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Cigar Industry

A Star in Honduras

The Makers of Astral and Don Tomas Cigars are Expanding Operations in Danlí
| By Mark Vaughan | From Matt Dillon, Spring 96

Raymond F. Guys, director of cigar and cigar leaf operations for United States Tobacco International, leads a tour of the company's Central American Cigars (CACSA) production facilities in Danlí, Honduras. In a large, open warehouse holding 200,000 pounds of aging wrapper, filler and binder leaf, four Honduran workers are "turning" a bulk of fermenting tobacco. The process involves disassembling a 4- by 5- by 20-foot pile of leaves, which have been bunched into "hands" of several leaves each, and reassembling the pile so that the tobacco in the center is rotated to the outside, thus allowing for even fermentation throughout the bulk. The work proceeds at a snail's pace, with each worker taking pains not to damage the leaves. A quiet, almost reverential atmosphere prevails in the dimly lit room on this warm, wet July morning.

Guys, a 22-year veteran of tobacco growing, processing and cigar making in Honduras, pauses to watch the workers. Reaching out, he picks up a hand of the golden-hued tobacco. In a motion common to all tobacco masters, he fans the leaves open between his fingers and, like a cellar master testing a fine Cognac, sniffs deeply. He holds the tobacco hand out for a visitor to smell. The rich chocolate and Caribbean spice aromas are almost intoxicating in their intensity.

"This is 100 percent Cuban-seed long filler tobacco, and the quality is excellent," says the soft-spoken Guys, who at 65 is slender, energetic and obviously dedicated to his work. "There is no doubt that Honduras is one of the best places for growing and processing tobacco and making cigars."

It is a sentiment one hears often in Danlí. A dusty backwater nestled beneath the mountains separating Honduras from Nicaragua to the south, the town gained infamy during the Contra War as a staging site for the anti-Sandinista rebels. Today, thanks to the efforts of producers such as Guys, Julio Eiroa, Nestor Plasencia, Rolando Reyes, Indalecio Rodriguez and others, Danlí has been transformed into a cigar making mecca. With a combined output of well over 50 million cigars a year and growing, such producers may soon make Danlí the world's premier cigar making center. That's something that wouldn't surprise Guys.

"This zone--here and in northern Nicaragua--is excellent for growing Havana-seed tobacco," notes Guys. "We've always known you can make a hell of a cigar in Danlí."

For Guys and the rest of UST International's cigar operations team, the current "hell of a cigar" is the Astral, a high-end smoke that was released with much fanfare at Morton's Steakhouse in New York City last June. Designed to be a cut above the company's Don Tomas, Don Tomas International and Don Tomas Special Edition lines, Astral is made with Honduran grown Cuban-seed filler and binder and Honduran shade-grown Connecticut-seed wrapper. The five cigars in the line range from the 5" by 52 Besos to the 7 1/2" by 52 Maestro, with suggested retail prices running from $5.75 to $6.50. A box of Astrals comes in distinctive Art Deco-styled mahogany. According to Iber Rodriguez, manager of UST International's Honduran cigar operations and a key player in developing the Astral line, it took three years to get the new cigar from the drawing board to retail shelves.

"There are a lot of considerations, from tobacco availability to packaging and marketing strategies to having the necessary skilled labor," says Guys. "You don't just make a new cigar overnight."

Though neither Guys nor Rodriguez will talk specifically about the blend and age of tobaccos used in making the Astral line, as with Honduran-made smokes in general they are largely characterized by the full-flavored locally grown Cuban-seed filler and binder. According to Guys, the cigar was designed to deliver most of its flavor in the second third of the smoke. "We wanted people to enjoy the cigar as it progresses and to be able to smoke it all the way to the end," he says. "That way you get the full flavor of the Cuban-seed tobacco."

Since their release last June, Astrals have been selling briskly, so much so that back orders have run as high as 200,000 units or more. "Market acceptance of Astral has been outstanding," says Rodriguez. "We are literally selling them faster than we can make them. It makes all that development time seem definitely worthwhile."

