CI Charging For SCHIP Already

[JDC20]

Originally Posted by OracleSmoke

Yah I figured most cigars are "large". I didn't see anything in the legislation that defined the method used.

Either way, a lotta the manufacturers I smoke have said they're not gonna be hitting folks with the tax right away if at all.

It'd be great if we had a running list of manufacturers who've stated they're not raising prices immediately.

I think Lew Rothman said it best

"Any manufacturer who claims to be a good guy by absorbing this entire tax was already charging too much for his cigars to begin with. Conversely, anyone raising the full amount or more (given the state of the economy today) was selling the product very close to cost and was forced to raise."

Now granted, there will be some smaller manufacturers that can hold their prices steady until they receive their next shipment of product whether it be 2 weeks or 2 months. But for the big companies selling 20, 30, 40, millions cigars a year, bringing shipping containers full of cigars in each week, they get hit with the tax as early as tomorrow.

[craigchilds]

Originally Posted by JDC20

I think Lew Rothman said it best

"Any manufacturer who claims to be a good guy by absorbing this entire tax was already charging too much for his cigars to begin with. Conversely, anyone raising the full amount or more (given the state of the economy today) was selling the product very close to cost and was forced to raise."

I don't know that I buy this. CigarsInternational (I'm speaking of its subsidiary CigarBid.com, in particular) is often lower than JR Cigars (owned by Lew Rothman). Case in point: a crate of 60 Omar Ortez Originals usually goes for $120-130 on CBID. It goes for $160 on JRCigars.

[JDC20]

Originally Posted by craigchilds

I don't know that I buy this. CigarsInternational (I'm speaking of its subsidiary CigarBid.com, in particular) is often lower than JR Cigars (owned by Lew Rothman). Case in point: a crate of 60 Omar Ortez Originals usually goes for $120-130 on CBID. It goes for $160 on JRCigars.

Lets dig a little deeper. Omar Ortez is a brand owned by Altadis, Altadis is the parent company of JR cigars.

CI/CBid is owned by General Cigar, Altadis's chief competition. It would make sense for General Cigar (the competitor) to undersell Altadis on its on product, its good business. Also if you take a look, JR's has many of Generals brands at lower prices than than CI/Cbid. That issue is more of a business competition than an issue tied to SCHIP.

Another thing to remember is CBid can let name brand, nationally distributed brands sell at cost, or even below cost because they can make 200-300% on their "House Brands" or "Private Labels". They can use the name brands stuff to lure people in but they make their real money on their exclusive product offerings.

[OracleSmoke]

I thought swisher intl. owned CI? Is swisher under GC too?

I was just reading through some back issues of Smoke Shop magazine the other day and there was a good interview with Lew Rothman in there. I don't recall the date of the article but basically Lew said if the mfg. was coming to him to sell their product, the mfg. knew the line was dead because JR was at that time the leader in low cost smokes. I don't know how JR stacks up against the other large online retailers these days, but something in that comment about SCHIP lew made rang out to me, If a mfg absorbs the increase then he was making more than enough profit before the tax. Which I'm assuming Lew meant that the mfg was overcharging for their product. Then he says, if the mfg. increased the price by the amount of the new tax, the mfg was selling close to cost.

From that, I guess his intent was to infer that the honest fair profit mfg. will increase their price by the tax and that the dishonest or profiteer mfg. will absorb the cost.

The only thing that stands out in that statement to me is that the guy who absorbs the cost is willing to make less profit while the guy who raises prices to match the tax isn't willing to lose profit.

Since we don't have price sheets from the mfg. or the distributors we'll never know what's true in relation to profit margins. But if I feel a smoke is worth the price I'm paying, and the mfg. is willing to make less profit to spare me the expense, I appreciate it more than a mfg. pushing the entire cost onto me.

For some reason, when a big time retailer and successful salesman tells me that paying more for my cigars means I'm not being cheated, my first instinct isn't to believe him. It tends to set the stage for making a great excuse to increase the price of everything when you can get people to believe it.

Maybe he's just letting us know in advance that Altadis will be increasing everything to the max tax.

