Cigar Aficionado

While he's best known for creating the Ashton brands, Robert Levin, president of Holt's Cigar Holdings, is a 30-year veteran of the cigar business with experience in retailing and wholesaling. After a humble start, sweeping the floor of his father's Philadelphia cigar store, he took over the family business in the 1970s, then created the original Ashton in the 1980s. His cigar grew up to be an industry giant, and in 1999 he trumped his earlier success with the addition of the Ashton Virgin Sun Grown line. This year, Levin hopes to add another million-unit brand to his portfolio -- La Aroma de Cuba. Recently, senior editor David Savona sat down with the 56-year-old Levin in Philadelphia for a discussion about the past, present and future of the cigar business.

David Savona: How did you get into the cigar business?

Robert Levin: My father bought Holt's Cigar Co. in 1957. It was a totally new business to him, and Holt's at the time was a small retail store in downtown Philadelphia.

Q: What was your father's business before Holt's?
A: He was a clothing manufacturer, and he closed down that business. Holt's was for sale; he had been smoking pipes and cigars his whole life, and he bought it.

Q: How old were you?
A: I was born in '46.

Q: So you were a kid.
A: Yeah, he would make me come in Saturdays and after school, and I would have to sweep up. There was not a walk-in humidor at the time. There were all these cabinets. In those days, the humidifiers were clay bricks. I would have to take the bricks out of all the cabinets every Saturday, take them down to the basement and soak them in big buckets of water.

Q: When did you get into the business full-time?
A: About 1972, '73, after college. My father always wanted me to come into the business; I always resisted, but he was having some health problems, and he wanted to go on vacation. Retail being as it is, it was tough to get away.

Q: What were your impressions of the business at the time?
A: It was a totally different business then. Premiums were not such a major factor. At that time, Philadelphia was actually a cigar-producing city. There were several factories, and mass-market cigars were still being sold in the cigar stores. There was no such thing as Walgreens and CVS.

Q: So Holt's sold mass-market cigars?
A: We sold everything. And we specialized in seconds. Garcia y Vega seconds, A&C seconds. We were cigar specialists. My dad would buy huge quantities from the factories. When I was still in school, the store had to move, and we moved into another store, and I think my father at the time was the first one to have a huge walk-in humidor, a store within a store with its own separate cash register.

Q: When was this?
A: Maybe the early 1960s.

Q: What did cigars cost back then?
A: Fifty cents. When you got into totally handmade, it was a dollar. In those days, and this was pre-Cigar Aficionado,
people were much more brand loyal. They would come in and they would smoke the same cigar -- buy a box a week, two boxes a week. And there were a lot more people buying cigars in those days. When I began managing the store full-time, that's when I started thinking about how we could expand the business, but I had a lot to learn before that. And in the early '80s, I wanted to have my own brand. I was looking for other things to do besides the retail store.

Q: Why did you want to have your own brand?
A: We bought a business in 1980, Harry A. Tint & Sons, which was another old Philadelphia shop that went back to 1898. The original Holt's was started in 1911 by a gentleman named Arthur Holt. Tint's was still importing directly from the Canary Islands, from Consolidated Cigar Corp. And Consolidated went through a lot of changes, ownership and management changes, and they decided that they weren't going to have a sales force, and the importers would do all the selling for them. So I ended up being a jobber. And I didn't like being a jobber.

Q: What is a jobber?
A: A jobber is a distributor. You're distributing other brands to other tobacco shops around the country.

Q: Was that a profitable business?
A: No. It was a very unprofitable business. Everybody was competing for the same business with the same stores, so the only way to get the business was to give discounts. So it's buying huge quantities of cigars, selling them for a few points profit, and it was obvious to me that that was not the way to go. Everybody was fighting for the same business. You're racking up huge bills for very low profit. That's when I started thinking of having my own brand.

Q: And what brand did you create?
A: I created Ashton. I knew exactly what I wanted: a cigar that had a little more flavor and more taste than was being sold then, because people were smoking very mild cigars then. And I wanted a Connecticut-shade wrapper. I knew all the manufacturers, so I got samples from everybody, and a friend of mine was importing and distributing Ashton pipes, so when I was searching for a name, he suggested that I use Ashton. And I didn't have a better name, so it was Ashton.