So worthwhile that Guys, Rodriguez and the rest of UST International's cigar operations management team are already exploring the possibility of developing another line of premium cigars. "We are talking about a number of things," says Guys. "But for now our primary focus is on expanding production, both in the tobacco fields and in the factory."

At the sprawling CACSA factory, evidence of that expansion is everywhere. In the tobacco curing and aging warehouse, workers are installing insulation panels and temperature and humidity controlling machines. Outside, a new climate-controlled warehouse is under construction, while additions are being tacked on to the tobacco processing and grading areas, and to the rolling, packing and cigar storage facilities. The box shop, which was recently renovated and expanded, is one of the most sophisticated in Danlí.

"The company has always treated the cigar division well," says Guys. "But the recent boom has really brought us a lot of positive attention from corporate headquarters. This year alone we are putting over $1 million into our Danlí operations. The way the market is going, we have to expand to keep up with demand."

Like its box shop, the rest of CACSA's production facility lacks much of the makeshift nature of many other Danlí cigar factories. Whereas some other local producers seem to have slapped their operations together in a few weeks or even days, CACSA has obviously benefited from its 25-year residence in Honduras. Here, a sense of established order and efficiency prevails. The suite of managerial offices is air-conditioned and comfortable, and computers, fax machines and multiline telephones are prominent, bearing witness to the long reach of CACSA's corporate overlords in far-off Connecticut.

Still, CACSA has much more in common with its Honduran neighbors than it does with the sleek efficiency that characterizes most cigar factories in the Dominican Republic. As with any Honduran factory, the energy and activity level at CACSA borders on the frenetic. With production expanding as rapidly as possible, construction going on at a breakneck pace, and the facilities filled to overflowing with workers, tobacco, raw wood, finished boxes, cigars, packing materials and the like, the ambiance is imbued with a rough-and-tumble, can-do local attitude.

Despite the rough edges, CACSA and the Honduran cigar industry have matured considerably over the past two decades. As Guys recalls, when he arrived in Danlí 22 years ago, the country had just four cigar factories. Today, there are eight in Danlí alone. "The Honduran cigar industry was very unsophisticated in those days," says Guys. "Since then, there have been big changes in the level of investment, the knowledge of the labor force and government support. In 1974, all the factories in the country together made about 10 to 12 million cigars a year. Now, there are a number of factories that are each producing that much, or more."

As in all Honduran cigar factories, bunchers and rollers at CACSA work in teams, making up to 500 cigars per day. In the large, rectangular rolling room, rows of work benches, similar to pews in a church, line the walls. Bunchers sit on one side of the room, rollers on the other. To make a cigar, the buncher gathers a blend of filler leaves in one hand and wraps them with a binder leaf. The "bunch" is then fit into a wooden mold and pressed for 20 minutes. The roller sizes the wrapper leaf with a crescent-shaped knife. Then, carefully removing the bunch from the mold, the roller rolls it in the wrapper, neatly caps the end and sizes the cigar with a device similar to a paper cutter. Rolling takes between 45 and 60 seconds to complete, depending on the size and shape of the cigar. The finished cigars are gathered into bundles of 50 by a counter, who weighs and inspects them for consistency and workmanship, the first of a five-step quality control process.

In total, CACSA's 500 bunchers and rollers made about 6.6 million cigars in 1995. The company plans to raise the output to 9 million this year, according to Rodriguez. As in all cigar factories, the rolling room at CACSA buzzes with activity; the constant click of leaf-cutting knives and sizing machines creates a great, clattering noise. But, as elsewhere, conversation is minimal, evidence of the concentration necessary to produce premium hand-rolled cigars. Guys has nothing but praise for his Honduran workforce. "In the 22 years that I have worked here, I can honestly say that I have never had any major problems with my Honduran employees," he says. "They are very patient, honest, hard-working people."

Guys does admit to having worries about CACSA's scheduled production increases. "You don't just push a switch and increase the RPMs," he notes. "People have to be trained, you need a good, adequate tobacco supply, box-making materials and so forth. It has to be done in a slow, methodical manner."

