A decade ago scores of new cigar brands went on sale. Most are gone, but the few that remain have built a comfortable niche in the industry
The scene: a cigar dinner in New York City in the mid-1990s. A burly, goateed man wearing a blue suit walks up to two smokers, a simple, unvarnished box of cigars tucked under his left arm. He offers his right hand in a shake. "Doug Wood," he says with a small smile and a sleepy, friendly gaze. He launches into a casual, short speech about the merits of his cigar—one of dozens and dozens of unknown brands invading a booming market—and hands one to each of the men. It's a process he'll repeat over and over for years. Nearly a decade later, Wood is still selling cigars. His La Perla Habana and Black Pearl brands, while hardly mainstays in most stores, sell well enough to earn him a living. That's more than can be said for many of his cigar-boom contemporaries, now long gone, off to try new businesses after their brands faded into obscurity. Today's cigar industry goes beyond the giants Altadis and Swedish Match, the iconic Padrón and Fuente families, and hardy boutique cigarmakers such as C.A.O. and La Flor Dominicana. A number of companies survived the post-cigar-boom fallout through persistence, creativity and sacrifice. The following survivors have each crafted a niche in the cigar market.
LA PERLA HABANA
When Wood entered the cigar market in 1996 he couldn't rely on it as a sole income source and was forced to make ends meet as a driver for actors and producers in Hollywood. He also owned a stake in a Beverly Hills cigar bar. "It was difficult," he says, sitting behind a simple table at his modest booth at a recent trade show. His sister serves as spokesmodel and greets tobacconists, and a neighbor helps him take orders. His company, Burlwood Group Inc., has three full-time workers. "I can remember the days when I didn't have cable TV because they shut it off. I couldn't pay the bill. I'd like to say the company is rich. It's doing well. Now I have a beach house and things are good."
Wood survived in the shadow of the industry giants by treating small orders with respect. "Smaller retailers, that maybe couldn't get an account with Fuente, found us, and stuck with us. Mom-and-pop tobacconists," he says. "A lot of cigar companies that got in during the boom wanted to cash in. They weren't willing to send out the two and three boxes a month to the little customers. There were a lot of cigar companies that didn't want to mess with that."
Like many smaller cigar companies, Wood doesn't make his own cigars. The Toraño family makes his Black Pearls and La Perla Habanas in Honduras and Nicaragua.
Wood still specializes in small orders, finding a receptive ear in cigar shop owners with crowded humidors. The little shipments aren't feasible for bigger companies. Some cigar shops, says Wood, "can't do 10 different sizes, they can't do a bunch of everything, but they can take three or four of our best cigars. We make cigars one at a time, and we sell cigars one box at a time."
Rubin, now 44, was an importer of bolts, nuts and screws made in China and Taiwan, and had success with a product built to meet hurricane codes. As business grew, he and his father sold the company for a comfortable sum that allowed Rubin's father to retire and gave Rubin the freedom to pursue a new field. "I just decided that whatever I did next was something I would enjoy, something I'd have a passion for. Something that wasn't a commodity."
A passionate smoker who has enjoyed cigars since his early 20s, Rubin incorporated Alec Bradley in 1996, naming the company after his two sons, and served a one-year consulting contract with the buyers of his company before selling his first smoke. He had no history in the business save for the fact that his father and grandfather once sold cigars and candy in New York City.
"Our original business plan was to provide cigars to golf courses. Our first product was called Bogie Stogies," he says. "Being a Florida boy, I didn't realize half the country doesn't play golf six months out of the year," he recalls with a laugh. "It was a bad business plan."
Rubin next tried selling Gourmet Dessert Cigars—flavored, handmade, Cuban-sandwich-style smokes—for around $2.50 each. The Florida-made cigars kept the company above water, but times were lean. Rubin didn't draw a salary, and the company was losing more money than he realized.
"On April 19, 1999, my partner left," he says. Rubin looked over the books and was shocked. "We were almost bankrupt. I went home that day and I said to my wife 'I don't know if I can pull us out of this mess.' "
Rubin decided to stick it out one more year, and try to make enough to at least get his company out of debt. That summer, he met Rafael Montero, who told Rubin that Hendrik Kelner, the maker of Davidoffs, could make him a cigar brand. Rubin asked Kelner to put his famous name on the smokes, and they created a brand named after one of Kelner's factories, Occidental Reserve by Henke Kelner. (It was later renamed simply Occidental Reserve.)
Famous name or not, breaking into the saturated 1999 cigar market wouldn't be easy. Bargain bins were bursting with unwanted smokes, and established brands, such as Macanudo, were no longer back-ordered in the millions. Rubin sent out 500 sample packs of Occidentals to retailers, making no mention of price. "We just asked them to smoke it," he says. Rubin then told them they could have the cigars in bundles for just over $1 each, and the cigars would have a suggested retail price of $2.50. Orders came in. It was a ridiculously low price for a long-filler cigar made by one of the big names in the business, but it was the only way for a desperate Rubin to get the brand accepted.
