Introduction by BillieBLVD
The price of Cuban cigars is set to rise immediately following the end of the embargo but that will be a bad move for Habanos S.A. especially considering that they want to capture a whopping 70% of the US market in a mere 5 years. I have already stated that Cuba does not have the capacity to produce that amount of tobacco nor do they have a history of ramping up production and maintaining the same standard of quality. Raising the price for the sake of unearned above average returns is going to increase the expectation of the buyer that will surely be disappointed with their purchase. Why? Cuba has understimated the impact of non-Cuban cigars on palate of the modern American smoker. They also have not considered the superior quality of their competition.
The global prices of Cuban cigars – the Island nation’s most famous export – could be set to rise after thawing ties between the U.S. and its communist neighbor, experts say.
Since the 1960s, when Washington slapped a strict embargo on Havana, then ruled by the Soviet-aligned, cigar-smoking Fidel Castro, Cuba’s luxurious hand-rolled cigars have been elevated to an almost mythical status.Despite being exported to the rest of the world, U.S. citizens would commonly find their precious box of Habanos destroyed in front of them by a zealous customs agent.But to the delight of Americans sentenced to a long future of puffing what many see as substandard stogies from the Dominican Republic, Honduras, or Nicaragua, Cuba’s coveted cigars are suddenly available – albeit in tiny quantities.By an order from the White House late last year, U.S. visitors to the island - situated less than 150 kilometers off the coast of Florida - can legally bring back up to $100 worth of Cuban tobacco and alcohol for personal use.Yet as most cigar lovers know, $100 is a small figure when buying costly Cubans. Travelers to Cuba can typically expect to pay $250 for a single box of 25 quality smokes.Meanwhile, a box of the top-of-the-market Cohiba cigars - Castro’s favorite brand before he quit in the 1980s for health reasons – can fetch over $400.While boasting multiple brands, Cuba’s cigar industry is state-owned. Habanos S.A., which controls their worldwide distribution in a joint venture with the UK-based Imperial Tobacco, generated sales of $439 million last year, Reutersreported - without direct access to the U.S. market.