We sit down with the president of Toraño Cigars for a wide-ranging discussion.
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Carlos Octavio Toraño, known to the cigar world as Charlie, was born into a family that has worked with cigar tobacco for close to 100 years. Toraños have worked in every branch of the cigar industry. First they were leaf brokers, then growers, and later became liaisons between brand owners and cigar factories. After they acquired their own factories, they made private-label cigars and ultimately created their own brands.
Today, Charlie and Carlos Alberto Toraño make up the father-son team behind the many varieties of Carlos Toraño cigars. In April, the 42-year-old Toraño visited Cigar Aficionado's New York City offices and sat down with senior editor David Savona for an interview covering the history of the Toraños, the recent sale of the company's factories and his views on the normalizing of relations with Cuba.
Savona: The Toraños have such a rich history. Can you share some of it with us?
Toraño: I'm lucky enough to be the fourth generation in the tobacco business. Our history dates back to 1916. It started when my great-grandfather, Santiago Toraño, traveled from Spain to Cuba, and the legend is that upon arrival, he fell in love with the tobacco leaf. He was originally a broker of leaf tobacco. As he learned tobacco, he learned how to grow tobacco himself. My great-grandfather was blessed, because he had three sons that ended up being as passionate as he was about the tobacco business: my grandfather Carlos Toraño, and his two brothers, Jaime and Jose. The three brothers and the father continued to expand their business growing tobacco in all the regions of Cuba.
Q: Which regions?
A: He spent most of his time in the farms in the Pinar del Río region and Vuelta Abajo, and primarily growing wrappers. When my father was growing up in Cuba, they had two homes, one was in Havana, and the other was out in the farm. My father always says that he actually saw very little of his father, because he was always out in the fields while my father was in school. So there's no doubt that my grandfather was a guy who lived, breathed and ate tobacco. That was his passion, frankly, more so than his own family. My father and I are very close. But my father was not close with his father, because there was just no time together.
Q: Where did your grandfather sell tobacco?
A: A big part of the leaf business back then was also exporting to the United States. He had a relationship at that time with General Cigar, with the Newmans, and several other companies. My grandfather's brother-in-law was Ramón Cifuentes; he was married to my grandfather's sister. So you can imagine they were selling to the Partagas Factory. And they all lived in the same block.
Q: What happened after the revolution?
A: My grandfather ends up staying in Cuba after the Revolution. Apparently his side of the family did think that Fidel and his group were going to bring back the constitution that had essentially been eradicated by Batista. My mother tells me her side of the family was very concerned from the get-go, and when Fidel starting giving his victory speeches her side of the family knew the jig was up. After it became clear that the situation was not what they had hoped, the family left. My grandfather, because of his relationship with General Cigar, he goes and he works with General in Connecticut. I think he only did that for a year or so. The Cullmans [the family that owned General Cigar at the time] tried to help my grandfather.
Q: Obviously he lost everything in Cuba.
A: Yes, he lost everything. My father remembers a conversation between Cifuentes and my grandfather on whether they should transfer [money] out. My grandfather says, "No, we'll be all right." So they lost it all. Within a year after he leaves, he goes over to the Dominican Republic and starts growing tobacco there. Meanwhile, my father didn't have much of an interest in getting involved in the tobacco business at that time. He was selling computers. He was not made a part of the business. Then when my grandfather passes away in 1970s, his brothers had this company called Toraño & Co. and they decided to grow tobacco in the Dominican. That's my father's entry into the tobacco growing business.
Q: When your father started growing tobacco, what thoughts were going through your head?
A: In the '70s and the '80s, the tobacco business was not a good business. I was far away from it—they were growing tobacco in the Dominican, and I was far away in Miami. I would hear the stories, and a lot of what I heard was the struggles. We can't imagine today having premium-grade tobacco and not being able to sell. I was going to be a lawyer.
Q: You had a love for law, didn't you?
A: That was my goal in life, to become a lawyer. I started working as a lawyer in August of 1992. In May of 1996 I had that pivotal conversation with my father while we were having dinner, I asked him if there was room for me in the company. He said that there wasn't just room for me, but a need for me if I was interested. My father never approached me to leave the legal world. He was afraid to entice me out of my practice because things were going well for me. However, I always kept my eye on his business, and the first chance I saw to help him grow the business I grabbed it. So, my first day in the cigar business was June 1, 1996. Although I have never practiced law again, I still keep my law license active.