"I put it all on the line. We were coming off a flavored cigar with no other brands. This had to work," he says.
Occidental Reserve allowed Rubin to pay his bills and eventually get out of debt. Alec Bradley showed its first profit around the end of 2000. "Things are doing particularly well [now]," he said in September. "August of this year was our best month in our history. Our growth is in double digits."
Montero is still employed by Rubin, and Kelner makes four of his premium cigar brands, which include Pryme, Alec Bradley Trilogy and Alec Bradley Havana Sun Grown. The Toraños and Nestor Plasencia make some of his cigars in Honduras, as does Tabacos Puros de Nicaragua in Nicaragua.
Rubin plans on selling "a couple of million" cigars this year. "We're a profitable company, we still put a tremendous amount back in the business; we're growing the business. You have to have a long-term approach to this business. We feel [customers] always get more cigar than what they pay for."
Kiki Berger began making cigars in Nicaragua in 1996. "When I first got here, it was the time the Sandinistas had just left," he said in Nicaragua in 2003. "The country was just starting to boom. I went from a little factory to building a bigger one."
Unlike many of his boom-time counterparts, Berger showed his devotion to his craft by investing in his business and setting roots in Nicaragua. (He even married a Nicaraguan woman.) He planted a field of tobacco directly next to his factory on the Pan American Highway in Estelí, Nicaragua, and built a curing barn.
"The only way you can have good quality tobacco is, number one, you have to grow it, and, number two, you have to cure it. I look at Padrón," he says, referring to his more famous neighbor, who often invites him over for coffee or drinks. "And I look at his success. You have to copy the best."
Berger once focused on making cigars for other companies, whichincluded boomtime brands such as Cupido, but now he's spending most of his efforts on his own products, specifically his Cuban Crafters brand.
Berger proudly shows off his property to visitors, highlighting outdoor seating areas he's having built to allow workers or guests some moments of relaxation. He's outfitted an office with two old barber's chairs, which he plops into, kicking out his feet, a plume of cigar smoke pouring from one of his dark puros.
Of all the brands to survive the cigar boom, one of the most unlikely has to be Graycliff. Scores of new brands were driven from the market when older, established brands were able to increase production, and consumers realized that the famous brands were often cheaper than the newcomers. But one of the most expensive cigar brands created during the boom is still on sale today.
Graycliff cigars are made in Nassau, the Bahamas, and they debuted in 1997 in the United States with eye-popping prices, up to $26 for one cigar. Few things are cheap in the Bahamas, and importing tobacco results in steep import taxes. Labor is also costly when compared with Central America.
Enrico Garzaroli created the brand after he came to Nassau by way of Como, Italy, in 1974, and bought the Graycliff mansion. The landmark was created in the 1720s, and Garzaroli turned the palatial retreat into a posh restaurant and hotel featuring exquisite dining and first-class service, building a wine cellar with a stunning array of bottles from around the world. "I tried to have wines the people had never heard about," he says. "The food is only a piece of the puzzle."
Garzaroli is a huge man with a personality to match, and a zest for the good life. He'd long loved cigars, and fashioned Graycliff into one of the world's more cigar-friendly places. Ashtrays seem to cover every flat surface. The restaurant did a large business selling Cuban cigars, and once had its own Casa del Habano. A dispute with the Cubans led Garzaroli to create his own cigar factory right behind his hotel. With the aid of Avelino Lara, who once ran Cuba's famed El Laguito factory, Garzaroli set up a small cigar factory featuring retired Cuban cigar rollers.
It wasn't easy to sell such a pricey smoke in 1998 and 1999. "What I was producing was more than I could sell," says Garzaroli. "People wanted to pay ten cents on the dollar."
He resisted discounting his smokes and called on an attitude honed from running a first-class restaurant: Be picky in the face of tough times. He also was able to subsidize the cigar segment of his business with his core business, and always had strong sales in the Bahamas, both in his restaurant and in the Atlantis Hotel.
"We had pretty good faith," he says. "A lot of cigars on the market were pure garbage. So I said, 'Soon these fellows are going to disappear.' "
Despite the high prices, Graycliffs are still selling in the U.S., and last year about 1.2 million cigars from the Bahamas were sent to the United States. Garzaroli, who is now 60, also sells in Italy, Switzerland, Russia and other international markets. "It's not that we have a million dollar buyer, but we have a lot of very good persons that put them in the hands of the right people," he says. "Now the cigar company is almost even with the restaurant sales."
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