When the cigar market boomed in the 1990s, Nestor Miranda, creator of Don Lino, seemed to have caught lightning in a bottle. He had an established brand that sold so well it was on back order even though production had more than tripled in two years. But when things looked brightest, his cigar manufacturer stopped supplying him.
Suddenly, the director of Miami Cigar & Co. found himself with a great brand but no cigars to maintain it. His annual sales plummeted from 12 million to 3.5 million.
Miranda struggled to recover from this adversity, ultimately suing the billion-dollar company that had supplied him to get back on his feet. The suit was successful, but the brand was also off the market for two years. Recently, Miranda, 62, sat down with senior editor David Savona to talk about his ups and downs in the cigar business, and how he has tried to reestablish Don Lino.
David Savona: You've been in the cigar industry quite a while now. Can we go back and talk about how you entered the business?
Nestor Miranda: I've been smoking cigars since I was 17, in Cuba.
Q: You were born in Cuba?
A: I was. I used to steal cigars from my dad. On Sunday, I'd go to the park and light a cigar and look like a big man. Everyone would look at me and say, ''Look at that guy with a cigar.'' It was like a lonsdale maduro—Regalias el Cuño. They used to make cigarettes. I always liked cigars. Always. My father smoked cigars, my grandfather smoked cigars. Actually, my grandfather used to carry 10 cigars in the pocket of his guayabera.
Q: Ten cigars?
A: And big cigars—Churchill size. So I think my genes came from my grandfather. I've always loved cigars. I was in the liquor business [in 1987 or '88 when] I was introduced to a roller who worked for Mr. Guillermo León [of La Aurora S.A.]. And he was rolling cigars, and the guy with him said, ''Would you like to have one?'' And it was a big Churchill, a León Jimenes Imperiales. It was nice. So I lit the cigar and I loved it, and I said, "I represent a [brandy] brand called Cardinal Mendoza, from Spain. I think we can come out with cigars and brandy. They can go very well together." He said, "I'm going to send you a humidor from the Dominican Republic—see what you can do with it." He sent me a humidor. It had 40 cigars—gorgeous. I said, "Man, this is beautiful." I called him and I said, "I like it, but 40 cigars is too much. How much is it?" He said, "$35." So when I saw the price and the beautiful cigar, I talked to my manager, and I said, "I think I have the item to promote Cardinal Mendoza." He said, "I love it. Let's buy 200." So for two boxes of Cardinal Mendoza, we gave away a humidor full of cigars. It was totally a complete success. So ever since that day I started developing an interest in cigars. My wife [Mariana] was doing nothing at the time, so I said, "Why don't we start selling cigars?" And we started selling cigars in liquor stores.
Q: Cigars were much cheaper back then. Tell me more about those old days in the cigar business.
A: I'm from the liquor business, so my mentality is geared to promotion, and to different concepts. In the tobacco business, it was the same people selling cigars, the same orders. I'm a different animal. I said, "What do we need?" La Aurora was making only a few sizes: No. 1, No. 2, No. 3, No. 4, No. 5. I said we need names—we need a belicoso, we need a robusto.
Q: They didn't have a robusto? I can't imagine a cigar company without a robusto.
A: No. They didn't have what the people wanted. We changed the whole thing. La Aurora started getting into better sizes, and that improved things. When you go into a tobacco shop and you show two boxes, you're going to sell one. But if I go with eight boxes, I'm going to sell four.
Q: When did you leave the liquor business to focus exclusively on cigars?
A: We started making Don Lino in 1989, at the old UST factory in Honduras. It was 80,000 cigars a year. I doubled the business in 1990, and we started doubling the business every year. We established Miami Cigar & Co. in 1989. My wife was handling the cigar business. I didn't see any future, but it was something I liked.
Q: Tell me about those early days.