Q: Who made the original Ashton?
A: It was Tabacos Dominicanos, which was Henke Kelner. I was there for two or three years. But at the time, Henke was in Colombia, and I didn't meet him for a couple of years. Other people were operating his factory. And it was a fairly new factory, because Henke had been running the government factory, and he started Tabadom with several partners.

Q: This is before he made Davidoffs?
A: Yes.

Q: Was the cigar much like it is now?
A: I think it's much better now than it's ever been, and I think it's
getting better every year.

Q: What year did you launch Ashton?
A: We came out with it in '85, '86 -- so we started working on it in
'83, '84.

Q: What was the original reaction to Ashton?
A: Ashton started out very slowly. I remember when I introduced it at the trade show, I took three or four orders from my friends in
the business.

Q: Was it hard to launch a brand?
A: Very hard. And I couldn't have done it if I didn't have Holt's Cigar Co. It wasn't a business you could live off of. And I had to go very slowly, and build it up account by account. Today, marketing is very expensive. Marketing in the old days was very simple. It was dealing with the retailers, and getting them to take on the brand, to support you. And there were a couple of trade magazines; you couldn't really advertise in any consumer publications, because there weren't any for cigars, and to advertise in a consumer publication that wasn't geared toward cigars was tremendously expensive and a waste of money.

Q: I wouldn't imagine there were a lot of new brands coming out on the market at the time that you originally launched the Ashton line.
A: There weren't, because it wasn't a growing business. But it was the business I knew. After two or three years at Tabadom, I needed to make a change. I think we were doing about 300,000 Ashtons a year, and the Fuentes began making the brand.

Q: Why did you make the change?
A: I knew the Fuentes my whole life. When they started in the Dominican Republic in 1980, they were just building up their factory. We reinvented Ashton in 1989, and Carlito [Carlos Fuente Jr.] and I worked on the blend, and got it to where we both thought it was a great cigar, and we started again. Even when Tabadom was making the original Ashton, we came out with Ashton Cabinet in 1987 or 1988, and that was made at the Fuentes, and we came out with Ashton Aged Maduro after that, and that was made at the Fuentes. Once the Fuentes started making it, that's when Ashton really started to take off.

Q: Did you blend Ashton to your own tastes?
A: Yeah. A combination of my tastes and Carlito's tastes.

Q: What's it like working with Carlos Fuente Jr. on a blend?
A: It's the greatest. Both Carlos Fuente Jr. and Carlos Fuente Sr. They're good tobacco men. They know tobacco -- and know how to blend it better than anyone else I know.

Q: Tell me about how Ashton grew in sales.
A: From '88 to '92, Ashton was growing at a very nice rate, but after '92, it was an explosion, after the publication of Cigar Aficionado.

Q: What kind of explosion?
A: Doubling and tripling. In 1993, sales were picking up at the retail level, the store was starting to do some major increases, and Ashton was selling -- the increases were huge. And Fuente was having a hard time keeping up with the demand.

Q: When did you first start to see supply shortages?
A: Approximately '95.

Q: When did Ashton become a million unit brand?
A: In 1994.

Q: How big is it now?
A: Probably around 6 million. If you want to throw in the little cigars, the Ashton small cigar series, that's another 2 million.

Q: And within that 6 million, how big are the sub brands?
A: Ashton Cabinets are about 600,000, Aged Maduros 500,000 and Ashton VSG 700,000.

Q: Let's talk about the creation of Ashton Virgin Sun Grown. How did it come about?
A: I wanted a line extension to Ashton. We were going to come out with Ashton Crown, which was going to have Chateau de la Fuente wrapper. I had packaging, I had bands, I had everything. But after Fuente Fuente OpusX [which used the same wrapper] hit, the demand was so tremendous, Carlos couldn't make any Ashton Crowns.

Q: When were you going to make this?
A: We were talking about it in 1992.