* * *

In fields just outside the town of Talanga, an hour's drive northeast of the Honduran capital of Tegucigalpa, tobacco plants barely a month old are already knee-high in the hot afternoon sun. Soon, the brilliant green stalks will tower six feet or more and their broad, heart-shaped leaves will hang as heavy as ripe tropical fruits. UST International's 1,360-acre plantation here is something of a model farm. It boasts extensive plots of Havana-seed sun-grown filler and binder tobacco, as well as huge plantings of shade-grown Connecticut-seed wrapper tobacco. There are rows of giant drying sheds and several large irrigation ponds to assure adequate water supply during the dry winter months. Since two plantings are now the norm for all Honduran tobacco plantations, work goes on at the farm sunup to sundown, year round. It is here that UST International grows and dries all the tobacco for its premium cigar operation in Danlí.

For Raymond Guys, as with most cigar men, tobacco has a living, breathing, near-human quality about it. When he talks of tobacco, whether it is in the fields, curing and aging, or even in a cigar, sensuous adjectives such as smooth, silky, soft and lovely creep into his speech. "Tobacco is the most important link in the [cigar] production chain," says Guys. "We have done beautiful things in Talanga, invested a lot of money there, and we are very proud of our farming operation."

According to Guys, UST International is considering expanding its growing capacity in Talanga and possibly into Nicaragua. As he points out, the cigar boom has created a shortage of premium tobacco worldwide, making it easier to justify the large capital investments needed to bring more acreage into cultivation. "If we are going to expand cigar production, we have to increase our tobacco plantings," he says. "It's as simple as that. Right now, I wish we had double the tobacco we have. Growing your own tobacco gives you great flexibility because you are not tied to what the market has to offer. That is particularly important when demand is high and there is less good tobacco to go around."

Over the years, UST International has grown a variety of tobaccos in Honduras, depending on market demand. Though Havana-seed leaf has long been its staple for filler and binder leaf, wrapper leaf plantings have ranged from Cuban to candela and Connecticut seed. The company is now growing exclusively Connecticut-style shade leaf, which produces the lighter colored and softer flavored wrappers that are popular among many new and younger cigar smokers.

Like all Honduran tobacco operations, UST International's Talanga fields were decimated by blue mold in the early 1980s. Of the 16 leaf-growing operations in Honduras before the blue mold infestation, only a handful survived. "It wiped everybody out," says Guys. UST International had both the capital and the technological know-how to keep its tobacco operations alive. "We found a solution to the blue mold problem that has so far worked," says Guys. "It's a trade secret, but I will say that we do it in a purely natural way, using no chemicals."

Back in Danlí, in a small room heavy with the fragrance of full-flavored Havana-seed tobacco, two Honduran workers are blending filler into stacks in preparation for the rollers. Lining each wall are open bales of tobacco, each containing leaves of different age, heritage and curing methods. Guys takes a hand of leaves from one of the bales and holds it up to the light. "Even if it is not as pretty as the wrapper, you get a lot of flavor from the filler. This is rich, gorgeous, aromatic tobacco," he says, adding, "beautiful, really beautiful."

Like many of the leading cigar makers in Honduras and elsewhere, Guys has spent a lifetime in the industry. Unlike most of the big players in Honduras, though, he does not come from a Cuban background. Instead, Guys grew up in Turkey. The son of a French tobacco merchant, he joined his father's business when he was still in his teens. In 1963, "because of difficulties faced by the operation, I left the country," Guys recalls. "But where do you go? I knew a lot of people in the tobacco business and so I went to the States and got a job." His first job in the United States was with American Tobacco Co.'s American Cigar division. After a decade with American Cigar, Guys went to work with UST International, and he has been there ever since.

Early on "they sent me [to Honduras] to take over the tobacco and cigar operations," says Guys. "I didn't speak a word of Spanish, but we hired a team of Cuban managers and I bought a dictionary. I learned to speak Cuban Spanish and pretty soon everyone thought I was just another Cuban refugee down here making cigars."

