New here-Cuban ?'s

[craig]

Of course it is a simplification - development /storage/carrying costs are not included, for example, nor is the price of the packaging/band/marketing. However, if one looks at what farmers are paid for tobacco and what workers get paid to process - then Lew's point that the cost doesn't vary that much is pretty close to the truth.

The main point is that the price you pay for a high-end luxury good has little to do with the actual cost of production. A Cohiba costs more to make than a Quintero, but the difference is closer to pennies than to 10's of dollars. I grew up in the garment industry and the same is true there. If one likes reading more on the web, then I found the cost comparisons of an iPad vs. Kindle quite entertaining, as were (to me) the comparisons between a pickup vs. an SUV based on that pickup.

[ggiese]

Of course it is a simplification - development /storage/carrying costs are not included, for example, nor is the price of the packaging/band/marketing. However, if one looks at what farmers are paid for tobacco and what workers get paid to process - then Lew's point that the cost doesn't vary that much is pretty close to the truth.

The main point is that the price you pay for a high-end luxury good has little to do with the actual cost of production. A Cohiba costs more to make than a Quintero, but the difference is closer to pennies than to 10's of dollars. I grew up in the garment industry and the same is true there. If one likes reading more on the web, then I found the cost comparisons of an iPad vs. Kindle quite entertaining, as were (to me) the comparisons between a pickup vs. an SUV based on that pickup.

...the price you pay for a high-end luxury good has little to do with the actual cost of production

That, my friend, is the textbook example of a "sweeping generalization". I wholeheartedly disagree with that statement. And - I think you'd find it very difficult to defend.

A Cohiba costs more to make than a Quintero, but the difference is closer to pennies than to 10's of dollars.

You're suggesting it is within a few "pennies" to make a short filler (left over scraps) machine made cigar, versus a long filler hand made cigar? And (more importantly) a low-end machine made cigar versus a handmade cigar that is made by the best cigar rollers Cuba has to offer? Seriously?!?

Rather than quoting Lew Rothman, I'd suggest you quote someone within the Cuban tobacco industry that is in "the know" about actual cost of production. The manufacturer really can give a better cost gauge than someone who is known for buying truck loads of "leftovers" from production runs the manufacturers are trying to close out. It's rather like inferring Trader Joe's is the expert on the cost of producing wine because they can give a good price point for "two-buck Chuck".

[ggiese]

Before you get all defensive on me Craig, please consider this...

...the price you pay for a high-end luxury good has little to do with the actual cost of production

Your overall statements (including Lew Rothman's observations) suggest:



should be only "pennies" in production cost difference with this:




Or...

This:



vs.

[ggiese]

...and the price differences in the "garment industry" for "high-end" versus regular production (with which you say you have some knowledge). I'm grasping here (because I don't work in or around the garment industry), but as a consumer that has "experienced" garments trhoughout my life I'm seeking to understand your rationale here...

Are you suggesting that generic winter coats made for Walmart or Kmart are only "pennies" difference in comparison with winter coats made by/for North Face or Columbia?!? ...shirts made by companies supplying Walmart or Kmart being "pennies" different than shirts made for Ralph Lauren or Nautica?!?

...or purses made for JC Penney or Wackenhut are only "pennies" difference with purses made by/for Coach or Louis Vuitton?!?

And further following your logic - cars made by General Motors or Ford are only "pennies" difference with cars made by Porsche or Lamborghini?!?

There are clear reasons why I would choose a Mont Blanc pen over a Bic - or a DuPont Lighter over a Zippo - and a Ralph Lauren shirt over a Walmart brand. It really has nothing generally to do with the name that's on it (though it is a "promise" through their brand that I'm receiving a high quality product) - but actually much more for me to do with the durability and value I'm receiving for the money I'm spending.

With cigars - While I do enjoy a Quinteros from time to time, there truly is no comparison to a Cohiba or a Davidoff. And - in that - even more mind boggling - could a Quinteros possibly be only "pennies" difference to produce than a Cohiba or a Davidoff?

I think you'd find it far easier arguing that lead can be turned into gold...

[badwhale]

wow. Someone just pressed George's button.

[ggiese]

wow. Someone just pressed George's button.

Yeah - I'll admit it - I am a bit "rattled" by Craig's thoughts. I'm really trying my damndest to get my head around Craig's thinking.

Cigar pricing seems to me to be pretty objective, although it's hard to argue that there might not be some subjectiveness to it. Maybe it's overkill, I just keep coming to the same place no matter how I slice and dice it. Maybe I'm missing something, (not withstanding Lew Rothman's opinions) there's no way it's logical to conclude that a cheap cigar is only "pennies" difference to produce than a high-end, top of the line premium.

Bottom line - while "opinions" are mostly okay, I think whomever reads our forum is entitled to the RIGHT information. So, for example, if a member writes a cigar review suggesting that a La Flor Dominicana Chisel is the mildest cigar they've ever tasted - you can confidently bet your next paycheck I'll be asking some "clarifying" questions!!!

But yes, Will, I am anxiously awaiting understanding of what I may have missed here...

[badwhale]

Maybe "pennies" is the exaggeration.

On the other hand, is a Padron 80th ($30) really $26 more expensive to produce than a 3000 ($4)?

[buzz]

A Cohiba costs more to make than a Quintero, but the difference is closer to pennies than to 10's of dollars.

You're suggesting it is within a few "pennies" to make a short filler (left over scraps) machine made cigar, versus a long filler hand made cigar? And (more importantly) a low-end machine made cigar versus a handmade cigar that is made by the best cigar rollers Cuba has to offer? Seriously?!?

I didn't read this as Craig saying it was within a few pennies, but that it was closer to pennies than 10's of dollars... half way between a few pennies (max 4 cents?) and 10's of dollars (min $11?) would be $5.48, so "closer" would mean anything lower than $5.48, right?