Contraband: A Story About Value

Taking a break from finance to share a personal story. I found a cigar label that I have been saving for many years and it sparked this walk down memory lane. I hope you enjoy.

When my wife and I were celebrating our first wedding anniversary, we wanted to do something special but within reason from a cost perspective. Since we live in northwest Ohio, we’re not terribly far from Windsor, Ontario. Surprisingly, Windsor actually has a really fun wine trail when you get outside of the city. We did wine all day and it was a delicious and enjoyable afternoon. When all of the fun from the day was over, the only thing I personally wanted to check off life’s to-do list while we were in Canada was try a Cuban cigar. At the time, I had never had one before.

I enjoy cigars (in moderation, of course). To be clear, I’m not talking about Black and Milds, I’m talking about real cigars. The premium hand rolled stuff. The kind you see the Don smoking in a mob movie. When a cigar is well made and consumed properly, it can be a deeply therapeutic experience. When it’s not well made or consumed properly, it will probably provide a poor experience.

Cuban cigars specifically have been somewhat mythologized over time. A big reason for that is because they have been considered contraband in the United States for decades and they carry a forbidden fruit effect for the user because of that. As readers of this stack probably already know, the United States has a rich history of rules for thee but not for me. One of the last things JFK did before signing the embargo was have Pierre Salinger (as he claims) basically corner DC’s Cuban cigar market for Kennedy just before his favorite sticks became illegal for everyone else. The pre-Castro is incredibly sought after. Here’s Michael Jordan talking about Cuban sticks and cursing a lot (GOAT):

Now, I can’t comment on pre-Castro or pre-embargo Cuban cigars. Those are highly sought after specimens and I doubt I’ll ever get to experience one. But I’m a very lucky person, and I’ve been in a position where I’ve been able to occasionally try post-embargo Cubans. As somebody who has now had several different Cuban cigars, do you want my honest opinion on them? Broadly, they’re very overrated. I’ve had some that are absolutely wonderful and I’ve had others that are massive letdowns. One of the most renowned Cubans is the Montecristo #2. I’ve had multiple. It’s fine. The Bolivar Petite Corona is better and it costs less. All my opinion, of course. Taste is completely subjective.

But this gets us to value. Is the Bolivar Petite Corona a better value than cigars from other countries that are freely available in the US market? For me, no. Not by a long shot. If you’re lucky you might be able to find the Bolivars for $10-15 per stick from an international company that is willing to ship to the US, but there’s a tremendous amount of risk in doing so:

1. Potential confiscation at US customs

2. The site could be a scam, take your money and ship you nothing

3. If you actually do get cigars, they could be fake

And this brings us to the point of the story. When I was in Windsor for that first anniversary celebration, I didn’t have to worry about number 1 or number 2. Even at a silly markup, the risk/reward calculation had changed. My wife and I went into one of Windsor’s numerous cigar shops and we picked out a Cohiba Edición Limitada 2004. We paid, we left, we walked down the street to the Detroit River and I smoked that thing down to the nub while chatting with the love of my life and looking at the Detroit skyline (it’s actually a very nice view from Windsor). It was an immensely enjoyable experience and I remember it very fondly.

Ready for a truth about that Cohiba Edición Limitada 2004?

… it was fake.

How do I know?

There are varying levels of fake Cuban cigars. The market for fake Cubans is massive. If you’ve ever been on a cruise or on a beach in another country and you’ve had a guy come up to you to sell you Cubans, I’ve got bad news for you; you’ve almost certainly been sold fakes if you actually bought them.

An abomination

A dead giveaway for Cubans is often the packaging. It’s very common to see boxes like the one in the picture above. These are fake without any shred of doubt. The labels are all uneven. The first cigar isn’t even facing the proper direction. Cohiba is the flagship cigar from Cuba, there is no chance the factory would ever let a finished product go out like that. So this one is obvious. But there is an even bigger reason beyond the optics of this that more seasoned cigar aficionados should pick up on; Cohiba doesn’t get distributed in 5 packs with glass-top boxes. This is not something the casual smoking tourist would ever know and it’s how the scammers are able to pull it off.

Given the box has all of the stickers and seals that would suggest it’s straight from the factory, it’s a certainty that the cigars are as fake as the packaging. Believe it or not, these are actually the low-effort fakes. If you smoke premiums, but just don’t know the Cuban market, you’ll know the second you light one of these up that they aren’t the real deal. Trust me, I know as I received one as a gift awhile back. Already well aware they were fakes when received, I decided to try to smoke one anyway just to see how it was and I couldn’t finish it. I cut open the second one to see if it was even long-filler. Upon seeing what was actually in the second stick (floor sweepings), I threw away the remaining three. It’s the thought that counts. #LowEffortFakes

But back to Canada: we didn’t buy any cigars out of a glass top package or from a dude on the street. We went into a real life, tobacco shop in Windsor Canada and still managed to buy a fake Cuban. Like I said, there are varying levels of fakes. There are the obvious scams like in the picture above and then there are the ones that are much harder to figure out. My cigar was actually phenomenal. It was smooth. It was flavorful. It was complex. It was a high end stick for a high end customer that had a fake label put on it. This was a higher effort fake.

