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Moving Forward in Nicaragua

Nicaragua's cigarmakers craft their smokes while keeping one way eye on the country's new president
David Savona
From the Print Edition:
Tom Berenger, July/Aug 2007

The meal of roast pig and all the trimmings was finished, and the sated diners retired to the living room for drinks and cigars. The clicking of multiple lighters was heard, then the air filled with the rich aroma of heady Nicaraguan tobacco. The men sat on an L-shaped couch, their eyes focused on the events unfolding on the television. Daniel Ortega, Nicaragua's newly elected president, was standing on a grand podium surrounded by his allies from around the world. Standing particularly close was Venezuelan strongman Hugo Chavez, foil to American president George Bush and in spirit the second coming of Fidel Castro. Patriotic music boomed in the background as a sea of onlookers, supporters of the Sandinista party, chanted what reminded some of those in the living room of an old Soviet work song.

For those with investments in Nicaragua, the sight could not have been comforting. Yet it's the new reality in Nicaragua, where Ortega has risen from the ashes to once again claim the presidency of this Central American nation. His previous reign—he was part of the ruling junta in 1980, then served as president from 1985 to 1990—was known for the nationalization of private assets and the American government's embargo of Nicaraguan goods. Today, however, the nation is serene, and few expect that such hard times will return. Many are betting it will be business as usual, and some are even making significant investments in ways that suggest they expect the country will continue to be a leading exporter of fine cigars to the U.S. market.

Nicaragua's cigar exports are growing faster than any other cigar producer. Shipments rose by 12 percent in 2006 to 56.4 million cigars, keeping Nicaragua firmly in the No. 3 spot for exports of premium cigars to the United States. (The Dominican Republic, which controls about half the market, ranks first.) No. 2 producer Honduras had flat shipments in 2006, at 88.2 million cigars.

The growth rate for Nicaraguan shipments has eclipsed that of other cigar producers for most of this decade. In 2000, Nicaraguan exports were 19.2 million, less than a third that of Honduras. They soared to 27.4 million in 2001, then reached 37.7 million in 2002 before slipping to 33 million in 2003. The growth resumed in 2004, jumping to 47.9 million, then 50.4 million in 2005.

The success of Nicaraguan cigars is directly tied to the country's amazing tobacco. The rich soils of Nicaragua yield superb tobacco leaf, and the nation has three distinct growing areas—Jalapa, Estelí and Condega—that allow cigarmakers the option to create complex blends using solely Nicaraguan tobacco Nicaraguan tobacco makes delicious cigars, and American cigar smokers have embraced that flavor.

The Padrón family, makers of Nicaragua's most acclaimed cigars, seem unfazed by the election of Ortega. They have put even more support behind the Nicaraguan cigar industry by shutting their Honduran factory, the outpost in Danlí where all Padróns were made during the U.S. embargo on Nicaragua. "We're moving the Honduran operation here," said president Jorge Padrón in January, seemingly unconcerned with the notion of closing his safety valve when some are wondering about the future of Nicaragua. He is walking through the large factory in Estelí that he and his father, José Orlando, opened in 2004, the source of most of the 5 million cigars the company produces each year.

At the end of 2006, the Padróns stopped making cigars in Honduras, and earlier this year they added production capacity in Estelí to make up for what was once made in Honduras. (At first, they had decided to put the rollers in their original Nicaraguan factory, which is now a warehouse, but they later changed the plan, and found space inside the large compound where they now make all of their cigars.) Rolling every Padrón in Nicaragua has streamlined the company's production. The Honduran factory remains open, but only as a box manufacturing facility.

Few things seem to faze the Padróns. This is a family that lived with bombs left on their Miami office doorsteps when a humanitarian mission to Cuba to rescue political prisoners didn't sit well with some members of the Miami community. When you can survive a bombing, a change in Nicaraguan politics mightn't seem daunting.

José Orlando Padrón flew to Cuba in October 1978 as part of a humanitarian mission to free political prisoners. During the visit, he recalled on a recent trip to Nicaragua, he met with Fidel Castro. Padrón had three cigars in his shirt pocket. "Padrón," Fidel said, "I hear you've been making good cigars." Padrón answered, "That's what they say." Asked Castro: "Can I try one?"

Padrón put the three cigars on the table, allowing the Cuban leader to choose. He selected one, Padrón took another, and put the third back in his pocket. "At that moment," remembers Padrón, "there were no journalists in the room." They spoke about the prisoners, came to an agreement and then brought in the press. At that time, Castro asked Padrón for another cigar to examine. Padrón handed him the one in his pocket. "I think Fidel did it on purpose," says Padrón. "The moment I handed him the cigar, they snapped the picture." The photograph made headlines in Miami, and it didn't sit well with some.

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