Q: Let's talk about your cigars. What is the house style of the Carlos Toraño brands?
A: I think there are three elements to the signature that is Toraño. The first is blending. Part of our philosophy is to use a variety of different tobaccos. That comes from the comfort level that my father had, and passed on to me, being so familiar with tobacco from different countries. If you want a good, solid medium body, and the rich flavors and different flavors, that's another thing that is our signature. And the third thing, the Toraño cigar is an affordable cigar.
Q: Is there a country you're most proud of using?
A: I think there are tobaccos that we use today that have become more popular over the years. The first one is Brazilian tobacco. We were using Arapiraca when Brazil, for whatever reason, didn't have the reputation. I think another example is Colombian tobacco. We've stepped out of the box. We've done the same thing with Panama. I think there's definitely more of a trend over the last several years to blend more, but at the factory level we were at the forefront of that.
Q: There must be some tobaccos that just don't work in a cigar.
A: Sure, I remember one time that we tried a tobacco from India, and I said this isn't going to work. We also tried some wrapper quality tobacco from Wisconsin and Pennsylvania. It was reddish, it had a certain shine. We really tried hard, but we just couldn't use it.
Q: What's it like competing in this market today compared with the boom years?
A: The shelf space is very tight. I think, at least from our standpoint, you can never rest on your laurels. Any brand that takes for granted any position that they have in the market is going to lose that market share.
Q: What has changed since your sale of your cigar factories in January to the Scandinavian Tobacco Group, which now makes your cigars?
A: One of the nice things about this new phase in the Toraño history is our exclusive focus is on the Toraño brand now. My focus and my father's focus now is to spend more time with the consumer, with the retailers, promoting our brand and telling our story with the Roots Run Deep tour. We have events through November. For us to compete, there's no more effective way in our industry than putting your cigar in somebody's hand, telling them your story, and letting them smoke it. As tough as this year is, the Toraño brand is up.
Q: What precisely did you sell?
A: We had two cigar factories, one in Honduras, one in Nicaragua. These factories employed over 1,000 people, these are organizations we built over the last 12 years.
Q: And the capacity was around 15 million cigars?
A: Above 15 million.
Q: All handmade?
A: All handmade. 100 percent long filler, also. We made premium cigars for Carlos Toraño, C.A.O., Gurkha, Dunhill, La Perla Habana, bundles for J.C. Newman, etc. Scandinavian Tobacco Group, which is one of the largest machine-made companies in the world, two years ago really made their first entrance into the U.S. market vís-a-vís their acquisition of C.A.O. International. We had been making most of the premium cigars for C.A.O., so when they came into the picture, early on they expressed an interest in eventually controlling the production or having ownership in the cigar factories.
Q: Does S.T. Group own all its machine-made factories?
A: Absolutely—this is definitely a group that is used to owning the production side. From the Toraño standpoint, we thought selling would enhance the strength of the factory, because Scandinavian Tobacco Group has the resources to buy a tremendous amount of inventory of tobacco, and to compete with the biggest cigar factories in the world for limited resources of tobacco. That's only going to be positive for the Toraño brand. The Toraño family continues to own and control the Toraño brand.
Q: Some people thought you had sold the brand.
A: This isn't going to happen, but tomorrow morning I could open up my cigar factory, making Carlos Toraño brands next door. Because we own our brand, we control our production. What we sold was the private-label business, and the physical entities that manufacture the cigars. I'm still involved.
Q: You have a management contract.
A: That's right. I'm working with S.T. Our cigar factories, that were owned by the Fidel Olivas family and the Toraño family, I think we built a hell of a cigar factory. We were competing with the big guys, but you also need big-guy resources to compete in the world of tobacco. S.T. has a great philosophy; if it ain't broke we're not going to fix it, we're going to enhance. They're going to make that existing organization even better, but they're not going to change it.
Q: Did they offer to buy the Toraño brand?
A: The Toraño brand was not for sale.
Q: What about your numbers? Will they expand the factories?
A: The factory will expand, because the factory anticipates sales expanding.
Q:You refer to it as one factory, although there are two factories.