A: We were selling Don Lino for $19 a box, and the bundles we sold for $8. When the cigar boom came in 1994, 1995, we were already in. In 1995, we began distributing the UST cigar line. And then in 1995 I retired from Southern Wine & Spirits. I worked for Southern Wine for 15 years, and Seagram for 10 years. I retired from the liquor business to work at Miami Cigar & Co. with my wife. In 1996, I was interviewed by Cigar Aficionado, and that year we ended up selling 12 million sticks. In 1995 we were doing 3.1 million.
Q: You went from 3.1 million to 12 million that quickly?
A: You can't imagine—it was so crazy.
Q: Don Lino was hot.
A: In 1994 we did 1.5 million [units], 1995 we did 3.1 million. In 1996, I calculated that I thought we would do probably 7 million to 9 million cigars. But I've never been too good at mathematics, so it was 12 million.
Q: So you picked up distribution of Don Tomás and Astral from UST, and you also began distributing La Aurora and León Jimenes? You soared to 12 million cigars?
A: That's right. It was the American dream.
Q: And of those 12 million, most were made by UST?
A: I'd say 75 percent of them were made by UST.
Q: Beyond your wildest dreams—great year.
A: We did 12 million cigars until the first week of November . We didn't finish the year. Why? Because in November, the great UST company decided to go on their own, and they called me and they canceled my contract, which ended in February 1997. They canceled everything. They stopped shipping merchandise.
Q: What about Don Lino?
A: They stopped shipping. They were making Don Lino. Don Lino was back-ordered about 3.5 million cigars, and they told me they needed [the production capacity] to make more Astral and Don Tomás and all that.
Q: This is November, this is before the holiday rush.
A: In November, my humidor was totally empty. La Aurora, León Jimenes, could not produce any more cigars. They could not. So they cut the cigars they sold in the Dominican Republic so they could send me cigars. That was Guillermo León.
Q: So in November of 1996, they said no more cigars? Were you waiting on an order?
A: I'd been calling the company. I called Greenwich [the Connecticut headquarters] and I said, "Listen, I have no cigars. Normally I receive a container. What is going on?" They said, "We have to tell you, at UST, we've decided to go on our own."
Q: I thought they called you?
A: I called to find out about the cigars. They called me the next day because I wanted to talk to the president. They said, "He's not here, but he'll call tomorrow." I said, "Listen, call the factory, send me two containers of cigars. They're sold already." So they called me the next day, the president of UST, and he told me, "Nestor, you did a great job, but we decided to go on our own." I said, "What do you mean? You're kidding, right?" They said, "No, we're going to be selling our cigars." I said, "OK, let me ask you something: what about my Don Lino? Because you make that brand for me." They said, "We'll call you and let you know what is going to happen with Don Lino." So it was a totally unexpected call, losing everything we built. I don't know how to face my family and tell them we lost everything. We don't deserve that. Especially that the line was given to Southern Wine. I worked for 15 years with that company.
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?
A: Yes, it was cigars, a company that sold cigars all over the U.S. golf courses, big business. They controlled all the golf courses of the U.S.A., and UST supplied them with cigars, but they had to go through me.
Q: They were cut off?
A: They were cut off, and they lost a lot of millions of dollars. And the lawyers said, "We want to represent you. You do have a case." I said, "No, I don't want to spend all my money in fees." We worked a deal, and out of the blue sky we sued them.
Q: So you wouldn't have sued otherwise?
A: Well, probably they were not expecting me to sue. Because I'm a little guy. They had the power. So I was kind of afraid to sue them and consume all my savings for nothing. So when I saw these people and I saw this letter, I was really, really mad. I got together with my family. My wife said, "We have to do a lesson." So I said, "Let's go." We went. We sued them—$100 million for damages.
Q: How did you come to the $100 million figure?
A: The calculation was made by a company in California. It was a $100 million suit, and it was done in Miami. They wanted it to be brought to Connecticut, but my lawyers won the right to have it in Miami. They sent an entourage of about 10 lawyers to Miami. My lawyers were two people from Texas. I said, "There's no way we can win this." And we won. We won the suit.
Q: The original judgment was for?
A: Forty-two-point-five million dollars, and we were on the front page of The Miami Herald. Then they appealed, the appeal went on, we finally settled the whole thing. It's OK.
