Future US Cuba relations and the implications for Internet vendors.

[tippexx]

Rules: No Names.

Internet vendors make cigar purchases easy whether NC or CC. The US vendors who currently sell only New World cigars are by en large very professional, very aggressive with discounting, deals and promotions; and in fairness to them, aren't particularly interested in selling outside of the USA.

For CC cigars USA BOTL unless traveling abroard have relied on Internet vendors. Irrespective of not really being allowed to have them the amount of CC cigars sold into the USA is high and the 'grey market' accounts for most of those cigars. With few exceptions and irrespective of where they're located the target market for Internet vendors of CC cigars is the USA.

When or if the purchase of Cuban cigars becomes legal in the USA several things must happen. The 'grey market' will begin to dry as Habanos divert cigars traditionally intended for that area into the now legitimate US market. US vendors selling CC cigars will look to Internet sales, which is reasonable, the USA is a huge country and the market will be hungry.

Now, there will always be those that chase the cheapest price and there are no end of dodgy vendors set up to catch the unwary by doing just that. But legitimate supply is a game changer, US citizens are generally very law abiding and patriotic and I suspect would, having the choice with no risk, much prefer to give their Dollars to Uncle Sam than hand them to someone in Geneva or Costa Rica.

US prices aren't that much different to those of the cheaper European countries, so other than for RE I wouldn't see US BOTL really needing non-US CC vendors that much in future. One or two Internet vendors may locate into the USA, others may try to carry on, but starved of stock and US customers many will wither.

Like it or not we might all be indirectly effected. Anyone disagree?

[PeeJay]

So in short you suspect that a couple of popular internet vendors may wither on the vine.

[ValeTudoGuy]

It appears to be sound logic.

[rascal]

It all really depends on who become the USA distributer. If it was me I would be looking at putting at least a 200% mark up on them when putting into a new big lucrative market. Then will still be considerable cheaper than Mexico, Canada and UK. So online sales may continue for normal for people who all ready use them. No need to price point aggressive for them as no incentive? These are the points that will effect online retailers the most.

[Wigan]

Yeah the Americans already see Cubans as a luxury. The holy grail of cigars. They are primed for them being massively marked up. Anybody that is the business of marking money isn't going to pass up the opportunity. If they weren't massively expensive it could almost put sales down as they wouldn't be seen as magical. Am I making sense?

[tippexx]

So in short you suspect that a couple of popular internet vendors may wither on the vine.

Two very popular ones I'm pretty sure will move some of their operations to the US. They both buy via their Regional Distributor rather than in the grey market and presumably would do the same in the USA.

[tippexx]

So online sales may continue for normal for people who all ready use them. No need to price point aggressive for them as no incentive? These are the points that will effect online retailers the most.

I disagree, many CC online vendors offer regular Sales and Discounts so nothing new there, and those incentives are aimed primarily at US BOTL who expect and regard price competitiveness between vendors as being normal. They will expect the same from US vendors.

[Wigan]

I disagree, many CC online vendors offer regular Sales and Discounts so nothing new there, and those incentives are aimed primarily at US BOTL who expect and regard price competitiveness between vendors as being normal. They will expect the same from US vendors.

/?
Even on the holy grail of cigars? If Rolex watches were 20 quid a pop would they be as coverted? Do you know what I mean?

[tippexx]

/ If Rolex watches were 20 quid a pop would they be as coverted?

Of course not, but only some Rolex are coveted, if you have the money you can buy one almost anywhere. Cuban cigars to US BOTL aren't Holy Grails they are 'Forbidden Fruit'. Holy Grail cigars are the same for BOTL in all countries, those cigars that are no longer made, extremely rare and which other than by pure luck are almost impossible to find.

A box of Partagas Mille Fleurs is hardly a box of hand made chocolates let alone a Louis Patek, they're only leaves rolled by the hundreds of thousands. Supply into the USA will be short initially and the demand will be high, but once things settle down I think there will be discounts and incentives to maintain the momentum and to push the less popular vitola.

[Wigan]

Of course not, but only some Rolex are coveted, if you have the money you can buy one almost anywhere. Cuban cigars to US BOTL aren't Holy Grails they are 'Forbidden Fruit'. Holy Grail cigars are the same for BOTL in all countries, those cigars that are no longer made, extremely rare and which other than by pure luck are almost impossible to find.

A box of Partagas Mille Fleurs is hardly a box of hand made chocolates let alone a Louis Patek, they're only leaves rolled by the hundreds of thousands. Supply into the USA will be short initially and the demand will be high, but once things settle down I think there will be discounts and incentives to maintain the momentum and to push the less popular vitola.

Yeah ok you got it there. Makes sense

[Gary]

Just my two cents on the subject, I think once CC are legally available in the US that in the short term there will be high demand from our American friends which will hopefully not mean a decline in supply or quality for the rest of the world, the Cubans will need to be planning for this eventuality a good few years in advance, but I think once the initial excitement of legally being able to purchase CC wears off, demand will fall as a lot of Americans are used to less expensive NC and will be reluctant/refuse to pay big dollars.

i would hate for the CC market to go the same way as the wine industry has over the last 5 or so years were the big new market has been China which has drove up prices for everyone and has saw practically all the top Chateau concentrate on China in pursuit of profit by practically ignoring most other markets that has sustained the industry for decades or longer.

Another point to consider is that big American companies like General Cigar that own the rights to sell the NC brands of Cohiba and Montecristo, I would suspect aren't going to just accept CC of the same name appearing on the scene, I'd imagine there will be legal battles around this.