A: For me it's always one entity, we call it one entity, two campuses.
Q: What is your linchpin cigar?
A: The flagship of the Toraño brand is the Exodus 1959, and this year marks 50 years since [the Cuban] exodus. We've always been very careful to say we're commemorating, not celebrating, because what happened in Cuba was tragic then, and it's tragic today. I think this Exodus 1959 50 Years cigar is about the fact that we triumphed as an industry. I'm really excited about this blend. I think we can take pride in our Cuban roots.
Q: Speaking of Cuba, the news is all about the Obama Administration flirting with normalizing relations with Cuba. It certainly seems that this Administration has the best chance of any in memory of dropping this embargo. If this happens, what happens to the cigar industry and what will change about Toraño cigars?
A: First, I want to say it is my sincere hope, and reasonable request, that if the embargo is lifted, and we talk about "normalizing" relations with Cuba, we do so in an environment where we see significant changes in human rights, elections, and the freedom of the Cuban people to enjoy the fruits of their labor. [Also] we have to be allowed to go and open up a cigar factory, finance growers of tobacco, and compete against those brands that would be exported from Cuba to the U.S. I'm not asking to be paid back for the land that this government stole. I'm just saying that you cannot and should not allow the free flow of cigars from Cuba to the U.S. and not allow the families who had brands, who had factories, who had tobacco to go to Cuba and compete in our own market against what Cuban brands are brought in.
Q: Does it bother you? It happened to so many people in the cigar industry—the factories were taken, the fields were taken.
A: I was born in '67, and it bothers me today as if I were standing on that farm with my grandfather and it was taken from me today as it was 50 years ago. I think it would be another injustice to suddenly be in our market, after having spent 50 years recreating the cigar industry that was taken from us, and to suddenly see an influx of Cuban cigars back into the U.S., and yet [not be able to] go in there and simply compete. I'm asking for a level playing field. I'm not asking for special favors, in spite of the injustices that were done. Too many times, it seems to me, normalizing relations with Cuba is posed by asking one question: should we or should we not undo the embargo? I think it's the wrong question.
I tell some of my friends, who don't spend as much time speaking about the Cuba issue, I always give them the simple example: "I just want you to imagine I'm going to go into your house, I'm going to take all your property, take all your bank accounts, I'm going to put your mother or brother in prison, and then 50 years go by, and now it's time to go back. And the same guy, the one who took all that stuff from you, is still the same guy at the door." So it is personal. It has to be personal. And we weren't the only ones. We're just one of thousands, or hundreds of thousands. You want to undo the embargo? Undo the embargo, but don't let cigars flow freely into the U.S. unless we can go in and compete.
Q: It's complicated.
A: It's complicated, but it doesn't have to be.
Q: Do you think those in power in the United States think about this?
A: I truly believe that the people that will make the decision on the embargo are thinking in dollars and cents. The idea that decreasing the embargo is not about business, that's false. If the Obama Administration were to release the embargo, that is a business decision. It's a political decision, but with massive business consequences. I understand that, because I am a businessman.
Q: If all things worked out with a level playing field, what Toraño blends would you make?
A: We'd be into another exciting time in the cigar industry. Imagine if Toraño could come out with a cigar with the best of Cuban tobacco and Nicaraguan tobacco, or Cuban and Dominican? There are so many possibilities. I look forward to the day that we can blend legally with Cuban tobacco. I want that day to come, and I want it to come quickly—I just want it to come in a way that's fair and just. As a manufacturer, we're missing a great tobacco, Cuban tobacco. No question about it.
Q: Would you want to go back in and grow tobacco?
A: Yes. Definitely.
Q: On those same fields?
A: That would be an ideal situation, but I'm more practical than that.
Q: Do you think there's ever a situation where Benji Menendez [whose family owned the H. Upmann Factory] gets his cigar factory back, and you get your fields back? Is that even possible?
A: There is historical precedence.
Q: East Germany?
A: And Nicaragua. That was a Marxist revolution, they nationalized all the farms, all the factories, so there is precedent. But from a practical standpoint, there could be a viable argument to just start over. I don't want to see Cuba become China. I don't want to see it open economically and not politically. I don't want that for the Cuban people. I hope that however the embargo is used in the future, that it gives the motivation to see real change—and for the change to not only come from one side.
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