Q: And it was going to be a strong cigar?
A: Strong cigar, OpusX wrapper, but with a different blend. But after OpusX hit like it did, and demand was so unbelievable, we could never make the Ashton Crown. I still wanted to come out with an Ashton with a more full- bodied, more robust taste, and that's how the VSG was born. The Fuentes have fabulous inventories of tobacco. The Olivas had this Ecuadoran Sumatra-seed wrapper tobacco, and the Fuentes were buying it for five years before we ever came out with a VSG. And this wrapper, the Fuentes had to work it. They had to ferment it, again and again, and process it, to get it to where it is now. So in 1997, '98 I took a trip down to the Dominican, and Carlito handed me a cigar and said "Taste this." And it was unbelievable. I almost passed out. These weren't aged. They were powerful cigars. And that's what happened. I have to give credit where credit is due: it was Carlito and Rick Meerapfel [the grower of Cameroon tobacco] who came up with the name Virgin Sun Grown.

Q: Did you consider using Ashton Crown as the name for that cigar?
A: I was going to, but between '92 and that time, there were too many crowns on the market. We decided that the time had passed.

Q: Did you have a good feeling about VSG?
A: When I was smoking it in the Dominican Republic, I had a great feeling about the cigar, and I knew we had something special, and that it was going to be a grand-slam home run.

Q: Why such a radical change in the taste profile from Ashton?
A: People were starting to want fuller-bodied cigars, and I wanted to have something for everybody, for every niche in the market. It was time to come out with something for that segment of the market that wanted that full-bodied taste.

Q: Did you ever think they might be too strong?
A: At first. But after we aged them for a while, they were fabulous.

Q: So you ultimately got VSG instead of Ashton Crown. Tell us about Ashton Estate Reserve, which does have that Ch‚teau de la Fuente wrapper tobacco.
A: We did get Estate Reserve, one shot, that was sold with the limited-edition humidor. And we are going to be coming out with the Estate Reserve again, with the wrapper from the Ch‚teau de la Fuente farm -- limited quantity, we'll have it once a year, in one or two shapes, maybe 25,000 to 50,000 cigars a year. I'm not sure when we're going to get it.

Q: Is that going to be out at this year's trade show?
A: We're trying.

Q: Tell us about your business relationship with the Fuentes.
A: In 1992, Ashton was becoming fairly successful. I wanted the Fuentes to make them, and they wanted to have an interest in Ashton. So they became partners in Ashton.

Q: They became a minority owner of the Asthon brand?
A: Yes. And it's been a great partnership.

Q: What happened when you took your company public?
A: We put everything together under Holt's Cigar Holdings; then they became a partner in everything, because we had to put all the companies [the wholesale, mail-order and retail business] together.

Q: What percentage do they own?
A: Now they own 35 percent of the company.

Q: Do you own any part of Tabacalera A. Fuente?
A: No.

Q: Tell me about going public.
A: I got caught up in the frenzy, and at the time the reason behind going public was to get the capital to make acquisitions and to grow. And a lot of the European companies came in and were paying outrageous dollars, and killed those plans. When they came in, they were paying 10 times what I thought certain companies were worth. We couldn't participate in that game, and we didn't.

Q: Looking back, was going public a good decision?
A: It was a learning experience for me. In hindsight, my personality did not go well with being a public company. I wasn't very fond of the quarterly reports, and a lot of things you have to go through to be a public company, You had to do a lot of things that I just didn't like doing. It puts undue pressure on you to try to do better every quarter. Long-range plans didn't really mean anything.

Q: Does the cigar business lend itself to being public?
A: I don't think so. Anything to do with tobacco does not lend itself to being a public company -- the cigar business especially. The cigar business is a small business, and it's a slow growing process. Unless you make an acquisition, you're not going to make huge jumps in growth these days. And in this environment, it's going to be very hard to grow at all. But you work and you do your best, and you'll grow. I didn't enjoy being head of a public company. It's very nice being private again. But it was an experience.

