Cigars, Cuba, Habanos, LCDH, Prices

To the Moon, Alice!

See the source imageLast month, shortly before Leslie and I went to Cuba, Habanos S.A. announced that they would be raising the prices of all their cigars, but they would really be raising the prices of the two top ‘exclusive’ brands, the Cohiba and the Trinidad.

I am grateful that the price hikes did not take effect until after our trip, and while buying cigars was not the primary reason we went, we were able to buy some very good cigars, including Bolivars, H Upmanns, Montecristos, Vegas Robainas, and yes, a box of Trinidads, and a few Cohibas.

While there is tremendous uncertainty around the announcement, there are several things that are clear:

  1. Habanos is raising the prices of most of their cigars worldwide to correspond to the current prices in Hong Kong.
  2. There is no market that is going to be left untouched.

While I have severe doubts whether they would do something so stupid as to equalize the price of Cuban cigars in Cuba to the prices in Hong Kong, there is rampant speculation that this is exactly what they are going to do (see article). With respect, I cannot imagine the Government of Cuba allowing something like this which would absolutely decimate the cigar tourism market, but they (the Government of Cuba) do not always act in accordance with what I believe is logic. We shall see.

Possibly the best indicator of what the worldwide prices will look like after the price hike is the price list from the German importer, 5th Avenue Products. As the exclusive importer of Cuban cigars for Germany, Austria, and Poland, they set the price for most of eastern Europe. They recently released the following price list on their site: Verkaufsprogramm_34.indd (5thavenue.de)

There is a lot of chatter from people saying that this is an absolutely ridiculous move. There might be some merit to that. However, Cuba is only able to produce a certain number of cigars per year, based on the size of their Tobacco crop. If there is anyone who thinks that this move is going to discourage the high-end smokers, or that Cuba is not going to sell out their cigars every year, then they are fooling themselves. At cigar lounges in China, smokers hold their cigars over their heads between puffs. This is not so that the smoke will rise above them, rather so that everyone can see the exclusive cigar that they are smoking.

There is an exclusivity to Cuban cigars that dates back to the original introduction of cigars and tobacco to the European market. They have always been known as the best, and there is a segment of the population who have enough money to buy as many as they want… and if the prices go through the roof so that Mitch Garvis can no longer afford to buy them, so much the better; that guy’s cigar just became even more of a status symbol to the envious.

Many of us will not agree with this move. We may say that this is not what cigars are supposed to be about. Habanos is not in the business of fostering camaraderie and respect among cigar smokers, they are in the business of making money.

It pains me to think that I am being priced out of the market on a lot of cigars, but then again, I do not smoke a lot of Cohibas and Trinidads (although I am quite pleased to have a box of Trinidad Reyes in my stash). I will continue to smoke my Partagas, Hoyo de Monterrey, H Upmann, and so many others… but I suspect I will also be smoking more non-Cuban cigars too. I just do not have the money to keep up with the Joneses, and companies like Davidoff, Padron, Perdomo, Arturo Fuentes, Oliva, and AJ Fernandez also make excellent cigars with tobacco from countries such as Nicaragua, Dominican Republic, Honduras, and more… and these are companies that are not deciding to increase their prices by orders of magnitude overnight.

I walked into my local B&M shop the other day, and in their humidor I noticed a Cohiba Esplendido selling for CDN$114 per cigar. I commented to the shop keeper that the new prices were going to hurt a lot of smokers. He responded ‘Yeah… the new prices go into effect June 14.’ I was shocked to discover that the $114 was the pre-price hike price. I cannot imagine what they will cost come Tuesday… but I will be heading down there to find out, I promise you!

There was a time not too long ago when I was seen as a Cuban snob. While fine cigars has never been an inexpensive hobby. I remember purchasing my first box of Cohiba Esplendidos in the Holguin airport Duty Free shop for under $400 for the box. Even in Cuba, they are now more than double what I paid then. When I was interested in selling some of my haul, it was easy to justify the cost of the box. Now that I have no interest in selling them, the hobby can either get a lot more expensive… or a lot more geographically diverse.

With the vast improvements in non-Cuban cigars, and the vast price hikes in Cuban cigars, I suspect my choice is simple… and obvious.

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