A Conversation with Nestor Miranda
The founder of Miami Cigar & Co. talks about the rise, fall and rebirth of his Don Lino brand.
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Q: What was the relationship between UST and Southern Wine?
A: UST has various companies. One of the companies is in the wine business. Southern Wine California was doing a great business for UST. Southern Wine decided to go into the cigar business. There was a big boom in the cigar business. When [UST] came to Miami to sign the [distribution] contract, they took away California. I said, "Why?" They said, "We're going to give it to Southern Wine." I said, "I think they're going to use your cigar for cross-merchandising." They sold to liquor stores.
Q: So you never sold their cigars in California?
A: The only thing I could sell in California was Don Lino, which I owned. We did extremely well—over and above expectations. And something I'm grateful for is when we lost the line, the tobacconists in the U.S.A. didn't abandon me, they helped me.
Q: What did they do?
A: When the liquor people went to the tobacco stores, they said, "We don't want UST." They closed the door to those people.
Q: Who did?
A: A lot of tobacconists. Not all of them, but a lot of them. So [UST] lost the feeling for the business. But they lost everything—they lost all the cigars, the investment in humidors, millions of dollars. Because they couldn't sell it. You can't take time from a liquor salesman to sell cigars. You need more time. In the liquor business, we say, "How many cases do you want?" It's different.
Q: When you got that initial phone call telling you about the change, did you have any more Don Linos coming?
A: Nothing. Nothing.
Q: So you had nothing in the warehouse?
A: Just a few boxes of León Jimenes, which were gone the next day. And tobacconists were getting mad.
Q: What did you say?
A: They couldn't believe I didn't have cigars. They thought I was selling the cigars to someone else.
Q: So everyone thought you were holding back. How many phone calls were you getting?
A: It was terrible. Guillermo would call me from the Dominican Republic and say, "I will send you anything I can." When they shipped it, I sent it out right away. I went from 12 million cigars to 3.5 million [in 1997]. I had to fire people.
Q: How many?
A: I had six people in the warehouse—I kept one. And I had 14 people in the office, and I kept six. And this happened at Christmastime. I had dinner for everybody. I gave them the last check. I said there is nothing I can do. I said I'm sorry.
Q: That must have been a very tough time.
A: I had, probably, one of the worst Christmases in my life. It's tough, because you were doing the job well. My promise to [UST] was [to sell at least] 3 million [of its] cigars. And I did 6.5 million. Of course, the boom was there, but it doesn't matter to a certain point. It took me 10 years, 10 years of my life, to go back to the roots. I'm happy, to the point that I still have Don Lino around, [though] not the way I used to, and I have the support of the tobacconists, and I had a great trade show.
Q: Tell me what happened to Don Lino, be-cause you had a brand but no manufacturing.
A: It took me a lot of time and money. I went to the Canary Islands, and I found a guy who sold me a good cigar, so in the Canary Islands we lost all the money, because the cigar they made for me was not the same.
Q: Did you invest in a factory?
A: No, I invested in buying cigars, and I paid ahead of time. Then they sent me machine-made cigars instead of handmade cigars. I lost almost $80,000. I wanted to buy a factory in Nicaragua. Luckily I didn't put the money in that business, and I kept looking for people to make cigars.
Q: Did your try the established manufacturers?
A: I couldn't. I didn't bother anybody. I used my logic—if they don't have cigars for their brand, how can they make my brand? I was obligated to wait, and lose money. The expenses were still there, but the profit was not. So I had to really control my habits. We controlled our habits. I had great, great support from Guillermo León. Without him, I wouldn't have a company.
Q: He finally agreed to make Don Lino. When was that?
A: Early 1999.
Q: So it was off the market for two years—nothing in '97, nothing in '98.
A: Even if you have a good reputation, if you're out of the market for two years, you have to start over again. It was made in Honduras; now it's made in the Dominican Republic. Our business is increasing every year. We're happy with Don Lino. I haven't reached the point of what it used to be, but I'll get there.
Q: When did you sue?
A: In July 1999. One of the reasons I waited, I didn't want to put what little money I had into litigation. I couldn't afford it. I was involved in a suit with another company that sued UST. I had to go to Colorado for a deposition against UST. And one of the lawyers showed me a letter that was about the elimination of Miami Cigar [as a distributor]—and this was from August of 1995.
Q: So when you saw that letter, how did you feel?
A: I felt so ashamed. The lawyer said, "We want to represent you."
Q: That lawsuit had nothing to do with cigars?