cigar distribution rights as well as most of the factories in Cuba. The remaining two cards are to own the farms and undeveloped fields in Cuba and then the retail distribution in the US. They hold pole position in both.

For the average cigar lover things will get tough sometime over the next 2-5 years. Increasing prices, decreasing supply. I don't think that Habanos s.a will allow construction quality to slip.

Habanos s.a has made no secret of the fact that it wishes to position the Habanos cigar alongside such luxury marques as Moet, Bollinger, Rolex and Mercedes.

Just another chapter.

[tigger]

All I can say is the folks that sent Lew Rothman their dough a bunch of years ago to reserve a box of Habanos when the embargo ends must be perched on the edges of their various seats right about now. :-P

[Claudius]

» » Hence, it was seen as significant when Raul, 75, said in his speech: "We

» » are willing to resolve at the negotiating table the long-standing

» dispute

» » between the United States and Cuba, so long as this is based on the

» » principle of equality, reciprocity, non-interference and mutual

» respect."

»

» Interesting

Here's the expected reply from the US:

WASHINGTON (Reuters) - The State Department on Monday rejected an offer of talks with Raul Castro, Cuba's acting president, saying it saw no point in a dialogue with what it called the Caribbean island's "dictator-in-waiting."

"The dialogue that should be taking place is not between Raul Castro and any group outside or any country outside of Cuba. It's the regime, with the Cuban people, talking about a transition to a democratic form of governance in that country," State Department spokesman Sean McCormack told reporters.

The offer of talks, made on Saturday, was the most direct overture to the United States by the designated successor to Fidel Castro, who gave power to his brother temporarily after undergoing emergency intestinal surgery in late July.

At a military parade on Saturday, Raul Castro railed at the Bush administration and condemned the Iraq war but added: "We take this opportunity to once again state that we are willing to resolve at the negotiating table the long-standing dispute between the United States and Cuba."

[Claudius]

» For the average cigar lover things will get tough sometime over the next

» 2-5 years. Increasing prices, decreasing supply. I don't think that

» Habanos s.a will allow construction quality to slip.

»

» Habanos s.a has made no secret of the fact that it wishes to position the

» Habanos cigar alongside such luxury marques as Moet, Bollinger, Rolex and

» Mercedes.

Hi Rob

Thank you for your thoughts. Very interesting...

Regarding the part I'm quoting, could you elaborate a little on how / why supply would decrease? I remember you (I think) saying that Habanos SA produce about 150 m sticks a year but that the theoretical capacity is between 3 and 4 times that. I see potential for Habanos SA getting richer, but not a priori why they would decreasqe supply? Or do you expect them to voluntarily decrease supply in order to create scarcity and raise prices?

The brand positioning "up there with Moet and Bollinger" I dont really understand. Habanos are already like that, a luxury product, like Champagne or an expensive watch or car, arent they? Except for some Davidoffs / Fuentes, Habanos are generally the most expensive cigars one can buy.

[El Presidente]

» Hi Rob

»

» Thank you for your thoughts. Very interesting...

»

» Regarding the part I'm quoting, could you elaborate a little on how / why

» supply would decrease? I remember you (I think) saying that Habanos SA

» produce about 150 m sticks a year but that the theoretical capacity is

» between 3 and 4 times that. I see potential for Habanos SA getting

» richer, but not a priori why they would decreasqe supply? Or do you

» expect them to voluntarily decrease supply in order to create scarcity and

» raise prices?

»

» The brand positioning "up there with Moet and Bollinger" I dont really

» understand. Habanos are already like that, a luxury product, like

» Champagne or an expensive watch or car, arent they? Except for some

» Davidoffs / Fuentes, Habanos are generally the most expensive cigars one

» can buy.

The new Joint President of Habanos s.a. said in a recent magazine article (this year) that distributors worldwide needed to keep 12 months inventory in hand and get ready for the opening of the US market.

I can tell you most distributors can't get 6 months inventory currently.

It is not a matter of getting cigar numbers....just not being able to get the numbers of cigars you specifically want. Example, Habanos sa will say we can send you a shipment of 600,000 cigars now.....but they are not the cigars a distributor necessarily wants.

So le't look at the situation when the Embargo drops. A significant % of supply will go there (forget about trademarks for the time being). Supply will no doubtedly be tighter for the rest of the worlds distributors. When supply is out of step with demand....either increase supply to meet demand or raise prices.

Increasing supply is not a matter of planting more fields. There are new fields coming on all the time. However, getting facilities and workers (training and trained) is difficult and a 3-5 year exercise.

