Cuban Cigar Prices Soar
Bombshell news doesn’t often drop on the world of premium cigars, but when Habanos S.A. announced a major price hike this spring the worldwide network of Cuban cigar smokers, retailers and distributors was truly shaken. Many had heard rumors and hoped that they were nothing more than exaggerations, but now it’s official, and Cuban cigar prices are higher worldwide, particularly on the Cohiba and Trinidad brands. In many markets, there was an instant doubling of prices for both brands. In some cases, prices have more than tripled.
Habanos cited supply and demand as one of the reasons for such an unprecedented increase, but the primary message was clear: Cohiba and Trinidad are luxury products that represent the very pinnacle of cigarmaking and should be universally treated as such, and that includes the price tag.
In the United Kingdom, already a pricey region in which to buy cigars, the hikes ranged from modest to extreme. A Hoyo de Monterrey Epicure No. 2, for example, rose from £25 ($30) per cigar to £27 ($32), an increase of 8 percent, as did the Partagás Serie D No. 4s. Cohiba Lanceros, however, soared 63.3% to £68 ($80) and a Cohiba Esplendido rose 36.6 percent to £82 ($97). Trinidad prices rose at even greater levels, with an 80 percent increase on the Reyes size, to £27 ($32).
If you think British price hikes are bad, Spain, the world’s largest market by volume for Cuban cigars, is facing even more extreme sticker shock. The Cohiba Siglo II, a popular petit corona, used to cost 17.40 euros in Madrid. (At press time, the euro and dollar traded one-to-one, making that cigar $17.40.) Today, that same cigar in Spain has a retail price of 37 euros, an increase of 117.6 percent. The toro-sized Cohiba Siglo VI saw a similar spike, going from 37.80 euros to 81 euros, while the Cohiba Esplendido, one of Cuba’s benchmark Churchills, rose from 43.60 euros to 96 euros, an enormous increase of 118.2 percent.
Price changes in Germany, another major cigar market, were comparable to Spain.
Cohiba Behikes have become even more expensive, but they are almost impossible to find. Because of their scarcity, Behikes are often allocated and sold off before they’ve even hit the shelves. The BHK 56 remained unchanged in Britain, at £150 ($177), while the BHK 52 rose 10 percent to £110 ($130). In Spain, the price hikes on Behike were dramatic. The BHK 52 price more than doubled, from 55 euros to 118 euros. The BHK 56, which once would have set you back 69.50 euros, now sells for 166 euros, an increase of nearly 140 percent.
Trinidad’s price hikes are even more drastic. The Fundadores, Trinidad’s long, thin flagship size, soared from 17.70 euros to 65 euros, up 261.1 percent. And the diminutive Trinidad Reyes, once a true bargain at 8.30 euros in Spain, is now nearly four times as expensive, costing 32 euros.
Price hikes are never welcome news to consumers, but for retailers and distributors there may be a silver lining beyond increased profits. This move by Habanos aims to regulate the pricing of Cohiba and Trinidad from country to country, pegging it to the Hong Kong standard, one of the world’s priciest and eliminating price fluctuations. Prior to this change, Cohibas and Trinidads were approximately half the price in Spain as they were in London. Today, all Cohibas and Trinidads around the world are (roughly) equal in price. Even in Cuba, long a paradise for cigar buyers with bargains galore, prices have climbed dramatically. Cohiba and Trinidad have been transformed from merely expensive cigars to something that, for many, is now unattainable.
In a sense, the universal price-fixing of Cohiba and Trinidad will better level the playing field. Shopping for cheaper Cohibas from market to market is now a thing of the past. Given the low supply, it’s no longer a question of how much a Cohiba will cost, but more a question of which market might have Cohiba in stock.
Reaction from around the world was mixed. “The prices almost doubled,” says Antonio Marsillo, general manager of Whisky Café, a cigar bar in Montreal. “The negative feedback so far from the clients has led us to revisit our Cuban stock offering, and we’re not sure if we will carry the entire Cohiba and Trinidad lineup.”
One major cigar distributor feared the worst from this change—fears that so far have gone unfounded. “We all were shocked,” says Heinrich Villiger, who distributes Cuban cigars to five countries in Europe including Germany and Switzerland. “We feared a massive reaction from the smokers and a substantial reduction of the sales. But neither one happened. The Habanos addicts accepted the new prices more or less without negative reactions. The reasons? Mainly the vigor and notoriety of these two labels.”
For George Skiadas, an Australian Cuban cigar collector of 30 years, the current situation means that he will buy more brands from Nicaragua, Honduras and the Dominican Republic, and fewer Trinidads and Cohibas. “I will definitely be switching to some alternative brands from Arturo Fuente, La Aurora, Drew Estate and Rocky Patel to name a few,” he says. “The next generation of young cigar smokers will not be able to afford the Cohibas and Trinidads, so they will start smoking the cheaper alternatives from Nicaragua, Dominican Republic and Honduras. And eventually, they will get accustomed to smoking those cigars.”
Marsillo agrees and sees this trend coming to Canada as well: “I can say that there is a serious shift toward the Cuban brands that were not price-hit too hard—Quai d’Orsay, Bolivar, Por Larrañaga—and of course, the New World brands that have more and more appeal to buyers of Habanos.”
Habanos doesn’t seem too worried about competition or losing customers. News of the price increase came along with an announcement from Habanos that the company posted record gains in its premium segment for 2021, reaching $568 million, 15 percent growth from the previous year.
If the Cuban monopoly is correct and Cohiba maintains its “unstoppable demand,” in the cigar market, then it’s unlikely that Cohibas will ever be priced out. The markups will only result in a shift in customer demographics. Consumers in high-income brackets with an appetite for Cohiba and Trinidad cigars are also unlikely to change their spending habits. According to a recent study of luxury goods by Global Industry Analysts Inc., the global luxury goods market for 2022 is estimated at $242.8 billion with projections of $296.9 billion by 2026.
In other words, Cohiba and Trinidad become special-occasion splurges for most, and the wealthy will continue to buy up the rest, no matter the cost. Either way, Habanos wins.