Cuba/USA relations, what's the future?

[Matt Wall]

I see that Cuba has reopened its embassy in Washington and today the U.S. reopened its embassy in Havana, I suppose this means America and Cuba are a step closer to having free trade between each other; but what does this hold for our beloved cigar brands? Will there be change or will the culture be the same? Will quality slip? Will prices go up? Will the Nicaraguan cigar market collapse temporarily? Will the fake market fade?
What do you all think will happen if the Trade Embargo finally gets lifted? It'll be interesting to hear your views...

http://www.bbc.co.uk/news/world-latin-america-33919484

Happy smoking,
Matt




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[sheppsea]

I think short term we may see a drop in quality while the initial excitement of being able to legally buy CCs lasts, although longer term I think it will even itself out. Lets remember that its not as though no CCs get over the border; there are plenty of vendors willing to sell cigars to Americans, so there is already a market out there

What I find more interesting is what will happen to brands that have NC versions as I think a big payday is coming for a lot of lawyers try to argue that one out!

[Matt Wall]

I agree with you there, I think quality will slip temporarily whilst Cuba learns to deal with a new massive market but hopefully in the long run production stays at a high quality. As for the NC Cuban brands that is going to be a very different one to think about, I wouldn't like to be involved in that lot...
I also think that NC brands will still do quite well, Cuba is infamous for its poor quality control at times and yet NC are generally much more consistent in construction so I think there will still be a strong market out there. I still see things like Padron, Oliva and Fuente as quality cigars, and that's me saying that with the choice of being able to buy Cubans. As long as construction remains solid with NC I think there will always be a market for them


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[Emaresee]

There has been such a long lead time on this.... As things are revealed to the public, so they have been happening behind closed doors for months if not years. It would not suprise me at all if there has been a steady increase in production, with a managed reserve of leaf and/or key vitolas for some time.

The US will, i imagine, benefit from regional editions that are subtly different to other regions. The US likes to be special in all things. Thus far its had to take what it can get, not necessarily what it wants. And yes there will inevitably be a short term spike in demand. we should rightly be a little concerned that the shelves of our tobacconists will be denuded of quality stock, but H&F etc. have a few hundred years 'pull' to use, serving mature markets which it would be unwise to alienate or strangle. Lets not forget, we will be able to get our hands on US regionals too!

i dont know if there is information available regarding the performance of the cuban production capacity, but i would doubt that it is close to max. Given the ownership structure of some of the brands, there is mature commerce involved ... For eg montecristo is (i think) half owned by imperial tobacco... And so peter is unlikely to be robbed to pay paul.... The US is a comparative risk for cuba, as well as an opportunity! Its got long standing domestic production and close ties with much ofthe NC world who seem to produce a neverending & creative stream of well marketed product- at just about every price point too. CC's will, i imagine, look to maintain premium positioning so production quality ought to remain a great consideration.

But I may be trying to look on the bright side.....

[sheppsea]

Cuba/USA relations, what's the future?

Given the ownership structure of some of the brands, there is mature commerce involved ... For eg montecristo is (i think) half owned by imperial tobacco...

Habanos is half owned by Altadis, who I believe is ultimately owned by Imperial and Habanos has control over the all CC brands

There is also an NC Montecristo brand, but the two brands have nothing to do with each other (except I think Imperial may ultimately own the NC brands as well)

It all very confusing and ultimately a minefield, it'll be interesting to see how it turns out

[jerryr]

I don't think there is any need to panic in the short term, don't forget that the re-establishment of diplomatic relations is not an automatic lifting of sanctions. It requires an act of congress to do that and congress is a lot more concervative than Obama. So I think it will take at least 6 - 12 months for a lifting of sanctions. At the moment you are only allowed to bring CC's in if have been on authorized to travel to Cuba and you can only bring into the US up to $100 worth of alcohol and/or tobacco products acquired in Cuba in accompanied baggage, for personal use only. Although not a US citizen I lived there for a period and once had a problem with US customs, only being allowed to keep my stogies as I came from the UK and only had a box bought duty free and some singles, plus I had a friendly customs guy. On the other side I hope we'll see some celebratory limited releases in the next year.

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[PeeJay]

Habanos is half owned by Altadis, who I believe is ultimately owned by Imperial and Habanos has control over the all CC brands

There is also an NC Montecristo brand, but the two brands have nothing to do with each other (except I think Imperial may ultimately own the NC brands as well)

It all very confusing and ultimately a minefield, it'll be interesting to see how it turns out

Romeo y Julieta will be an interesting one as the owners moved to the Dominican Republic after the revolution so who owns the name?

[sheppsea]

Romeo y Julieta will be an interesting one as the owners moved to the Dominican Republic after the revolution so who owns the name?

I think it the same debate for all the brands except Cohiba (and possibly other post revolution brands if they have NC versions) as they all left following the revolution

I'm not expert in law so am wildly speculating but one argument could be that the industry was nationalised legally and therefore the ownership of the brands transferred with that

[Edamski]

I think there'll be an increase in shipment to America but not massive as most who wants them can already get them. I think a lot of novelty buying will go on initially.

I also think a lot of the smaller NC brands will disappear, I think there's only such a market for them because of the relatively scarcity of quality Cubans to average joe. Some of the better ones will carry on selling because they're selling quality. Besides anything else a lot of them are crap anyway

Think the copy cats will fade after a bit of legal pursuit and a bung or two.

[PeeJay]

I think you're overlooking the cost issue. The average Joe probably smokes dollar cigars so Cubans will be a premium product so once the novelty is over the cheapies will continue to sell as before,

[Ryan]

Americans buy 300 million legal premium cigars annually.
Cuba exports 80 million premium cigars every year.
Start saving.

[PeeJay]

And how many yardgars?

[Edamski]

Cuba/USA relations, what's the future?

I think you're overlooking the cost issue. The average Joe probably smokes dollar cigars so Cubans will be a premium product so once the novelty is over the cheapies will continue to sell as before,

I was and its a fair point but how many of them will stop smoking the dollar cigars after the taste of a cheap Cuban.

I know I stopped smoking the cheaper stuff as it just didn't hold a candle too them

[oskihen]

Maybe we may all have to actually start smoking our stash at a rate faster than it grows for a change

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[RDBM]

unless a Cuban smoke is going into the U.S. market at a reasonable price I doubt the majority of NC smokers there will change their brands. Don't forget a pretty good smoke can be had very cheaply in the States and as has been said before, those who want them are already smoking them. I'm sure there will be a spike in the market until the novelty wears off and things will even themselves out.