I can see a major bottleneck occuring in the supply and demand equation. Habanos s.a will take the money. Distributors will be seething. Habanos s.a Heirachy will say to them "we told you to increase inventory" and in the end prices will increases.

As for positioning the Habanos cigar alongside luxury brands, you are right in that in many ways the positioning is well along that route.

However, the margins are not. Not as far as some in Habanos s.a are concerned. Think of a bell curve. The average pricepoint of a Habanos cigar is currently say $12 USD (I am talking world instore retail terms). Through changing their product mix (cutting non selling lines/reducing some difficult machine mades etc, more luxury tubes, more regionals, more LE's) they can push that to $18 USD/increase turnover of internal inventory (no slow moving stock) and increase their internal rate of return (hell, the risk for selling regional releases is on the distributor...not Habanos s.a).

The above are my impressions and thoughts only (albeit with some internal knowledge). I could be wrong however I would not bet against it.

[tmos]

Before the embargo most cigars were rolled with Cuban tobacco, right?

I'm too lazy to do a search, but wasn't consumption higher then?

A free market system in Cuba would allow production outside of Habanos S.A. That would be the best thing for the average cigar smoker instead of being held hostage by a Cartel.

Blood cigars.:-P

[El Presidente]

» Before the embargo most cigars were rolled with Cuban tobacco, right?

»

» I'm too lazy to do a search, but wasn't consumption higher then?

»

» A free market system in Cuba would allow production outside of Habanos

» S.A. That would be the best thing for the average cigar smoker instead of

» being held hostage by a Cartel.

»

» Blood cigars.:-P

Tmos I do agree with your sentiments. The fact (as at today) is that the cartel you speak (both partners) control the Cuban cigar industry. Now assuming they take Cuba down the Chinese Socialism/Communism model, they will control the cigar industry so tightly that no-one will get a look in.

Today, a foreigner cannot grow rice within Japan for export. Similar laws apply to Wagyu Beef. Try getting a Tobacco export licence into China who guard their tobacco industry (Govt monopoly) like a pitbull terrier

Nothing is ever as clear cut as it looks :-|

[DrAlejandro]

very interesting thread guys... keep it coming :-D

[Trevor2118]

This info from 2003 regarding Altadis sa influence on Habanos maks interesting reading. I don't know the source as I have had this info for years. Its a bit long but well worth the read. RECOMMENDED.

In an ever-increasing urge to gain extra profits, Habanos S.A. has decided to dramatically change the way they make and market cigars, following a system that better fits into an efficient free-market global economy, that is intended to give cigar smokers what they have been asking for.

Of the 549 vitolas that were manufactured in 1992, at the beginning of Cuba's "Special Period," by the end of 2003, only 319 will remain in production. The rest will go the way of the La Flor del Cano Short Churchills, or the Bolivar Gold Medals, cigars that are never to be made again, aside from the occasional “special limited production” cigars that are only sold with a luxury custom-made humidor for thousands of dollars.

When it comes to this streamlining of production, it would seem that the impetus for this change did not come from within Havana. It would seem that the idea came from abroad.

In 1999, after conducting buy-outs and mergers with a myriad of cigar-producing companies around the world, Altadis S.A. made one of it’s biggest purchases to date, with a 50% buy-out worth $500,000,000US of Habanos S.A., the Cuban government’s marketing and distribution wing for sales of Cuban cigars and tobacco. This buy-out, was a tremendous sum of hard currency that Habanos S.A. so desperately needed. If one took the net sales of last year as an indicator, that sum of money would be equivalent to Habanos S.A.'s sales over a period of about 3 1/2 years. Needless to say, Altadis S.A. undoubtedly wishes to increase the sales and profitability of the Cuban cigars. Altadis S.A.'s motivation is influenced by four things, output, supply, demand, and the US trade embargo.

Through the recommendations of Altadis S.A., Habanos S.A. will continue to manufacture only 33 marquees of cigars. The La Corona line, founded in 1844 in Havana, will have its production in Havana discontinued. The La Corona line of cigars will continue to be made in the Dominican Republic, using tobaccos from the Dominican Republic and Conneticut, as Altadis S.A. owns the rights to distribute this in the United States, so therefore, they can hence market this Dominican-made version world-wide.

Of the 33 remaining marquees, almost all will see major changes. Instead of having varying degrees of quality within the grand marquees, Habanos S.A. has decided to do what Altadis S.A. did with their line of cigars. The grand marquees will only contain premium and super-premium “totalamente a mano” hand-rolled cigars. This will allow consumers to better understand just what sort of cigar they are buying.

