Obama Smokes? Maybe there's hope?

[HeavyMetal-cr]

Originally Posted by lazylightningNY

yeah, but can you imaging how much we'll be paying for certified CCs if the ban is lifted? ouch!

I'm not sure what a "certified CC" is, but since the US dollar is now rising against the euro and several other world currencies, the price of Havanas in USD has dropped. It would be nice if this trend continues to parity with the euro as it would represent about another 20% strenghtening of the dollar and thus a concurrent drop in the price of non-dollar denominated goods and services.

I would also anticipate that shipping costs to the US would moderate if the embargo is dropped.

[lazylightningNY-cr]

Originally Posted by randomhero1090

Put it this way, Habanos SA will be the cigar version of De Beers. De Beers controls 75% of the diamonds that are distributed around the world. De Beers holds back distribution of diamonds in order to keep the price up. Just like Arab Oil as well.

Habanos SA will do the SAME THING. Limited amount of distribution to the US in order to keep the price UP.

HOWEVER, this should bring down the price of some of the better Non-Cuban cigars. If cubans get unleashed on the market, the ultra premiums are the ones that will suffer, so price is the 1st way to combat competition.

excellent point, random, and one I truly look forward to.

[HeavyMetal-cr]

Originally Posted by randomhero1090

Put it this way, Habanos SA will be the cigar version of De Beers. De Beers controls 75% of the diamonds that are distributed around the world. De Beers holds back distribution of diamonds in order to keep the price up. Just like Arab Oil as well.

Habanos SA will do the SAME THING. Limited amount of distribution to the US in order to keep the price UP.

HOWEVER, this should bring down the price of some of the better Non-Cuban cigars. If cubans get unleashed on the market, the ultra premiums are the ones that will suffer, so price is the 1st way to combat competition.

Interesting scenario however this is not borne out by the facts.

First, the cuban govenment is no longer in control of Habanos SA. Altadis purchased a controlling interest in Habanos SA in 1999 and has set marketing and production policy since then. Further, in 2008 Imperial Tobacco purchased Altadis. Thus, a capitalist western company is solidly in control of the production and marketing of cuban cigars.

Secondly, Altadis (and now Imperial) have worked to increase production. And of that production an estimated 20 - 30% is already consumed in the US by ordering from world sources. So even if there was a limitation to American distributors, the current world sources would simply continue to fill the demand. The only way this would not happen is if Imperial cut production by 30% - not likely since that's the profit margin.

Also production restrictions such as that in the diamond trade only works when someone is in control of a significant proportion of the product. In the case of cigars, Havanas are a rather small proportion.

Lastly, if this scenario came true, it would result in a rise in NC prices not a fall. You can already see this in effect today. If company A raises prices for its flagship product, company B will typically follow (think Kellog and General Mills, Proctor and Gambel vs Kimberly).

What do I think will happen? Absolutely nothing. The end of the embargo will be well known before it happens and Imperial will execute its plan for distribution to the US. The transition will be smooth as anything else would be undesirable from a marketing standpoint.

I also do not buy the argument that there will be huge shotages as "eveybody and his brother" rushes out to try a cuban cigar. First, not eveybody and his brother smokes. Most people couldn't care less about Havanas because THEY DON'T SMOKE. And most experienced smokers have already tried Havanas. That leaves a relatively small percentage of cigar smokers who may or may not even care.

In sum, wake me up when it's over. I'm gonna go play golf and take a nap.

[slowburning]

I never doubt there would be a shortage should the embargo to end, at least initially.

My reasons are simple:

1. too many smokers in the US have not had a chance to smoke a Cuban, now you have a chance to try one legally-this applies to both smokers and non-smokers.

2. Cohiba-The Holy Grail factor, Cohiba cigars were considered the Holy Grail of the cigar industry, at least in past decades, you've gotta try one at least once, this is more for the younger generation, as well as some old-timers.

3. legandary brand-Montecristo, RyJ-the baby-boomers will remember these from their days, and will undoubtedly rejoice with these and to remind them of "the good times."

As for long term, I don't know, because too many variables/factors involve:

1. quality of cigars initially sampled

2. price

3. availability of other cigars with same quality and same price point

Hell, if I don't like the first few I sampled, I would go back to my $1/stick La Flor de Cano, or better yet, some Don Elias with "over 4+ years of box-aging." (I read the same printed ad 4 years ago. Someone needs to update their ad copy.)