Cuban cigars are more expensive than an iPhone

By | April 30, 2023

even the occasional smokers of cigars, that is, those who smoke one or two a year, will have understood that the market is very agitated: a great shortage of mainly Cuban cigars and price increases that in two years are close to 200%.

The most distinctive of Cuban cigars, the Cohiba Robustos, one of the most popular and sought after vitolas on the market, has become hard to find. And where it is available, it currently costs around 70 euros a piece from 25 euros in the period 2019-2020. Famous Cuban brands such as Cohiba, Romeo y Julieta and Montecristo, all owned by Cuban tobacco company Habanos SA, whose 50% was sold to Chinese interests in February for $1.2 billion, have seen the prices of their cigars double or even triple. Some of the larger cigars, like Churchill, now cost upwards of €120 a piece. But even at these prices there are significant shortcomings. Thus, the classic box of 25 Cohiba Robustos cigars on the current market costs 1,768.75 euros, that is, more expensive than most Apple iPhone models.

A look at the most authoritative Greek websites selling cigars online immediately lands on the “out of stock” tag. In fact, the vast majority of Cuban cigars are now a hidden treasure of the market. As Nikos Miamis explains speaking with “Kathimerini”., a specialist in Cuban Habanos cigars, which has a physical store in the center of Athens but also one of the largest online, these price increases and shortages have led to an increase in prices and cigars from other countries of origin such as Santo Domingo and Nicaragua, while they have brought cigars from third countries such as Honduras to the Greek market for the first time. Some of them are really very good, but they are not Cuban. And Cuba was and continues to be the undisputed king in these fine tobacco products.

In recent weeks, however, he sees an attempt to normalize the good supply in the market. Meanwhile, vigilantes here and there on the Greek border are funneling to the Greek market, as in other countries, mono cigars, of inferior quality, i.e. tobacco – which, according to experts, sometimes even includes banana leaves – wrapped in and packaged. with counterfeit labels.

Countertrade and mono cigars in the market, despite efforts to normalize supply.

Despite the fact that the use of tobacco products and especially cigarettes is in decline worldwide and therefore also in Greece, it is significantly decreasing while alternative products such as heating tobacco and vaping are conquering an increasing proportion, the demand for cigars and cigarettes is at the highest levels of the last decade. According to sources from the management of Phenicia Fereos Hellas SA, the official importer of Habanos cigars in Greece and the only authorized wholesaler, in 2021 sales of classic cigars reached 2 million sticks, a level that is also the highest since the debt began. Greek. Crisis 15 years ago. Among them are cigars that the Cuban company manufactured especially for the Greek market under the name “Omiros”.

“I estimate that the demand at this moment for Cuban cigars amounts to two and a half million pieces, quantities that, however, will take some time before we can have them available to the Greek public given the great shortage that is observed worldwide” , explains a senior executive at Phenicia Fereos Hellas. However, as he assures him, the worst is behind him. In 2021, Phenicia Fereos recorded an all-time record not only in volume but also in sales value and profitability. And in 2022 the demand was even stronger. In Greece but also abroad.

Havana-based Corporación Habanos SA, which markets 27 of the best Cuban DOP brands, all made by hand, announced at the end of February that it recorded revenues of $545 million in 2022, more than in 2021, despite production difficulties related to a reduced harvest due to typhoons, the inability to find packaging materials on time, labeling and delays in the international supply chain.

China, hurricanes and Havana politics shoot up prices

The great shortage and the increase in the prices of Cuban cigars are due to the perfect storm that has hit this market: international demand is increasing as emerging economies such as China with hundreds of millions of inhabitants see their incomes improve and develop socially in the middle class, seek expensive pleasures like authentic Cuban cigars. But demand is also strong in mature markets like Europe, despite the decline of traditional cigarettes, as more and more people are selectively choosing to smoke a few good cigars a week over anything else. At the same time, the supply collapsed along with the pandemic.

Chinese interests Allied Cigar Corp acquired 50% of Habanos SA paying a price that exceeded 1.2 billion dollars.

Cuba used its own vaccine, not as effective as it turned out, with the result that around 50% of the workers in the manual production of cigar wrappers were out of work for almost two years. But that was not enough. Particularly bad weather conditions with hurricanes destroying much of the tobacco production prevailed in the last three years.

However, even when the tobacco was collected and workers were ready to wrap it, the wooden boxes in which it is packaged as well as the paper labels that wrap each stick were not available due to known problems in the supply chain. international supply the pandemic It should be noted that most of the boxes and labels are produced outside of Cuba, according to experts. However, in addition to the imbalance between supply and demand, the Cuban state-owned company Corporación Habanos, SA has adopted and has been applying for some years now two policies that lead to increases: in principle, for a few years the prices of cigars have increased horizontally between 3% and 5% per year.

Secondly, it decided to try to match the prices of its best cigars worldwide, that is, those included in the series called Luxury Line, which are the best lines of the Cohiba, Romeo y Julieta and Montecristo brands. This policy is attributed to increases that came even before production problems arose in some countries of more than 100% depending on how burdensome the tax regime for cigars is in each region.

But concerns among retailers and smokers, especially in Europe and the United States, that the situation could get even worse, intensified earlier this year when news broke that Chinese-owned, Hong Kong-based Allied Cigar Corp had acquired 50% of Habanos SA paying a price that exceeded 1,200 million dollars. The fact was read as proof that from now on China will absorb a much larger part of Cuba’s production, perpetuating the scarcity of its coveted brands in the West.

The markets that generated the highest sales of Habanos in 2022 were Spain, France, Germany, China and Switzerland. By region, Europe continues to be the main market for Habanos, with 53.7% of the value of sales, followed by the Asia-Pacific region (19.3%), America (15.3%) and Africa and the Middle East (11.7%).

And as if all that were not enough, in early April a report in Granma, Cuba’s state newspaper, revealed that Pinar del Río, the region in western Cuba where most of the high-quality tobacco is grown, may be facing its worst harvest. with all of tobacco in history. The lingering effects of Hurricane Jan, which destroyed most of Pinar del Río’s tobacco growers in late September, are largely to blame.

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