Q: Were you a target?
A: I had some inquiries, but I never pursued them, and I don't know how serious they were. Because of the Fuente involvementÖ

Q: Did that eliminate some potential suitors right off the top?
A: Oh, I'm sure it did. But I'm not sure anybody was that serious.

Q: Tell me about your newest cigar, La Aroma de Cuba.
A: I wanted to come out with a different type of cigar at a different price point. It's expensive to make cigars in the Dominican Republic, so we needed to go somewhere else. Also the Fuentes are really maxed out on production. I can't get any more VSGs, I can't get more maduros. They didn't have the production capabilities to do a new brand.

Q: So where did you end up?
A: I'd been talking to my friend Jim Colucci [of Altadis] for quite a long time, and I had been doing business with Flor de Copan [in Honduras] before Altadis bought the factory. I would buy a lot of their seconds, in bundles. And I thought it would be a good place where I could have a brand made. The name La Aroma de Cuba came from a Cigar Aficionado article. I read an article you guys did a long time ago on Winston Churchill. When Churchill was stationed in Cuba in his very young days, one of his favorite cigars was La Aroma de Cuba. So when I researched it, it had just disappeared off the face of the earth. I registered the name, and I'd had it for a long time, five years, before we came out with the brand. And I got a hold of an old label from the original La Aroma de Cuba, which was a beautiful label.

Q: Is that the original Cuban artwork?
A: It's a combination of the original Cuban artwork with another old label; our designer put both of them together. It's very similar to the older label, with a few additions.

Q: Is the wrapper from the factory's farm in northern Honduras?
A: It's a Cuban-seed wrapper that's grown in Honduras, but it's grown by Plasencia. Flor de Copan does grow wrapper, but they don't have enough of it to put on a brand. It's a very small farm. I wanted to use their wrapper, because it tasted great, but they just don't have the quantity to come out with a brand. And they don't have any big leaves to put on larger cigars.

Q: What's the rest of the blend?
A: It's Honduran and Nicaraguan filler, and it's Honduran binder, and it's all Cuban-seed tobacco. It starts at $3.70 and goes to $5. The packaging is beautiful and the cigar is excellent.

Q: How was the reception to La Aroma de Cuba?
A: La Aroma de Cuba has been accepted extremely well, and it was a pretty big hit at the RTDA [Retail Tobacco Dealers of America] show when we introduced it [in 2002]. Our problem, fortunately, is we can't get enough product. We're really behind. Hopefully we'll catch up in the next three or four months, but the demand has outpaced the supply.

Q: How many do you think you'll be able to sell in 2003?
A: We're hoping for a million.

Q: That's a fast start.
A: We're way behind that now. The shipments haven't been coming in as we planned. It's a great cigar, and it's very reasonably priced.

Q: Let's talk about some of your other cigar brands. Do you still make Premium Dominicana?
A: No. I learned a few things with that. We rushed something out because we were a public company. That was the main reason to come out then. We didn't have the right name, we didn't have the right packaging, and that was really rushed to market before it was ready.

Q: You felt the pressure to get something new to the market?
A: I was under a lot of pressure to get something out. There was a shortage of cigars everywhere, shortage of tobacco and cigars, and it was hard to come up with a product, and too rushed. The care and attention that you have to put into it just was not done. That was a good cigar, but everything was rushed.

Q: How has your business evolved?
A: When I first started Ashton, everything was being done out of the retail store. But as we grew and grew and grew, we needed some infrastructure, so we rented 8,000 square feet and we had a warehouse. And I'd spend half my day at the retail store, half in the office. And as you grow, the people you hire make or break your company. We were lucky enough to have people who do a great job and made it possible for the company to grow. I hired Mike Pitkow, who really runs the day-to-day operations; I knew Michael from college, he's an old friend. And we started a sales force in '96 or '97. We have 11 salesmen now, who cover the whole country, and I feel they're the best sales team in the whole industry. They are excellent people, hard-working. Manny Ferrero is our vice president of sales. He is the spiritual leader of the sales force -- he gives them the passion and the integrity they need to be out there on the road. Chip Goldeen, he's the national sales manager. We have a great crew. We have very little turnover. We have really good people top to bottom, and that's what makes the company work.

