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An Interview with Rocky Patel

Rocky Patel, 47, has quickly become one of the best-known faces in the world of premium cigars.
David Savona
From the Print Edition:
Arnon Milchan, September/October 2008

(continued from page 3)

Q: Let's talk about expansion. Your main brands are made in Honduras, but you recently started doing things with some smaller factories in Nicaragua.
A: We have a wide array of tobacco, but sometimes you're limited by what kind of flavor profile a factory makes. The fermentation can be similar. So I decided to venture into Estelí, Nicaragua, and we spent about a year and a half with a very small upstart factory that was making inexpensive bundle cigars. We supplied them with good quality tobacco, we spent a year training the bunchers and rollers, we put in draw-test machines, and I worked on many blends. Hence we're making some private-label cigars from that factory, we're making the ITC 10 Year there, we're making the Rocky Patel Summer Collection there. We're making very special limited projects there. Small-run cigars. We want to make sure we have fun while we make these cigars. We're trying to create novel, fun options for the consumer to smoke.

Q: Let's talk about some of the challenges facing the cigar market. You've been instrumental in fighting for the rights of cigar smokers, especially the SCHIP [State Children's Health Insurance Program] legislation.
A: My biggest fear when I put my head on my pillow at night is not market share, it's not about growing the cigar company. My biggest fear is the government, and with the stroke of a pen they can pretty much take away our business or have a grave impact on it. We need to be a lot more alert about some of the legislation that's coming down the pipeline. First there's the SCHIP bill, where they were trying to impose a $10 tax on cigars, that we're negotiating. That [proposed] tax is presently at $3—we're trying to get it to 12.5 cents. The second impact is the FDA bill, where the surgeon general at any time could have complete control on the taxation of cigars and about what materials go into a cigar. There are many issues here from a legislative standpoint, the biggest being the tax. I've been spending a lot of time in Washington, because I spent a lot of time building this company and I don't want to give it up.

Q: I'm sure some politicians equate cigars with Big Tobacco.
A: What I found is that most people on Capitol Hill were naive. They thought only rich people smoke cigars. We showed them. It's an art form. It's a tradition. When they realized this, and they see the art of cigar making, it really opened up their eyes.

Q: Does it help when they see how a lot of the companies that would be impacted by these bills are smaller companies?
A: Sure, it made a big difference. I had with me Jorge Padrón [of Padrón Cigars], Robbie Levin [of Ashton], a lot of the smaller manufacturers, telling the history, how long their families have been in business, on retail and manufacturing, and how [the proposed legislation] has an impact on many, many companies, and that story resonates.

Q: The first SCHIP legislation that was proposed called for up to a $10 federal excise tax on cigars [editor's note: the current federal excise tax is capped at 5 cents per cigar], with a floor tax on retailers. Had that gone through, unchanged, what would have happened to the premium cigar industry?
A: It would have pretty much destroyed it. A cigar that retails for $5 would retail for around $20. It's like buying a glass of wine for $8, and the next day it's $25—you're not going to buy it. It certainly would have had a grave impact on cigar sales, which would have resulted in far fewer sales of cigars, and hence all the people in Honduras and the Dominican would have been laid off. You have problems already with Chavez in Venezuela and the Sandinistas in Nicaragua—more economic instability in these countries only leads to opportunity for other leftist governments to come there, and adds to immigration problems. It would have had a grave impact on our whole industry.

Q: This is no exaggeration.
A: Yeah, and trust me, we were very close. If the president hadn't vetoed this bill.... People need to be up in arms about it and talk to their senators and congressmen, to show them we are not Big Tobacco, we're not cigarettes. This is an art form, this is a culture. We don't have to have a cigar, we're not addicted to them—we enjoy them, just like we enjoy a fine glass of wine.

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