Slightly off topic, but I just spoke with a retailer who told me retailers aren't going to be charged the tax on their floor stock. Apparently this only applies to the manufacturers and what they have in stock.

So from that I take it that retailers aren't responsible for the tax but rather it's the manufacturers or importers that pay it and pass it to the retailers, if they in fact pass it on at all.

Wish we could see a list of which mfg. are gonna eat the taxes for a while and which aren't.

[JDC20]

Nope Swisher is not related to General/CI.

As for the commentary, I really don't believe any manufacturer will be able to eat the tax. It is a matter of when not if they raise the prices. There will be many companies that can hold the price for a while maybe even 3-4 months, depending on how much inventory they have in stock now, as you pointed out there is no floor tax for retailers or distributors/manufacturer on existing inventories. I would be willing to bet, any company that says they will eat the tax will have a price increase proportionate to the tax (or more) by the end of the year. They won't call it an SCHIP tax, it will be production cost increase or something else.

You are right it is the manufacturer/distributor that brings the product into the country that is liable for the tax.

For some reason, when a big time retailer and successful salesman tells me that paying more for my cigars means I'm not being cheated, my first instinct isn't to believe him. It tends to set the stage for making a great excuse to increase the price of everything when you can get people to believe it.

I don't think it is a cheated/not cheated discussion. The price increase or lack of would would be an insight into the profit margin of a certain product, no more no less. One thing to remember is that this is a business and they all operate on their own set profit margin, they know what they have to get for their product to stay viable as a company.

Just as a disclaimer, I am coming at this issue as an employee of a Manufacturer/Distributor, so I am not viewing the issue purely as a consumer.

[XMegaDude]

You can go to their Auction Website, Cigarbid.com (its ran by Cigars International) and save money there by bidding on what you want. at least its competative and I always pay less than catalog price.

[smokeydog]

Originally Posted by XMegaDude

You can go to their Auction Website, Cigarbid.com (its ran by Cigars International) and save money there by bidding on what you want. at least its competative and I always pay less than catalog price.

this is what i usually do, but over the last 2 weeks even there prices are jacked up

[Nickerson]

Seems like pretty sleazy business, although my purchases don't rely on what I think of a company usually, its all about pricing. If they are the cheapest price then I'll most likely buy there.

Over all I like CigarsInternational best, great selection, good prices.

[craigchilds]

Originally Posted by JDC20

Lets dig a little deeper. Omar Ortez is a brand owned by Altadis, Altadis is the parent company of JR cigars.

CI/CBid is owned by General Cigar, Altadis's chief competition. It would make sense for General Cigar (the competitor) to undersell Altadis on its on product, its good business. Also if you take a look, JR's has many of Generals brands at lower prices than than CI/Cbid. That issue is more of a business competition than an issue tied to SCHIP.

Good point. I didn't think of that. I never realized CI/CBid was owned by General Cigar.

[ezmoney5150]

Friday I stopped in at Dad's Smoke Shop in Cleveland and picked up a box of Oliva Serie V Figurado. Not only did I not have to pay S-CHIP tax I actually got a deal.

I think anybody who does business with CI need to email them and show their disapproval.

[Jonesee]

Interesting development on the CI SCHIP disclaimer. THEY REMOVED IT!!! LOL

I saved the link, so I went back and checked on a whim and all mention of SCHIP is gone. A nerve must have been struck because "corrective action" was taken.

When "all upper management" became aware of it, it became a hot enough issue that the ad copy got changed.

I guess that is the only clarification or comment that CI is going to offer...

[Steeleagle]

How can someone be "gouged" on a 100% luxury item?

[slyder]

its really not a matter of "gouging" its a matter of them charging the new SCHIP tax 5 days before the SCHIP tax took effect (4/1/09)

[Jack Straw]

Um, today is April 1, and I just checked 2 cigars that I remembered the prices of on CI from weeks ago, and they are exactly the same.

[slyder]

Originally Posted by Jack Straw

Um, today is April 1, and I just checked 2 cigars that I remembered the prices of on CI from weeks ago, and they are exactly the same.

I know what day it is......this thread goes back a few days. Read the whole thing.