From a buyers perspective. Some suggestions for HSA.

[Padrino]

Should anyone still be wondering about the reasons for Habanos S.A. going in the direction that it is it's actually quite simple...

The individual that started this dung ball rolling: Mr Buenaventura Jiménez Sánchez-Cañete (Google this chap, interesting articles out there)

So, the reasoning behind my somewhat disjointed post is.....

Why not email Mr Buenaventura Jiménez Sánchez-Cañete with our concerns and queries ?? surely someone should have these details.......no ?

[Colt45]

I have wanted to start a positive thread on suggestions for HSA from a buyers perspective.

You know well that this forum is read almost daily by HSA so I want this to be a positive experience of positive suggestions and thoughts from people who spend their hard earned moola on their product.

Hey, you tried........

[PigFish]

Hey, you tried........

I am laughing my ass off over here!

What are you trying to say Ross... that I am negative? -LOL

[Colt45]

I am laughing my ass off over here!

What are you trying to say Ross... that I am negative? -LOL

Not at all Ray

Seriously, I would never intentionally try to single out or "call out" any member on their opinions - I live in a glass house.

But I will say this: I don't know RA's reason for this thread, but I thought his request was fairly clear cut. We know he's taken some heat

from Habanos, and though I enjoy giving him a jab as much as the next guy, I also think we can give him a hand when we're able.

[PigFish]

I know man I am yankin' your chain.

I don't really like to bullshit around. I think that H SA is clueless about some of their customers, not their trendy pink pinstripe customers but the hardcore cigar consumers like you and I. They don't get the fact that if all they produces is the Edmundo (an Nth degree analysis) it will not solve the market saturation issue but simply start the cycle again in another vitola.

Killing the SS1 is not the answer. Killing the SS1 will not get me to buy Edmundos and that is what they have got to understand.

I have one more example to post about. -Piggy

[PigFish]

Last bits of wisdom from Dr. Piggy!

I had a whole new diatribe written to cover my next example but I am not going to post it. I think I am beating a dead horse here and I have plenty of live ones in my yard that are more fun to beat! I suppose I could empty all my cigars out of their storage places and place them on the floor and you could take note that there is not one box of Monte Edmudos in the heap.

Instead I am going to do this… post a picture and do a little math.

These are three cabs of PC’s. I like PC’s. At least 1 out of 3 cigars that I currently smoke is a PC. I am sure that I have at least one full box of every currently produced PC. Here is my point.

Take the three cabs of PC’s. Lets say for the sake of argument that these represent all the cigars that I own. When you (H SA) stopped producing Partagas PC’s I stopped buying them, the same goes for RA PC by the way! I did not replace them with the brands that you still produced I just bought less cigars. You see you still produce the Boli and the PL and in my example I don’t really need more of those, I already haves some. I own 30% more cigars in this picture because you made them and I like them. You make them, I like them, I buy them. You don’t make them, I don’t buy them, nor do I replace them with more cigars that I already have.

LESSON: If you wish to sell me more cigars you need to produce cigars that I like in VARIETY! Rolling more Edmundos will not sell more cigars to Raymundo! It does not get more simple than this.

Hello H SA... are you listening? I am not making this **** up, I am a consumer of your product and I am giving you a clear picture on how to sell me more cigars!!!

[PigFish]

Lesson 2:

H SA: I as a consumer will no longer buy the SS2 from you. This is one of the few larger ring cigars that I smoke. Why, because you no longer make them?

[PigFish]

Lesson 3:

H SA, I will no longer buy the RA PC from you. I would have but you no longer make them!

[PigFish]

Lesson 4:

H SA, I will no longer buy the RA 898 from you. Just guess why!!!

[PigFish]

****... there are a lot of cigar I will no longer buy from you guys... and hell I was just looking for a box of SS1's to post!

Thanks for reading, -Piggy

[Colt45]

I know man I am yankin' your chain.

I, you, and many know - we're simpático, mate.

I'm enjoying the photos and am making a list - if I ever get to Isle of Man, you'll regret posting them

[El Presidente]

Piggy, you have to understand your enemy in order to defeat him.

The easiest thing in the world is to sabre rattle and rally a crusade which is going nowhere. In this instance HSA is divided into three camps....those to whom ROI is God, those who believe history and tradition are assets and need to be valued, and those who really don't give a flying fig either way.

This thread is about us assisting the second group. You have raised some exceptional points. Stay on track.