It was tricky, but I figured out it was fake after doing research well after the fact. What tipped me off to it possibly being fake? The cigar I had in Canada was a Cohiba Edición Limitada 2004. I was able to acquire a regular production Cohiba years later that I was highly confident was authentic and I noticed a very slight variation in the label (I keep the labels from really special smokes). If it wasn’t for that variation, I’d have never known. But it tipped me off that something was different about the Canada stick.

Heading into Canada, I knew far less than I do today about Cuban cigars. I knew of the major brands and some of the more famous sticks but I knew nothing about the Edición Limitadas, or EL series. As you’ve probably deduced on your own, it translates to “limited edition.” These are the super small batch, very rare vintages that are supposedly the best quality tobaccos. And yes, they’re even more expensive than the regular production Cubans (which are already very expensive).

Over the last several years, there have been 3 annual Edición Limitada releases and they vary year to year. For instance, Cohiba doesn’t get an EL every year. But each year, the EL selections are very specific as to what they are and what the sizes are. I decided to look up the Edición Limitada line for 2004 and I found that while there was indeed a limited release Cohiba that year, it was produced as the double robusto vitola (size and shape). Mine was a piramide. The Cohiba EL piramide was the 2001 release. Fool a Cuban cigar expert? Probably not. Fool a dope like me? Sure did.

I know for a fact my cigar was a piramide. What I don’t recall is if I asked the shop owner to cut my cigar for me. But I know he did. Why? Doing me a solid? Maybe. Or, perhaps he wanted to cut off the piramide cap before I left the shop just in case I somehow figured out the 2004 was actually a double robusto before smoking it - it would have been harder to distinguish that with the cap already cut off. So not only was I absolutely sold a fake cigar, but I’m also fairly convinced the shop owner knew it was fake at the time.

This matters because the guy owns a stationary business. I’m sure there are a lot of tourists like myself who come over the border to try Cubans, but I’m sure there are people in Windsor who like cigars too. If any business at that shop is repeat customer business, then the cigars have to not suck. The point is, this was a much more sophisticated fake than the glass top and it helps lead us into the point of this entire post.

Where The Value Is

Is there anything objectively different about Cuban tobacco and Honduran tobacco? Perhaps. There are likely differences in soil and climate that create the differences in flavor that are produced by the tobacco from each country. But any objective differences in final product are entirely at the mercy of subjective preference. And that subjective preference is where so much of the value in Cuban cigars comes from in my view.

It isn’t just the objective attributes like soil and climate that dictate what makes an enjoyable cigar. Those are the inputs that impact the tobacco as a material, but what makes a great cigar truly a work of art is the blending and the time. I could start growing tobacco myself if I had land that could actually produce a yield. But I’ll never be able to make a cigar as good as Pete Johnson, AJ Fernandez, the Fuentes, or the Padron families.

With that as our framework, does it ultimately matter if the cigar had a Cohiba label or if it was from Cuba? Or it does it matter that I enjoyed the cigar and that it was an amazing compliment to a human experience? Did I enjoy it more because I thought it was Cuban at the time? I suppose we’ll never know.

Why did I enjoy that experience so much? Was it because the cigar was soooo good? Not really. The cigar was indeed very good. But the environment was better. What made the experience so wonderful was where I was, who I was with, and what we were doing; just talking and reflecting. Reflecting on the day. Reflecting on our first year together. The environment made the cigar, not the other way around.

I’m reminded of a really great piece of advice from a documentary about bourbon. I don’t want to ruin the documentary but the cry your eyes out scene is near the end when Freddie Johnson, a Buffalo Trace employee, was telling the story of when the distillery achieved a significant milestone. He wanted to celebrate the achievement with his father and his brother by toasting with a 20 year old bottle of Pappy Van Winkle. After pouring the drinks, Freddie tried to put the stopper back in the bottle and his dad told him not to:

There will always be more old barrels of bourbon being made. Look at me and look at your brother; we’re the fragile part of this whole thing. So never ever save old bottles of bourbon. They’re meant to be enjoyed with friends and family at the moment.

I’m intentionally leaving out a key part of the story so you can watch it for yourself:

But the scene really sums up the entire point of this post. We have no idea what the heck tomorrow is going to bring let alone what the next year is going to look like. Spend time with people you care about and you’ll be fine. That’s what I believe anyway.