Anyone going to the IPCPR (RTDA)

[bigtattoo79]

Andy So far its Me the Wife (and shes going to smoke her first cigar ) and my Father-in-law going to the herf.

I have been smoking cigars off and on for a couple of years but Father-in-law is the one that got me smokeing more often. Thanks to the great folks on Puff I am the one teaching him now LOL.

Cant wait to hang with you guys!

[Cigar Man Andy]

Originally Posted by bigtattoo79

Andy So far its Me the Wife (and shes going to smoke her first cigar ) and my Father-in-law going to the herf.

I have been smoking cigars off and on for a couple of years but Father-in-law is the one that got me smokeing more often. Thanks to the great folks on Puff I am the one teaching him now LOL.

Cant wait to hang with you guys!

9 more days and counting bro.

[Nickerson]

If Drew Estate is there please ask them why the price of Isla Del Sol's DOUBLED. I still don't understand this. Sorry for repeating it, must sound like a broken record. Specially since the last post I made was about this as well. But it puzzles me. Was something changed in the blend that costs more? Was it SCHIT taxes? Are they now rolled by Victoria Secret supermodels?

If Ghurka is there, ask them why their cigars sell for around 20% of the "MSRP". Everywhere I look I see, "Retail Price $5,000.00, our price $3.95!". Its the same with Graycliff as well.

If Pepin is there, get on you knees and bow to him. Then ask him how he develops so many different blends and which of his blends he considers to be his best.

[Cigar Man Andy]

Originally Posted by Nickerson

If Drew Estate is there please ask them why the price of Isla Del Sol's DOUBLED. I still don't understand this. Sorry for repeating it, must sound like a broken record. Specially since the last post I made was about this as well. But it puzzles me. Was something changed in the blend that costs more? Was it SCHIT taxes? Are they now rolled by Victoria Secret supermodels?

If Ghurka is there, ask them why their cigars sell for around 20% of the "MSRP". Everywhere I look I see, "Retail Price $5,000.00, our price $3.95!". Its the same with Graycliff as well.

If Pepin is there, get on you knees and bow to him. Then ask him how he develops so many different blends and which of his blends he considers to be his best.

I will be seeing all of them, but I can answer about Drew Estates. They raise the price on everything the take on. Personally, I call it greed. They raised the price on the JdNA 20%. They seem to feel that those cigars are worth it and that we will continue to buy them. Even at those prices.

[Cigar Man Andy]

Two days to go... Yea Team.

[ssaka]

Originally Posted by Nickerson

If Drew Estate is there please ask them why the price of Isla Del Sol's DOUBLED. I still don't understand this. Sorry for repeating it, must sound like a broken record. Specially since the last post I made was about this as well. But it puzzles me. Was something changed in the blend that costs more? Was it SCHIT taxes? Are they now rolled by Victoria Secret supermodels?

Prices on Isla del Sol were not doubled... this year we had already planned a 5% price increase on all of our brands with one exception, Joya de Nicaragua, as we did increase the prices on average across all their skus about 18% in April 2008.

I can not argue with anyone that this wasn't a large price increase, but it was necessary for three reasons for the sustainability of the brand: 1) At the advice of their previous distributor, they had not had a price increase for the factory in numerous years - this was a major problem as the costs alone in Nica rose some 15% just between Y2007 & Y2008. It simply wasn't possible for the factory to continue making the same quality of cigars without a healthy price increase at the factory level. 2) Drew Estate has been spending alot of cash to get the brand better penetration and placement in the marketplace over the last year - we have actually given away nearly 20% of all the cigars we paid the full higher price to the factory for. The brand had been left to waffle for far too long in our opinion and we knew it was going to take a serious commitment on our part doing tastings, events, etc in order to have any hope of growing the brand. To date, we have more than double the overall sale of the cigars, but doing so has been costly. 3) We made the commitment to ensure availability of the cigar to consumers and retailers by pre-purchasing and maintaining a minimum of 6 months of on hand inventory of all sizes in all the brands at all times - in the past, the availability was spotty at best and in our opinion this is not good for the retailer or for the consumer. We want to do our best to ensure we always have the cigars available for those who want to smoke them.

To date, Drew Estate has basically broken even on Joya de Nicaragua and we have taken a very substantial risk buying so many cigars as the average on hand inventory most distributors stock ranges from 30-60 days only. We look at it as a long term investment as we have tremendous faith in the brand and the cigars Dr. Alejandro Martinez Cuenca manufactures. In the end, I do believe JDN will become a profitable brand for us so we intend to stay the course.

So in Y2009 there has been a 5% price increase on DE made products and no increase on JDN whatsoever.

However as everyone knows there was a $0.4026 tax added to every cigar courtesy of the government beginning on April 1st - we have to pay this new tax within 15 days of import and it sucks. Like most companies we could not afford to eat this, however we chose to not margin it and passed it through flat and even strongly encouraged all of retail customers to do the same as we feel it is bad for our industry to start "profiting" off taxes.

Not every retailer agrees with this opinion and in their defense they must now spend an extra $0.40 per cigar which hurts their cashflow and reduces their overall sales which makes their fixed costs increase so many felt it was necessary to margin it to some degree - it varies from store to store - some just added the extra $0.40 per cigars, while others more than double it. :<

Sadly this new federal tax is compounded by an increase in higher state taxes in many states as they charge a percentage on the overall wholesale and/or retail price... so you end up having a tax upon a tax - the end result is much higher cigar prices in some states. :<

And of course the more inexpensive cigars like Isla del Sol are hit the worst proportionally... ie. a $11 cigar increase to $12 stinks, but it certainly isn't as painful as a $3 cigar becoming a $4 one...

Right now there are still some inexpensive cigars in the "system" as many manufacturers were forced to sell at a tremendous discount due the economy slowdown of last fall plus all of us manufacturers tried to get as many cigars as possible into the US market prior to new tax going into effect. Most likely over the next few months these cigars will all be bought and every cigar going forward will cost more.

So in summary, WE didn't double the price of Isla del Sol, we increased the price by only 5% which if you start looking at the numbers closely the reality is we are making less money as just like everyone else in NICA have endured roughly 15% cost increase to manufacture and to top it off we have to lay out an extra $0.4026 to government on every stick. We make substantially less profit on every single cigar today than we did two years.

My best advice at this point is to shop smart when looking for Isla del Sol, I believe you can find them for far less than "double".

I hope this answers your question - I tried my best to do so candidly.

BR,

Steve Saka
President, Drew Estate, Inc.