[kilroy]

I've had to think long and hard about what and how I would give suggestions to HSA. So the first thing I thought of is to, like Rob, put on my HSA cap:

- I'm a company with a limited amount of natural resource to push out as final product.

- While we would like to make all the people happy (that's what socialist societies are supposed to do. HAHAHAHA) we have to sell products that actually go off the shelf and make us a profit.

Then I took off the hat and started thinking:

- Why are there Montecristo corona size while there are no Partagas or Cohibas in the same size?

- For that matter, how come all the brands aren't standardized in their sizes? Why doesn't each brand have the same 12 cigars they sell?

Then I put on my HSA hat and had a mojito, took it back off for a beer and blah blah blah.... anyways here are my final thoughts:

- The forum members here are a niche following of a niche industry. Unfortunately most people that smoke cigars aren't what you'd call connoisseurs. The guys smoking $15 Macanudos at the strip clubs are a testament to that. Granted they can't get CCs there, but that's just logistics anyways.

- HSA is nothing but a company trying to make enough money so that lord willing they make a huge profit that THEN they can take the time and money and invest it into its more informed customers.

So in conclusion... HSA... just be nice to us that love you the most... if you have to delete a size or line, fine... just don't take away my Partagas!!!

[Shann]

Ray, supurb posts my friend! This has probably already been discussed but another angle are smoking restrictions that seem to be going global. Time to smoke is already a premium, but now places are also. The smaller Vitolas serve both of those points well and may become more in demand as restrictions increase-which current mood suggest they will.

[Habanos2000]

I would LOVE to see some of the old classic, currently discontinued brands and vitolas reintroduced as LE's. Something that would connect me to the old world, classic cigar base of yore.

[PigFish]

Saber rattling is all that I can do Rob... I don't party with these guys. For all I know they think I am some drunken monkey that is full of ****. This is why I post the pictures of the cigars that they claim no one wants. You know I buy and smoke cigars, my friends here know I buy and smoke cigars, but they don't. Somewhere, somehow, I am hoping someone may take notice that there is this stupid son of a ***** on an Aussie cigar board who has ranted, raved and scratched his fingers on the chalk board enough to be heard. This is all I am good for Mate, a good rant! Perhaps by screaming at these blokes a bit they might realize that I am not the guy who picks up a couple of "in" cigars before the Lacrosse match. When that guy's wife chews him out about his smoking he does not smoke anymore; he gives up. Not me... I put up a fight. When his favorite cafe says no smoking he goes back, buys the usual and does not smoke. I tell them I am not coming back and I don't.

There is a huge potential difference between the guy who owns 5 cigars, 50 cigars, 500 cigars, 5000 cigars and 50,000 cigars. I believe that the guy who owns 1000 plus cigars represents an important demographic. That person and persons interested in keeping a locker of more than a few boxes represents the future of this industry. Demi Moore is probably not smoking cigars anymore guys... she gave it up when the fad went bust in the late 90's. The fad smoker is not the future of H SA. The future of H SA is not in blowing out the best cigars because they are not "in" today.

Frankly I don't believe the whole return on investment thing but I am not expecting you to explain their position nor am I going off on some wild economic theories about it. If those guys are sitting on a cash of RA 898's I wish they would sell some to PCC so you can get some for me! Out of boxes... wrap a blank yellow ribbon around them and put them in cello, I'll still buy them! I can come up with my own boxes to put them in.

Thank you for all your efforts Rob and for being the good cop. I am happy being the bad cop. -Piggy

PS: Last year I had a heart attack. While in the hospital I told the staff if they did not get me out soon I was going to start ordering cigars and have them delivered to the coronary care unit. You might say I am passionate about cigars.

[CigarZen]

There is a huge potential difference between the guy who owns 5 cigars, 50 cigars, 500 cigars, 5000 cigars and 50,000 cigars. I believe that the guy who owns 1000 plus cigars represents an important demographic. That person and persons interested in keeping a locker of more than a few boxes represents the future of this industry.

These are opinion makers in the market. Many times I have steered newer smokers one way or the other, as I am sure many others here have.

[Wiley]

Let me put a HSA hat on (play devils advocate).

The thought process is that each cigar must have a benchmark return on investment. Opportunity cost must be taken into account in determining this ROI.

So to maintain a 100,000 annual production of SS1 we need to maintain packaging options, apportion that tobacco for the cigar as opposed to putting it elsewhere where I can sell the product 20 times faster.

