CI Charging For SCHIP Already

[Jonesee]

I got my daily email from CI on their specials and the Perdomo Tierra del Sol is on the special. I clicked the link, was forwarded to CI's web site and greeted with this disclaimer copied and pasted ditectly from their site:

Note: due to SCHIP taxes, the price of Tierra del Sol received a slight price increase starting last month, but the increase was modest at onlyl $2-$5 per bundle depending on size. So this fine Perdomo handmade remains a tremendous value.

So for a month CI has been raising prices ahead of the tax. Which is not due on inventory currently in stock!!!! It looks like a little "revenue enhancement" going on at CI. Or more accurately a "money grab". I'm truly disapointed in them.

And they said it was dependent on size??? Ummm, interesting, I didn't read the tax was dependent on size...

Here is a link to the page if you want to see it yourself:

Tierra del Sol - Cigars International

I hate the feeling I get when I think someone I have done business with is trying to take advantage of me. CI has good prices, but I believe I can match or beat them with a little tenacity and searching. This was all I needed for motivation.

I sent CI a note with the text and link to this thread and asked if they had a response. I will forward anything they might send to me.

[KickU2Sleep]

It will be interesting to see what kind of response they give, if any...Doesn't make sense to charge ahead of the start date....

[Gone Dave]

Originally Posted by KickU2Sleep

It will be interesting to see what kind of response they give, if any...Doesn't make sense to charge ahead of the start date....

Its a money grab,
A store by me raised the price of cigs, last week to "adjust "the new tax into them ..then they raised them again yesterday...

[sboyajian]

every store that I know of raised cigarette prices last week.. it's because 99% of the people don't know anything about the tax.

[Firerat]

Cigs have gone up twice here in the last 2 weeks and will go up again.

Thank God I quit smoking!!

[docruger]

sounds like a bad case of jumping the gun

[Chopper]

Money grab.

[Old Stogie]

I believe that some retailers are gouging in order to create revenue to pay the tax on their existing stock on April 1st.

[ghe]

I don't know about CI or other cigar operations, but those of you complaining about cigarette retailers are, I think, misguided. Earlier this month there were news reports that Philip Morris had raised its prices 71 cents a pack, 62 cents for the SCHIP tax coming April 1 and 9 cents for the increased cost of business. Reynolds followed with a 44-cent price hike. The company said it was raising prices early to avoid disruptions that can be caused by big tax boosts.

[wolfmonk]

With CI it sounds like an unfortunate case of gouging "'cause we can".
Very sad.

[JDC20]

Is it possible that this price increase was brought on by Perdomo and not CI?

[Jonesee]

It's possible, but only CI has had the increase as best I can tell. So... I tend to think it is a CI move.

I'm still waiting on a reply from them. If it was a Perdome price increase I would assume I would have gotten a quick reply explaining they were simply passing on an increase from the manufacturer. Right now I am betting I don't get a reply and if I do it will be wriiten in marketing happy-speak and be irrelevent.

[sboyajian]

Originally Posted by Old Stogie

I believe that some retailers are gouging in order to create revenue to pay the tax on their existing stock on April 1st.

I believe the tax is imposed on the manufacturer side, so if a cigar cost a retailer 2.30 and it now costs them $2.65 (the 35 cent difference, from the previous amount).. if the retail simply passes the tax to you (increase sales price from 4.60 to 4.95 -- double original retail plus new tax), then there is no need to gouge before April 1, as they will still be selling existing stock at the new price and thus at some point we will be paying more for sticks that didn't have the tax.

Some retailers are not so "nice" and actually plan on profitting on the additional tax. The example above shows a retailer simply passing the additional tax to the consumer. Some shops will simply double (2.65 becomes 5.30). Recouping not only the tax for the retailer, but putting an extra 35 cents per stick in their pocket.

So while a full box may cost the retailer $7 for a box of 20, it will cost the consumer $14.

I am happy to know that my B&M will only be passing the extra along to me and not charging me double.

[Jonesee]

OK: In absence of a reply from CI I just went on to the CI online live help and asked about the price change. The short reply was I needed to call the Customer Service 888 line and ask for a supervisor.

I called, I asked and after a long wait I was told the supervisor, Trish, was busy and would I like to leave a voice mail. I told them I had some time and could hold. They thanked me put me on hold and in about 90 seconds was sent to a voicemail anyway. I definitely felt like I was getting the old shove off because they don't want to discuss it.

CI's reputation is dropping quickly right now. Does anyone have a direct line to CI? or know a manager's name??

[BlueHavanaII]

A couple of cigar manufacturers have increased their wholesale prices in March. I do not believe that Perdomo was one of them. Wholesale price increases are due to increased taxes, as well as increase labor, production and shipping costs, so they are not a consistant 35 cent increase per cigar. As noted previously, for the retailer (and the consumer), this is an increase in wholesale cost (cost of goods sold) and adding a retail margin, will increase the retail price proportionately.

Retailers adding the increase to their existing inventory are justifying this on "cost of replacement", which I do not agree with (but is a quantifiable practice).

On the cigarette front, we have a SH**STORM in progress! Many vendors increased their prices in March. On April 1st, there will be a floor stocks inventory tax. Imagine the following scenario:
Mar 1st - wholesale cost $3.00
Mar 15th - wholesale cost $3.61
April 1st - Floor stocks tax of $.61 - effective wholesale cost $4.22
April 2nd - wholesale cost $3.61

This means that inventory purchased after a price increase, but before April 1st will be effectively taxed twice, but the gov't will only receive the floor stock tax (the manufacturer will keef the rest!)