Should we worry?

[Puff Scotty]

Just trolling around the latest topics & thinking....
loads of posts & comments about the bad years of cigar production..
My worry would be that the Middle East now has a huge demand for high end Cohibas (well - anything big & expensive) & the demand in China is growing enormously...both typically non-cigar regions. Will this demand at anytime outstrip the production/growing capabilities in Cuba & bring about more 'bad years'.
Many people seem to think that opening up the USA to Cuban trade would not affect Cuban production as many Americans already have access to these cigars..IMHO this is utter tosh, ask a roomful of cigar smokers in the USA how many had smoked a genuine Cuban cigar & I'd be surprised if 10% put their hands up... More to worry about!

[Vortigan]

Great question and points for debate.I wonder if the apparent increase in the RE and EL programs and the regular deletions is in any way linked to these growth markets?.Fewer but more expensive cigars satisfies the elite niche and helps spread the raw materials around a bigger area.Personally,I've got no knowledge or insight at all,it's just what seems to make sense to me whilst watching what seems to be happening.

[crusse]

I know very little about the Middle Eastern and Chinese markets. But as far as I'm aware, the world's biggest market for cigars is the US and I expect that if the embargo was lifted then demand would very quickly start to outstrip supply. This would put a lot of pressure on the CC industry and I think that it would cause big problems in terms of quality control. This makes me feel ambivalent about the idea of lifting the embargo: on the one hand I think that it would hugely benefit the Cuban economy as a whole and would benefit ordinary Cuban people. On the other hand, I think that it could cause major issues for the Cuban cigar industry.

However, I also think that the quality control problems caused by lifting the embargo would eventually be resolved. The Cuban cigar industry has proven itself to be resilient and adaptable. To my mind, the current increase in EL's and RE's is proof of the industry's adaptibility. Whatever you happen to think about the proliferation of RE's and EL's (I'm personally not a fan of most of them), they seem to be commercially successful.

In the past, crop and production problems have only caused temporary setbacks for the industry and I think that the Cubans would eventually find ways of coping with increased demand without massively compromising on quality. But if the embargo was lifted I think that a few years of quality control issues would ensue.

My main concern is less about quality control (which would eventually be sorted out) and more about being priced out of the market by rich Americans! Prices skyrocket when demand massively exceeds supply and cigars are already too bloody expensive in this country!

[peanutpete]

if 10% of the USA cigar smokers smoke cubans thats huge,was with George Padron last night and he is not worried at all about cubans being aloud into the USA as they estamate 60% of cubas production end up there already
i am sure i also read some were that cubas production is down from a few years ago and there is a lot of scope to increase really hope so,if 10% of the Chinese start smoking cubans than i think we will be F....d

[Smallclub]

My worry would be that the Middle East now has a huge demand for high end Cohibas (well - anything big & expensive) & the demand in China is growing enormously...both typically non-cigar regions. Will this demand at anytime outstrip the production/growing capabilities in Cuba & bring about more 'bad years'.

Good point, but according to several very informed sources, Cuba has a huge stock of leaves and warehouses are full of cigars, while overall sales are down. This is what explains why some recent cigars do not taste like young cigars: they spent months in the escarpate, the rest room.
Our real problem (we=middle class of old Europe) is that these new Asian customers are willing to pay big bucks, thus pulling prices up?

[monkey66]

In so far as Asia and 'new money' markets I can tell you that the majority of auction humidors at the festival this year sold to those regions of the world (with Asia being the biggest by some margin). It's possible these humidors and super-limited editions (in their current volume) really only exist to service the these markets.

In so far as us mortals the biggest obvious impact is the increase in cost of the vintage market ...but this is a two-way street if you have a few older boxes. Probably fair to say the way to a great collection is to buy good regular production cigars and age them. The limited editions have a minimal impact on this type of approach.

Speaking to people intimate with the process there is apparently no discussions at HSA about significant price increases. The product is already premium priced and sales volumes are not as good as they have been. Whilst it is easy to speculate anyone who has been involved in serious business decisions (of any type) knows it is very risky to significantly change the retail model of a ?100's millions business. This risk to turnover is too large. There could, of curse, be a gradual increase in pricing ...but this will happen anyway.

Probably safe to assume our biggest risk in the UK and Europe is taxation and legislation ...not HSA pricing (can anyone say petrol).

Mt personal biggest concern with the endless (and often poor IMHO) Limitadas is the distraction from making great, consistent regular production sticks.

CC re-entry to US is an multi-faceted debate but I would speculate an initial demand followed by a levelling period. One might suggest that a significant percentage of US smokers have a taste built around NC's, loyalty to the brands etc, and may not prefer Cubans (especially if they are young, poor quality, plugged etc). Then we have to consider the might of the NC marketing machine, trademark issues, distribution challenges, patriotism, counterfeits flooding the market etc.