No we do not wish to alienate, however there are economic fundamentals we all need to keep in mind.

Would it shock you that we sell more Montecristo Edmundo in a month than Punch SS1 in a decade?

We do not believe the market is ignorant. They are making choices every day and are shaping our direction.

Sorry, I'd forgotten I'd posted in this thread!

Dear Mr. HSA man,

ROI could easily be addressed by raising the price. How fast the product is sold is directly related to making an amount that parallels demand, assuming there is demand.

In any event, making concessions that cost money but keep customers loyal is also something that most of us who own businesses deal with daily.

[El Presidente]

Sorry, I'd forgotten I'd posted in this thread!

Dear Mr. HSA man,

ROI could easily be addressed by raising the price. How fast the product is sold is directly related to making an amount that parallels demand, assuming there is demand.

In any event, making concessions that cost money but keep customers loyal is also something that most of us who own businesses deal with daily.

Dear Mr Wiley

Price rising we are very familiar with. Unfortunately it does little to move the products scheduled for deletion this year. While we appreciate the cerdo's posts and positions, we simply wish he had 10,000 more brothers with similar tastes. Maybe a compromise is in the air. 5 year releases of the those cigars being sought. 898 RA/Punch SS1/Punch SS2 etc. It has been done before.

The cigars would be released progressively (one or two each year) with a 5 year rotation. There would be no fanfare. They would simply arrive on the market and go again once that allocation was sold.

[harryleech]

Great ideas Harryleech, you have outlined some really interesting plans here. I think your case-studies go a long way in making these ideas understandable. Do you suppose HSA is thinking about long-term marketing strategies? Do you foresee any long-term problems occurring with their present course of actions?

I would also like to thank you for such a well considered post. I'm sure that your insight will not fall on deaf ears.

Hi Mr P,

Sorry for the delay in replying to your questions, I've been away and had little access to internet for most of last week.

I can't really comment on whether HSA is thinking about long term marketing strategies. What I will say, from what I know of a lot of marketing in the spirits and beer industries, is that many sections within large firms (and HSA is now 50% owned by Imperial Tobacco) are focused purely on short term ROI, particularly focused on how this affects shareholder value on a quarterly and yearly basis. Within spirit & beer brands, new products in such companies are often launched in order to raise volume (at huge cost) and then quietly taken off the market because long term sales are unsustainable.

By now even Jack Welch, former head of GE and the person most closely associated with the popularisation of this concept in the early 80's, recognises that focusing consistently on short term share-holder value leads to long term problems for owners of those shares.

As Habanos SA is 50% owned by Altadis (i.e. Imperial) and 50% by the Cuban government, I think I can understand where El Prez is coming from when he talks about the different factions within the company and their different perspectives on history, heritage, brand values etc. Sometimes it can be hard to see the wood for the trees, especially when people are ambitious to succeed or they think that their jobs are on the line. The advent of short-term focusing on shareholder value also coincided (probably not coincidentally) with people stay in shorter in their jobs than the previous 'job for life' model. This is not necessarily a bad thing, as jobs for life have their own problems of malaise etc, but with different people moving through jobs every few years, the consistency and long term focus needed for something like a Whiskey brand, or a cigar brand, can sometimes fall by the wayside.

Quite often we can be too harsh with some of the new influences within Habanos: They have done a good job of working on quality control within recent years and problems of draw, beetles etc now are (hopefully) a thing of the past. Also, it has to be said, moving all the brands to fully handmade, rather than machine made brands, was a fantastic move. There were too many machine made versions which had comparable handmade vitolas in each marca and this made no sense whatsoever. Sometimes, it's the simple things...

With regards your question on potential pitfalls regarding Habanos current strategy, I think there are a few potential problems. I will list two, and if Habaos are interested in hearing more I will gladly ofer my consultancy.

1. Diversification of Portfolio: We've all seen and heard the horror stories of what happens when investors have a very narrow portfolio in a fluctuaing market, and the market can be cruel. I know of a couple (family friends of a mates girlfriend) nearing retirement age who, with adult children moved away, sold their family home. They thought the current market for smaller homes to be too high, and were advised by an idiot stockbroker to invest for a year in Irish banking shares. Lots of different bank shares, but bank shares nonetheless. Needless to say, they are not going to enjoy a financially secure retirement that they had planned and have lost 90% of their original investment.

