An Interview with Oscar Boruchin

Owner of Licenciados and 8-9-8 Collection cigars.

(continued from page 3)

Boruchin: In 1985, I bought the whole company.

CA: When you started in 1981, what were the total sales?

Boruchin: Less than $2 million a year.

CA: What were the sales in 1985?

Boruchin: In '85 we grew the business to about $4 million.

CA: Does that mean that most of the growth was in the wholesale business?

Boruchin: Yes. Don't forget Mike didn't carry a full line [at retail] of merchandise from everybody. When I came in with the wholesale operation, he was only carrying two or three sizes of the Te-Amo. Then we added the whole line. He was only carrying two or three sizes of Montecruz. We added the whole line. The only company where Mike was carrying the whole line was General Cigar merchandise. While he was adding all of this merchandise for wholesale inventory, retail sales grew, too, in the different sizes.

CA: Did the retail business grow the same as the wholesale side or did it contract?

Boruchin: Our retail business was growing in a dying industry. A lot of retailers were going out of business. A lot of small shops were closing. But we were discounters. We were a consumer-oriented company. We were offering popular cigars at a tremendous price.

CA: Where did most of your business come from--residents of Miami Beach or tourists?

Boruchin: It was a combination. When I arrived, Mike had discontinued his mail-order business, so most of the business did come from the residents and tourists. In 1985, I started the mail-order again. Luckily, he had kept his records, so the minute I had full control of the company, I put out a letter which went to maybe 4,000 or 5,000 names. I re-established the mail-order side. We have been growing ever since. But other stores kept going out of business. They couldn't afford the rent on the malls or whatever. Maybe we were selling fewer cigars, but our share of the market was growing.

CA: I remember when I visited Mike's in 1991, the thing I loved about it the most was--forgive me for saying this--but it was a dumpy, almost garage-like store that was loaded with merchandise. Anyone who loves cigars would walk in there and thought they died and went to heaven. It wasn't fancy. There was nothing elegant about it, it was down and dirty. The counter cases looked as if they had been there since 1950. Which cigars were selling well then?

Boruchin: Te-Amo was always very strong, and Montecruz and Don Diego were also very strong brands. All the national brands were doing well. We also did a tremendous business in the seconds of Macanudo and Partagas, which we had an exclusive on from General Cigar.

CA: Did people know they were buying seconds from Macanudo?

Boruchin: Yes, they did. We didn't necessarily advertise it, but sometimes the sales staff would tell people. Normally, we just said they were seconds of the best brands on the market. People understood, because the sizes were identical and the color of the wrapper was identical. But we were careful. We felt, and General Cigar felt, that it might hurt the main brand.

CA: You have the three tiers of your business--mail order, wholesale and retail. By 1995, what were the total sales of your business?

Boruchin: Last year, we did about $11 million.

CA: What was it in 1992?

Boruchin: We did around $7 million in 1992.

CA: In 1996, what are you projecting now?

Boruchin: Over $22 million. We've doubled the business.

CA: In one year?

Boruchin: In one year.

CA: Of the $22 million, how much is mail order, wholesale and retail?

Boruchin: At one time, wholesale was 80 percent, 85 percent of my business. Today, it's 50 percent. The reason in the change is that our retail business has increased so much that no matter how much more the national companies have been giving us, we don't have enough to wholesale it. We are selling directly to consumers. The store is tremendous. The mail-order is tremendous. So, wholesale and the retail side is about a 50-50 split.

CA: When you moved to your new store last year, you were very nervous because you went from a little hole in the wall to a good-sized store.

Boruchin: We went from 1,800 square feet to 16,500 square feet. And, instead of renting, we bought the building for over a million and a half dollars.

CA: It sounds like you did the right thing.

Boruchin: God knows. The business was already pointed in the right direction two years ago, though. And, it looked like we couldn't continue on Arthur Godfrey Road. I was convinced that I had to move in order to even maintain the business that I was doing.

CA: It would seem that maybe the biggest change from a retailer's or a wholesaler's point of view would be that in the '80s you could get as much of any brand as you wanted, and today you're dependent upon your relationships with the manufacturers. Is that true?

Boruchin: Yes. But we were lucky. We were in a position in the market when the Cigar Aficionado revolution came that helped us cash in. We were probably the second-largest company in the United States in the cigar business. We were in the right place at the right time.

CA: Second to JR Tobacco.

Boruchin: Yes. By the way, we are very friendly competitors and personal friends. He [Lew Rothman, owner of JR Tobacco] is one of my largest suppliers of cigars.

CA: Many cigar lovers are frustrated about how difficult it is to get their favorite cigars. They always ask, "How long will it be before we can get the established brands?" What do you think?

Boruchin: I think every manufacturer is making tremendous investments, from growing tobacco to training cigar makers to making more boxes. You know the shortage of boxes is one of the biggest problems, even though it's not mentioned very often. I would say that if the consumption continues to grow at this rate, [we may never catch up]. If at one point, the growth does slow down, the bigger manufacturers will catch up. I actually hope it never happens, even though some people are frustrated. You know why? There're a lot of great products on the market, and a lot of new products are coming to the market. Some of them are great, and you can still find good cigars. When I left my place in Miami, I had a good supply of almost every major brand. That doesn't mean that two weeks from now we might not be out of everything.

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