Q: How many people do you have now?
A: We have 71 people.

Q: And when you started working for your father?
A: Five or six.

Q: What size was the business when you took over?
A: About $600,000 a year.

Q: How big a company is it today, in terms of dollar volume?
A: We're private so we don't really give out our revenues.

Q: How do your sales today compare to your biggest year?
A: We're growing every year.

Q: It's bigger now than during the boom?
A: Yeah. When we were public we did $29 million. It's a slow growth. It's the wholesale business that's driving the train.

Q: Will it also be your most profitable year?
A: No. We're expanding; we're going to double our space. We've been here for five years, and we convinced the owner next door to sell us his property and the building next door.

Q: When you first created this joint headquarters and warehouse, did you think you'd have enough space?
A: I thought we'd be here forever. I thought it would be plenty of space. But what I need is more warehouse space. We need more people space, but it's the warehouse space where we're really crunched.

Q: Six years years ago, you said your business was split evenly. What's the breakdown now?
A: More than half of the business is now wholesale. The retail is about 7 percent of the business; mail-order is 30 percent, a little less.

Q: What about the Internet?
A: That's part of mail-order. The catalog drives the Internet business, but more people are ordering online. I think it's replacing the phone.

Q: You have all these cigar brands that are doing well. Do you see adding more in the future?
A: There's going to be an addition this year, hopefully for the trade show. New Ashtons, with a Cameroon wrapper. I've always wanted to have a Cameroon wrapper. Rick Meerapfel is one of my best friends. I met him through the Fuentes years ago, and I've always wanted to have Cameroon wrapped cigars using Rick's tobacco.

Q: What are you going to call it?
A: We're batting names around. I'm not sure. And there's going to be a new size of Ashton Cabinet, the same size as the VSG Tres Mystique; we're going to call it Tres Petite.

Q: Let's talk about the cigar market. How was 2002?
A: It was a great year for us. We introduced La Aroma, Ashton was still growing, and we came out with the Ashton little cigars made in Europe -- I'm astounded at how they're selling. Quality always rises to the top and wins out in the end. If you have a quality product, it will rise to the top.

Q: So what effect does a tough economic climate -- higher unemployment, bad stock market -- have on cigar sales?
A: We're still growing; it hasn't hurt us that much, but I think it does hurt. I can tell by our mail-order sales and some of our wholesale accounts, say in New York. We had a great year despite what's going on in the economy.

Q: What about all these smoking bans?
A: I think it has to affect us. We haven't felt it yet, but I think we'll start to feel it.

Q: Are you worried?
A: Yeah. I think we're still going to grow, but I think if a guy is smoking five, six cigars a week, and he lives in a place like New York now, he might only smoke one or two cigars a week. And it's going to affect everybody.

Q: How is 2003 so far?
A: January and February were excellent. March was soft, but April came back like gangbusters. But we don't know yet the effect of all the antismoking legislation. Boston just went into effect the fifth of May, New York was April, so we haven't really seen the effect yet.

Q: Why the soft March?
A: It was a combination of the economy and such a strong January and February -- you have to tail off a little bit.

Q: Do you think cigar sales are somewhat immune to economic
problems?
A: My father always told me that. Years ago, he said that generally in recessions and depressions, cigar sales remain. It's an affordable luxury in hard times. But I think, definitely, that the economy has an effect on luxury products, and cigars are luxury products.

Q: About 20 years ago you sat down and created a cigar brand. That cigar forever changed the nature of your business. Where do you think this company will be in 20 years?
A: I have no idea. My son, Sathya, shows some signs of interest; he's a senior in college. My daughter, Meera, is a sophomore, so it's too early to tell.

Q: Would you like your son to take over?
A: If that's what he wants to do, he can do it. He's already spent time with the Fuentes in high school, he's worked with the salesmen out on the road, and he's worked in the retail store for years. He's seen every part of the company. If he shows interest and he wants to do it, that's great; if he doesn't, that's fine too. But the world's open to him -- whatever he wants. So things are alright.