However for the cigar connoisseur on a budget, things will become a little more difficult. Currently the Bolivar, H. Upmann, Hoyo de Monterrey, Partagas, Punch, Ramon Allones, and Romeo y Julietta marquees are produced using the “totalamente a mano” method, the “tripia corta” machine-bunched hand-finished method, and the “mecanizado” machine made methods. After the close of 2003, these marquees will only be made using the “totalamente a mano” method.

The “tripia corta” cigars have their wrapper put on by hand, and a good deal of effort goes into producing these cigars, however Habanos S.A. does not charge all that much for them, and hence they are a good value. However, as some types of cigars are made three different ways, one who rarely smokes Cuban cigars is met with a bewildering set of choices. Some cigars, like the Romeo y Julietta Romeo No. 1 Tubos, are manufactured utilizing all three processes. The Romeo No. 1 Tubos that is totally machine-made is the cheapest, and retails for $43.75US per box of 25 in Havana, while the Romeo No. 1 machine-bunched hand-finished line retails for $55.00US per box of 25 in Havana, while the “totalamente a mano” Romeo No. 1 Tubos de Luxe retails for $116.25US per box of 25 in Havana.

As the hand made version is over 100% more expensive than the hand finished cigars, but utilize the same tobacco that is in short supply, if Habanos S.A. were to only sell the hand-made variants, they would make far more money than they would utilizing the same resources. Furthermore, as torcedors from time to time cannot work, as there is not enough tobacco to roll cigars every day of the year, this better utilization of tobacco will make it harder for torcedors to seek extra-legal employment as black-market torcedors, as they are kept busy in the factories. Freeing up more of the long-filler tobacco to be utilized in premium flagship vitolas will allow Habanos S.A. to make even more money.

Furthermore, in the future, only Belinda, Quintero, Jose L Pidera, Gispert, La Flor del Cano, Cabanas, Los Statos de Luxe, and Troya will be made by the “tripia corta” or “mecanizado” methods, however the Partagas line will have one vitola made by the “tripia corta” method, the exception being the Partagas Culebras. It would be important to note that this market strategy is employed by Altadis USA, as their premium marquees are all hand-made long-filler cigars, while their mass-market marquees solely consist of machine-made short-filler cigars. By separating premium cigars from mass-market machine made cigars, the occasional Habanos smoker will not be turned off from a particular brand, as the current state of affairs could leave one with the impression that a certain marquee, or worse Habanos in general are sub-standard, if that person was smoking a machine-made short-filler cigar, which can be erratic.

Many of the machine made Habanos are made utilizing machinery from the era of the Second World War. Some have compared these cigars to the work of an one-armed blind torcedor, and Habanos S.A. obviously would wish to distance its grand marquees from their uglier machine made counterparts. Altadis S.A. has also seen to better meet another demand for Cuban tobacco more efficiently. When a cigar is created, you have the long filler leaves that go into the cigar, and bits of leaves that are created as the bunch of the cigar is cut.

While this by-product can be utilized for short-filler machine made cigars, as they have in the past, because the blend of tobaccos was similar. As the premium marquees have their short-filler products eliminated from their portfolio, Altadis S.A. has found a more profitable way to utilize these short filler tobaccos and has arranged the shipment of modern cigarillo producing machines to Cuba, so Habanos S.A. can produce cigarillos for export for all of their major brands, just like Altadis USA does for their cigars in the Dominican Republic.

However, machine made cigars will not be the only type of cigars to be cut. To prop up the demand for the niche market Cuaba marquee, only Cuaba will continue to make perfecto vitolas. The Partagas Presidente, the Romeo y Julietta Celestes Finos, and the flagship of the Fonseca line, the Fonseca Invictos will not be produced after 2003. Also, as the El Rey Del Mundo Tanios, La Gloria Cubana Tanios, Partagas Churchills de Luxe, Ramon Allones Petit Coronas, Ramon Allones Coronas have such miniscule production levels, they are surely unprofitable, and will be cut.

So that Habanos S.A. can continue to produce the maximum number of the vitolas that sell the most, vitolas within a marquee that have the same dimensions, but different blends will be axed. Such overlapping that exists with the corona gordas of the Punch marquee, with the Punch Royal Selection No. 11, the Punch Black Prince, the Punch Super Selection No. 1, and the Punch Punch, will be eliminated.

As with Darwinian struggle, only the best selling cigar of a vitola will survive, in this case being the Punch Punch. Most notable of these cuts will be the Romeo y Julietta Prince of Wales, as it has the same size as the more popular Romeo y Julietta Churchill. Like with the distinction Altadis USA delineates between machine-made marquees and premium long-filler hand-made marquees, Altadis S.A. eliminated whatever overlap existed in their lines of cigars, with the exception of special release cigars and cigars with different wrappers (ie. Conneticut Shade, Maduro, and the Nicuraguan-grown Havana 2000).