The reason I tell this story is that currently, 50-52 ring gauge cigars are king on both the NC nd CC market. Almost all the new releases are in this ballpark and the justification for this is that that is wat the market wants at present, and this is perfectly reasonable. However, I would worry that without some investment in smaller ring gauge cigars, that if (when) the market changes, then Habanos will not be best placed to rect to this. It could take 3-4 years to do this (at best) by which stage market share woud be decimated. Currently many NC brands are launching Lanceros, as it's a size that has been historically almost completely Cuban. These may not be their biggest sellers, but they are positioning themselves in case times change.

2. Diversification of Consumer: I would hazard a guess that the vast majority (over 95%) of Habanos consumers have one thing in common. Age? Wealth? Martal Status? Race? No.

Genitals. The vast majority of Cuban cigar smokers are men. Every second person in the world is female. Where do you think the greatest potential for growth is? In many areas, long considered the preserve of men women are now taking their place and I'm not just taking about the workplace. In the area of traditionally male dominated sports, women are becoming far more involved than they previously have. Almost all of the growth in the sports of Olympic-style weightlifting over the past 15 years has been through womens participation in the sport. Women were admtted to the Olympic games in Sydney 2000 and have never looked back.

The sport of boxing was fighting women's involvement in the sport until recent years, and now are scrambling to have the sport accepted to the London 2012 Olympics. They have seen what has happened from other sports and realise that the sport becomes more attractive to men when women are involved, men spend more time involved in the sport when wome are involved, and that the sport becomes far more marketable when women are involved.

Women live longer worldwide and yet already smoke cigaretes more often than men. They are a massively untapped market, and if Habanos wants to grow over the next decade, they will need to start to focus on this market. Women by and large will never smoke a large ring gauge cigar. My girlfriend occasionally smokes a panatella size and wouldn't consider smoking anything larger as it would look 'crude'. I am not suggesting for a second that different sizes should be marketed at different genders but smaller ring gauge cigars, some with slightly milder blends, some richer, are necessary if the company is to suceed in growth both in the short and long term.

Just some thoughts, hope that they help.

Harry

[Wiley]

Dear Mr Wiley

Price rising we are very familiar with. Unfortunately it does little to move the products scheduled for deletion this year. While we appreciate the cerdo's posts and positions, we simply wish he had 10,000 more brothers with similar tastes. Maybe a compromise is in the air. 5 year releases of the those cigars being sought. 898 RA/Punch SS1/Punch SS2 etc. It has been done before.

The cigars would be released progressively (one or two each year) with a 5 year rotation. There would be no fanfare. They would simply arrive on the market and go again once that allocation was sold.

Dear ROI man,

I think Cubans are too liberal with the word "pig". I wish Italians made good cigars...

[El Presidente]

Dear ROI man,

I think Cubans are too liberal with the word "pig". I wish Italians made good cigars...

.....The "Cerdo's comment" was a referrence to "Piggy's" post.

Great post Harry. I have put together a summary of the better posts here to e-mail to half a dozen insiders. I look forward to their comments.

[Evo03]

Maybe a compromise is in the air. 5 year releases of the those cigars being sought. 898 RA/Punch SS1/Punch SS2 etc. It has been done before.

The cigars would be released progressively (one or two each year) with a 5 year rotation. There would be no fanfare. They would simply arrive on the market and go again once that allocation was sold.

That would be nice. It would give me the chance to try RA 898, SS#2, Punch Ninfa, etc. If they were on a 5 year rotation, I could easily stock up to last that long.

[CigarZen]

I wonder how much of the sales decline in smaller RG cigars is due to the unsmokeably tight construction of '99-'00? Some clearly is they are out of fashion, but some may fall into the consumer's reaction of "once bitten, twice shy."

The good news is construction is better. But it takes time for consumers to learn this.

[PigFish]

I wonder how much of the sales decline in smaller RG cigars is due to the unsmokeably tight construction of '99-'00? Some clearly is they are out of fashion, but some may fall into the consumer's reaction of "once bitten, twice shy."

The good news is construction is better. But it takes time for consumers to learn this.

Man I almost started an entire rant on this subject alone but backed away from it. Some folks still won't touch cigars from this time frame. It is amazing how some folks will blame the cigar while mismanagement of the product line and a corresponding attempt at increase production (for the sake of ROI I might add) is wholly responsible.

I figured I beat this pony enough but I am damn glad that someone else brought it up. -R