Q: How much did you get?
A: I can't say.
Q: OK, so you got less than $42.5 million. When was it all over?
A: In 2002.
Q: So you got some money in 2002. But you also sued Southern Wine. You must have felt odd about that.
A: It was very, very hard for me to do that, even though they pulled the line for me. I respect, so much, the owners of Southern Wine. And I had been with them for 15 years. To me, it was hard to believe that things like this can happen. I'm just a little guy. But that's water under the bridge.
Q: You have other cigars besides Don Lino now. Can you talk about them?
A: In 1996 I was interviewed by your magazine. My daughter was in Gainesville, [Florida, at college]. I saw my picture with my wife and my son [Daniel], which was very nice. My daughter saw that picture at the university and said, "Oh, my God." And then she called me, and said, "Dad, how can you forget about me?" I did not forget about her. I said, "Tatiana, I feel so bad." I had to come out with something. And I said, "I'm going to come out with a cigar called Tatiana." I sent her a letter with a band, and it was a flavored cigar. So I started making and selling a few boxes, but then they started selling. Then I came out with the canister, the mini. I was flying to Los Angeles, and I wanted to come out with a little cigar. Having been in the liquor business, I knew I had to come out with something small, for the counter. So we made miniature cigars—the cigar was unbelievably horrible, but it smelled good. They had no boxes. They came with rubber bands. It was horrible.
Q: Did it sell?
A: It sold. Look at what we have today. It is unbelievable. Then we created gorgeous boxes—we got the second prize in Europe for the design of the Dolce. This becomes a big brand. So Tatiana was born. And I am more than happy to see the success of Tatiana.
Q: Does it make your daughter happy?
A: Oh, my God. (Laughs.) The only thing is—she wants royalties now.
Q: So you have Don Lino, you have Tatiana, named for your daughter, and you're still the exclusive distributor of La Aurora.
A: Next year, we're coming out with the new Don Lino signed by me. I'm going to have publicity. I want to have my dynasty.
Q: Why Don Lino? What does that mean?
A: Lino was the name of the person at the factory, and we used that. It was just a name. And it sold so well, why change it?
Q: How do you feel now about where Miami Cigar is?
A: I am blessed with having a great son. He is unbelievable. He lives for the company. And I have great support—my wife is there, too, but my son is the one running the operation. I give him the support of my experience in sales in the market, but my son is the one who makes the decisions in the company. I do not make decisions without consulting with him. I come out with ideas that we put together. For example, I was in Africa hunting in a safari. It was my dream, and I think it's every man's dream to be in Africa. I went hunting in Africa, and I had such a great time. I was on a plane for 21 hours. I was thinking it's such a great country, Africa, so I designed a box of cigars on the plane. When I came to Miami, I said to my son, "Let's come out with a cigar, Africa." He said, "Let's do it." We wanted to put on the front of the box the name of the mountain, Kilimanjaro. It was taken. I said, "OK, Let's come out with Don Lino Africa." They are gorgeous boxes. I wanted to put the name of the African animals—but in the Masai language. Intead of calling it Cheetah, we call it Duma. Instead of Zebra, we call it Punda Milla.
Q: Does it do well?
A: We did very well. We did 250,000 cigars the first year. My expectation was 200,000.
Q: Is there African tobacco in it?
A: We have Cameroon in the filler blend. So when I went to Nicaragua, we started making blends. I told the blender, "Why don't we use a leaf of Cameroon in the blend?" No one had ever done that before. I tried it and I said, "This is it." It has oily Nicaraguan wrapper, we use Costa Rican, we use Dominican, we use Cameroon. I understand some of the empty boxes are [being] sold. It costs much more than regular boxes.
Q: Describe the roles your family plays?
A: Danny is vice president of sales, my wife is president of the company and I am just the director.
Q: Have you always been that way?
A: Always. I don't go by titles. I go by the end-of-the-month sales, and the profit that we make.
Q: How is the company doing?
A: We are doing great. We have a great future ahead of us. I think we're going to go for a long time.