Guys, who spent 11 years full-time in Danlí before moving to Connecticut to manage the cigar and leaf operations from corporate headquarters, recognizes his and UST International's debt to the Cubans who have helped him run the division. "The Cuban exiles I have been lucky enough to work with over the years are extremely knowledgeable in the cigar business. These people really know what they are doing."

Today, Guys' team includes a mix of Cuban, Honduran and American managers. Fifty-nine-year-old José Quesada, a recognized 'Don' in the world of premium cigars, has been with UST International since the days of Tobacos de Honduras (how CACSA was known from 1972 to 1980) and is now general manager of Honduran operations. Like most tobacco godfathers, he traces his roots to pre-Revolutionary Cuba, and tobacco and cigars seem to be a part of his genetic structure. This is also the case with Oscar Hernandez, another Cuban exile who, at 65, has spent a lifetime in the tobacco business and now manages curing, sorting and packing operations at the CACSA facilities. Honduran members of the team include Marco Tulio Barahona, the 50-year-old manager of the Talanga farm who has been with the company for 19 years; his 28-year-old assistant, Lenin Obaldia, who came on board in 1992; and Edwin Guevara, CACSA's 31-year-old administrative manager of cigar operations who has been with the company for five years. From the United States there is Iber Rodriguez, also 31, who joined the company from a Madison Avenue firm in 1992 to help develop the super premium Astral, and Larry Palombo, 47, who spent 21 years with General Cigar and recently moved to UST International to become Guys' right-hand man as assistant director of cigar and cigar leaf operations.

"We are a diverse group," notes Guys, "but the dynamics are very good. We are lucky to have some highly respected tobacco and cigar veterans on the team as well as some very creative younger people."

Guys agrees that for UST International's parent company, the premium cigar division, in spite of its success, is small potatoes. UST, the holding company for UST International, also owns the United States Tobacco Co., makers of Copenhagen and Skoal brands of smokeless tobacco; International Wine & Spirits Ltd., which owns Chateau Ste. Michelle, Columbia Crest, Villa Mt. Eden and Conn Creek wineries; and UST Enterprises Inc., owner of Cabin Fever Entertainment, a distributor of home entertainment videos nationwide. The holding company, with more than $1.22 billion in sales in 1994, dedicated two thirds of its annual report last year to the smokeless tobacco division, a tribute to cash cows Copenhagen and Skoal. Though it employs more than 1,500 people in Honduras, the cigar and cigar leaf division failed to get a mention in the 50-page report.

Still, claims Guys, UST's recent investments in the Honduran operations is an indication of the unique position the division holds in the company. "If you speak dollars, then we are really not very important," he says. "But, if you speak of prestige and a desire to be a player, we are very important."

* * *

In the big rolling room at UST International's CACSA factory, bunchers and rollers are busy from 7 a.m. until 4 p.m., six and sometimes seven days a week, turning out premium hand-rolled cigars. Of the 9 million the company hopes to make in 1996, roughly 1 million will be Astrals. Some of the remaining 8 million will be made under license for independent distributors, but most will be sold under the company's Don Tomas flagship brand. Like Astral, sales of Don Tomas cigars are brisk, and they, too, are on back order.

Despite all the positive developments of recent years and his long, successful career, Raymond Guys still finds plenty to fret about. Chief among his concerns are tobacco supplies and the endless search for skilled workers and talented managers. "We need more tobacco, and tobacco plantations take a lot of time and money to develop. We need skilled workers, but good people are hard to find and it takes months to train them. Old-timers like José [Quesada], Oscar [Hernandez] and me are retiring and we need young people to take up the slack. These old guys have lived tobacco for years and years, and you can't just replace them overnight."

Whatever his personal retirement plans may be, Guys is not yet ready to discuss them. His worries notwithstanding, he agrees that today's cigar industry has just cause for optimism. "Yes, I am optimistic about the future because all the signs are pushing you to be optimistic and you can't ignore what's going on." With a knowing smile, he adds, "Of course, we have always believed in the cigar."

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