[tippexx]

if 10% of the USA cigar smokers smoke cubans thats huge,was with George Padron last night and he is not worried at all about cubans being aloud into the USA as they estamate 60% of cubas production end up there already
i am sure i also read some were that cubas production is down from a few years ago and there is a lot of scope to increase really hope so,if 10% of the Chinese start smoking cubans than i think we will be F....d

I don't think so Pete. First to suffer will be the 'grey market' (Oh dear, to bad, never mind!) as it's primary clientel would be able to buy CCs legitimately and at US prices. Habanos I'm sure are totally aware of the Bongoland scenario, and Bongoland would quickly find itself dumped or Cuban starved in favour of the Land of the Free.

Production I don't think will be an issue. Cuba is stockpiled for the eventuality and very quickly new factories would be established. Dunhill and Davidoff most likely being the first.

The future's bright. The future's Cuban.

[PoohBore]

I dont think it will be too bad, those that want cc's already get them anyway. I think the demand will come from the casual smokers on the States.

I hope the grey market isn't too badly affected .

My largest worry would be the influx of tourists from the states wrecking cuba

[Smallclub]

and very quickly new factories would be established. Dunhill and Davidoff most likely being the first.

Not Dunhill. The brand Dunhill no longer wants to be associated with anything related to tobacco. Their pipes are now made under the brand "The white Spot"

http://www.whitespot.co.uk/home.asp

[crusse]

Not Dunhill. The brand Dunhill no longer wants to be associated with anything related to tobacco. Their pipes are now made under the brand "The white Spot"
http://www.whitespot.co.uk/home.asp

Er....so why are Dunhill signed range cigars being sold by major retailers? Are they no longer being produced? http://www.cgarsltd.co.uk/advanced_s...=&26=&x=12&y=8

[monkey66]

Er....so why are Dunhill signed range cigars being sold by major retailers? Are they no longer being produced? http://www.cgarsltd.co.uk/advanced_s...=&26=&x=12&y=8

Could be wrong but I don't think the Dunhill range of NC's are anything to do with Dunhill any more ...if you know what I mean.

For instance they don't sell them in the London Dunhill flagship store.

[tippexx]

Not Dunhill. The brand Dunhill no longer wants to be associated with anything related to tobacco. Their pipes are now made under the brand "The white Spot"
http://www.whitespot.co.uk/home.asp

I wouldn't be so sure about Dunhill not returning to Cuban cigars Frank. Wouldn't matter what the directors of Dunhill might want .... they're owned by British American Tobacco, and the lure of owning a premium Cuban cigar brand would be hard to resist.

[SmokeyDave]

I'm sure Nic could clarify the situation with Dunhill, I think that their clothing brand and tobacco brand are owned by two different companies, hence they don't sell the cigars under the same roof as the clothing.

[Ryan]

Last years Habanos exported about 80 million cigars to the rest of the world. Within Cuba, it's hard to get numbers but a similar number is possibly smoked, although much of that tobacco comes from regions other than Pinar del Rio.
Starting, oddly enough, today, about 14,000 hectares in Pinar del Rio will be planted with tobacco seedlings for harvest in January/February.
One farmer I spoke to in February harvested 4 million leaves, enough tobacco for at least 1 million cigars, from his 16 hectare farm near San Luis in the last harvest. Mostly quality leaf. Much of that was ploughed back in as it was not sold.
It takes about 9 months of training to make a decent roller. I've heard this from quite a few different rollers/factory staff.
A little bit of maths should ease concerns about production capability.
What happens prices over the next few years is anybody's guess. I've been hearing price increases in Cuba for Habanos cigars of 15%-20% coming very soon.

[monkey66]

Last years Habanos exported about 80 million cigars to the rest of the world. Within Cuba, it's hard to get numbers but a similar number is possibly smoked, although much of that tobacco comes from regions other than Pinar del Rio.
Starting, oddly enough, today, about 14,000 hectares in Pinar del Rio will be planted with tobacco seedlings for harvest in January/February.
One farmer I spoke to in February harvested 4 million leaves, enough tobacco for at least 1 million cigars, from his 16 hectare farm near San Luis in the last harvest. Mostly quality leaf. Much of that was ploughed back in as it was not sold.
It takes about 9 months of training to make a decent roller. I've heard this from quite a few different rollers/factory staff.
A little bit of maths should ease concerns about production capability.
What happens prices over the next few years is anybody's guess. I've been hearing price increases in Cuba for Habanos cigars of 15%-20% coming very soon.

Very interesting stuff Andy. How solid is the discussion about the price increase, sounds very risky in a single step. One would imagine that sort of jump will significantly impact sales?