These changes are obviously so Habanos S.A. can be able to bring to market as much of the well known vitolas as possible, to increase demand among the average cigar smoker, as the grand marquees will have a greater chance of being in stock, and the simplification of the lines will better allow the occasional smoker of Habanos to better understand the range of Habanos, hopefully leading to the creation a greater pool of regular Habanos smokers. With the global market for Habanos, the continued production of these vitolas would be hard to justify economically.

The Habanos portfolio - according to international demand and the market structures have been divided into four groups.

The “marcas globales” (global brands) which contains the Cohiba, Montecristo, Romeo y Julietta, Partagas, Hoyo de Monterrey, and Quintero marquees.

The “marcas mulitilocales” (multi-local brands), which consists of the Punch, Bolivar, H. Upmann, Vegas Robaina, Fonseca and Jose L. Piedra marquees.

“Marcas locales” (local brands), which are sold only by market importance in certain countries, represent only 18 marquees, being the Rafael Gonzalez, Ramon Allones, El Rey Del Mundo, Saint Luis Rey, La Gloria Cubana, Juan Lopez, La Flor del Cano, Por Larranga, Sancho Panza, Vegueros, Diplomaticos, Quai d’Orsay, Los Statos de Luxe, Troya, Belinda, Cabanas, and Gispert.

To round out Habanos S.A.’s portfolio, there are the three “marcas de nicho y especiales,” the niche market brands, however they have some modicum of global distribution, which are the Trinidad, Cuaba and San Cristobal de la Habana.

Doubtlessly, this reorganization has been better tailored to better suit the global demand of Habanos. Furthermore, another demand that Habanos S.A. will likely do something to reorganize is their tobaccos that they export. As Habanos S.A. seeks to increase demand for cigars made in Cuba, export of Cuban tobacco to Europe and the Canary Islands will more than likely diminish, as all companies who are not a part of Altadis S.A. are effectively siphoning off tobacco from what could potentially be something Altadis S.A. would sell. This especially likely, as the amount of money that Habanos S.A. earns from the sale of raw tobacco is a mere fraction of what they make from the sale of finished cigars.

[Airborne RU]

Guys,

Americans who are truly interested in smoking Cuban cigars already find ways to procure the forbidden fruit. So in effect cigar afficionados in the states already are a part of the demand cycle. Since the coming of the internet a person who has never spent a day of his life outside the wheat fields of Kansas can try a Habanos, illegally of course. The opening of the American market will not shock the supply chain; I have to believe that Habanos SA has been preparing for the eventual collapse of the embargo for quite some time now.

A newly affluent China would probably represent more out right potential demand than America. In America the nanny state is in full effect and there will be fewer and fewer municipalities which will allow the freedom to smoke (there is even one town in California which is considering an all-out ban on smoking out doors, public nuisance they say). China doesn't have this neo-prohibition problem and in many ways China is a more "old school" society in which smoking is just another past time.

In America the upsurge in demand will be from occasional smokers and curious non-smokers. So there might be an initial spike lasting at most a year (after the novelty wears off Habanos is just another cigar).

I do not think that the Cuban government will privatize their cigar industry. You can argue that with the influx of foreign investment from Habanos S.A. that the Habanos industry is partially privatized as it is. I agree Habanos will not allow their competition to utilize their leaf. That would be like French wine makers sending over vats of grapes to Aussie and Californian wine makers to create new blends. Not going to happen, that would be like watering someone elses garden.

Habanos that are hand made are a luxury good and as such a bit more insulated from wild fluxuations. Everyone needs housing, that is why housing bubbles inflate and burst. Not everyone needs to smoke.

[habanablue]

I may have missed a similar argument amongst the word heavy postings, but what of the impact on the non-cuban cigar market. The opening up of the USA (officially) and emerging China would to me mean that more and more people would want the real deal 'Cuban cigar' and would leave non-Cubans behind.

Would non-Cubans drop prices to compete? or would they raise prices to just below Habanos SA prices rises to offer a 'poor mans' alternative.

[CaptainQuintero]

Found this treasure of a post just now, very interesting to see how things were planned a few years ago and how they have come into fruition recently and where the aim is.

[Vortigan]

Fascinating thread indeed,thanks for digging it out.

[mazolaman]

"The King is dead, long live the King"

[PigFish]

For a moment I thought Jimmy was posting again! Castro... mehhhh! -Piggy

[Loki]

I miss Jimmy. I gotta go to NYC and look him up.