Here's What Could Happen to Cuban Cigar Prices
- Thread starter CeeGarOne
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Mr. McSquirelly
Joe Bananas
Very interesting article. It's the first one of its kind to really address some of the bigger questions surrounding the Embargo. This quote from the sanctions lawyer really puts the timetable of lifting the Embargo into clear relief:
In 1996, Congress passed the Cuban Liberty and Democratic Solidarity (Libertad) Act, also known as the Helms-Burton Act, which locked into place the restrictions enacted by Kennedy. “Sanctions are typically issued by the executive branch as a regulation and don’t require an action of Congress,” Dan Newcomb, a sanctions lawyer at the firm Shearman & Sterling, told Fortune. “Until Helms-Burton is modified, the [President] doesn’t have the power to change the import regulations very much.” Until the House and Senate agree on some action and a president signs a bill into law, there will continue to be no commercial importing of Cuban cigars.
First the House will vote to modify the Helms-Burton Act, the Senate will vote to pass it, and then the president will have to sign it. Sounds like this ain't happening any time soon. And once all this does happen, then comes that giant tangle of copyright litigation, which will be followed by appeal after appeal. I think Habanophiles can breathe a little easier. This will take at least 5 to 10 years, if I had to guess.
This! ^^^
Let's suppose the US does start importing CCs directly. The demand will be massive. Cuba won't get their production up to speed for 5-10 years (because let's face it, they're backwards Communists ). Prices in the US will be Canadian-esque, so backdoor channels will stay wide open. But only until the short supply starts affecting other countries; then the whole world is going to be paying through the nose for CCs. As one of my college professors sagely pointed out, "if the US economy so much as sneezes, there's an earthquake somewhere else in the world." The Law of Unintended Consequences is merciless.My $.02 , YMMV.
Cigary43
Just Another Ashhole
I remember when this subject matter first came up and everybody gets excited about "maybe" having access to CC's and it being legal to purchase. Zippos take is exactly what I pointed out a year or so ago....the Embargo has gone on for so many years and to think that because a stroke of the pen will make things so much better....is to believe that Timeshares are a great vehicle for financial independence. I believe if it happens the market for CC's will take a nosedive in quality...Cuba just isn't set up for worldwide distribution neither is it a country that does business with any type of regulatory finesse. I'd just as soon keep it the way it is until they can prove themselves to be ready for the future by doing things now...setting themselves up to be a success...does anybody have anything about how they might be doing this now?This! ^^^
My $.02 , YMMV.
On the other hand, the fall of the embargo would end up boosting the worldwide NC market.
Outside of the US, CCs are legally available and not that more expensive than NCs. My guess is that when less adventorous people go shopping for cigars, they'll shell out the extra 10 - 15 % for a CC because yes, they've heard good things about Ashton or Pepin Garcia, but on the other hand, they're not that cheaper while a cuban is a cuban (undisputed premium, etc).
If the price of CCs does indeed increase significantly (or the quality falls, again), it might make lots of people re-think their choices.
Outside of the US, CCs are legally available and not that more expensive than NCs. My guess is that when less adventorous people go shopping for cigars, they'll shell out the extra 10 - 15 % for a CC because yes, they've heard good things about Ashton or Pepin Garcia, but on the other hand, they're not that cheaper while a cuban is a cuban (undisputed premium, etc).
If the price of CCs does indeed increase significantly (or the quality falls, again), it might make lots of people re-think their choices.
No doubt! If the price of apples goes up, more people are gonna buy oranges, pears or whatever.
While the prices will be impacted, I don't think we are talking enough about the negative impact this would have on quality. Habanos SA has finally got the quality thing on track and now this could put us back 10-15 years.
StogieNinja
Derek | BoM June 2014
I always find it interesting that the industry experts they choose to evaluate whether other cigars are as good as Cubans are always either NC makers or US B&M owners.
I agree though, quality will take a nosedive for few years once the floodgates open. @vivalanation734 is correct, Cuba has just recently got quality very much on track, its going to be a bummer when things go downhill again. I'm slowly trying to stock up as budget allows right now, hoping to have 3-5 years' worth of stock when that time hits.
I agree though, quality will take a nosedive for few years once the floodgates open. @vivalanation734 is correct, Cuba has just recently got quality very much on track, its going to be a bummer when things go downhill again. I'm slowly trying to stock up as budget allows right now, hoping to have 3-5 years' worth of stock when that time hits.
redneck_toy
Fuente Fanboy
No kidding. The box of HUHC's I bought this spring had 5 rolled so tight, you couldn't draw through them at all.
Still, the HUHC remains a favorite of mine.
Cigary43
Just Another Ashhole
No doubt there will be a "break in" period...and yes there is already worldwide distribution of product but nothing comparable to what the US would bring. That quantifies a different approach to distribution and they are hardly ready for this much business unless they are hiding the factories under tents that used to house Nuclear Missiles. Remember that we're talking about an enterprise that doesn't suit Cubas main business ethics and it's all about the money and less about the product. For the last few decades Cuba has been able to maintain their business acumen with old time measures and strategies...they are not 'plug and play'....if product isn't delivered like a well oiled machine...product suffers as well as quality and the Domino Effect is in play. A fickle marketplace will not give service to inferior product when pricing is what we know it to be. Their system works with what they have....increasing productivity with a limited resource of workers who are already subjugated isn't going to work....telling a worker that the Gov't demands their service for more work at the same rate of pay as before with no benefits to go with it.....Google Cubas' business strategies as it relates to workers and you'll get the idea.
Well.
Habanos S.A. does of course have limited resources, but that is mostly related to the closed state economy.
Since the fall of embargo is anyhow not likely before Cuba opens up to private enterprise and US investors anyhow, how long do you think it'll be before everyone with a million dollars to spend rushes in and buys up all the farming land, sets up rolling operations or starts exporting tobacco?
My guess is that Habanos will have to mostly deal with the competition on their own soil.
edit: what I meant is that at the moment, the key asset of Habanos is their monopoly over the Cuban tobacco production. Every other aspect of cigar production (fermenting, aging, rolling) can and/or has been replicated or surpassed by other producers. When they lose the control over the production of the raw material, they'll have to work hard to stay in the game. Of course, there's more to growing tobacco than just throwing money at fertile soil, so the change may not necessarily happen overnight, but on the other hand, the industry is full of experienced people. (and experienced Cuban growers also aren't likely to reject offers in hard currency)
Habanos S.A. does of course have limited resources, but that is mostly related to the closed state economy.
Since the fall of embargo is anyhow not likely before Cuba opens up to private enterprise and US investors anyhow, how long do you think it'll be before everyone with a million dollars to spend rushes in and buys up all the farming land, sets up rolling operations or starts exporting tobacco?
My guess is that Habanos will have to mostly deal with the competition on their own soil.
edit: what I meant is that at the moment, the key asset of Habanos is their monopoly over the Cuban tobacco production. Every other aspect of cigar production (fermenting, aging, rolling) can and/or has been replicated or surpassed by other producers. When they lose the control over the production of the raw material, they'll have to work hard to stay in the game. Of course, there's more to growing tobacco than just throwing money at fertile soil, so the change may not necessarily happen overnight, but on the other hand, the industry is full of experienced people. (and experienced Cuban growers also aren't likely to reject offers in hard currency)
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