An Interview with Rocky Patel
Rocky Patel, 47, has quickly become one of the best-known faces in the world of premium cigars. The owner of Rocky Patel Premium Cigars Inc. spends most of his life on the road, either in the factories in Honduras and Nicaragua that make his cigars, in the tobacco fields of Central America or in the many cigar shops that sell his wares.
Recently, his 10th Anniversary smoke, the Rocky Patel Decade Torpedo, was rated a classic, scoring 95 out of 100 points in Cigar Insider and Cigar Aficionado tastings. In April, Patel sat down with senior editor David Savona to speak about the impact of that rating, the impressive growth of his company and his efforts to confront the challenges that face the American cigar industry in the form of prohibition and exorbitant taxes.
David Savona: So let's just talk about where you are and where you've come from. You're just coming off the success of the Decade. What's it like after more than 10 years in the business?
Rocky Patel: It's actually our 12th year now. It took us a while to find that perfect cigar to celebrate our 10-year anniversary, or decade, in the business. In order to commemorate our 10 years, we came up with the blend for the Decade. We probably went through about 120 different blends until I finally said we've got a cigar that's got a lot of flavor, it's got spice, richness, nuttiness, but balance. And we tried to do the same thing with more of a Nicaraguan puro in the ITC 10 Year.
Q: Wasn't the blend that became the ITC 10 originally going to be your Decade?
A: The original blend for the Decade was the ITC 10 Year. We liked that because it had a lot of character, it had a lot of body, it had a lot of spiciness. Then I came up with the blend we have now for the Decade, and decided that the Decade had that elegance and that balance, so we kind of flip-flopped. The original Decade was going to be the ITC, and the ITC was going to be the Decade.
Q: So you reassessed, looking at where the cigars were, because the ITC is pretty bold, while the Decade has a lot of finesse. Did you always intend to have two?
A: Yeah, because we had two different lines. We originally started with the Indian Tabac line, so we wanted to celebrate our 10 years with the ITC. And the Rocky Patel line is really well balanced. I think the forte of Rocky Patel cigars has been they deliver a lot of flavor, a lot of character. You can smoke them to the nub and they don't get harsh, they don't get bitter. They're just clean and well balanced.
Q: You've been doing this for 12 years. Compare the cigars you're making now to the cigars you made 12 years ago.
A: Well, it's night and day. When I got into the business I actually didn't really know that much about tobacco. It was a learning process. I had a partner at the time who was making the cigars, and we were letting other people completely make the cigars. About 1998 I took over the manufacturing process, and that's when we kind of moved into the old Swisher facility, which is the factory in El Paraíso [Honduras], and took complete control of the fermentation of the tobacco, about the blending of the tobacco, the manufacturing processes, the way the bunchers actually bunch the cigars, and started buying tobacco, curing it and making our own blends. And that transpired first at the [old] UST factory, where we launched the Vintage in 2002, and then from there progressed down to The Edge, the Sun Grown, the Decade, Olde World Reserve and everything else. It's been a learning process, a maturing process—every day is a learning process with tobacco. The more and more time you spend with it, the more you realize what you can do with cigars. You can literally have tobacco from the same farm, ferment them in different processes and have them taste totally different. There are so many variables in making a cigar; it's not only where the seed is from, [but] the country of origin, the type of fertilization, how you ferment it and then how you use that in the blends. For example, last week I was in the [El Paraíso] factory, and we had to work on some of the Olde World Reserve blends, because the tobacco that came out of the rainy season was much milder than tobacco that comes out of the summer season, so the ligeros end up being much stronger, so you have to balance out the percentages sometimes so that cigars taste consistent.
Q: You mentioned having more control, but you still don't own your own manufacturing facilities.
A: We don't. We're in the process of owning at least 50 percent of a factory, if not a higher percentage, but we have complete control. We're lucky to work with the Plasencia family where we have such a great relationship, where they allow us to have our own employees in charge of the fermentation, in charge of the construction. Certainly I make all the blends myself—we have carte blanche at the factory, which is a nice thing.
Q: Did you think you'd get to this level? You started after the cigar boom, when the market was saturated—not the best time to come into the cigar market.
A: It was very difficult, and I didn't realize it would be so difficult to acquire all the top materials. The key to our success has been to get great quality wrapper, filler and binder. We deal with some of the biggest growers in the world: Nestor Plasencia, we deal with ASP, the Oliva family—it took a long time to gain the trust and acceptance of some of these major suppliers. You build those relationships. I think it was based on [that] they saw we were dedicated. Nobody ever thought we would make it. It was a hard challenge. There were five, six, seven years where we weren't sure how far we would get. We had to prove ourselves in order to get that acceptance. When we first started we were making 150,000 cigars. Last year, we rolled a little over 16 million cigars. It's been quite a rapid amount of growth, especially from 1999 to 2000. We really had our big growth in the business since we changed our name to Rocky Patel. At that point we were still only making around 1.75 million cigars.
Q: When was the name change?
Q: You made the name change for a couple of reasons. One of them was a licensing conflict?
A: We had some licensing issues with Indian Motorcycle Co. But mainly when I really felt comfortable that we had control over the manufacturing process, and we were finally able to produce the quality of the cigars that we envisioned, that's when I decided that it's time to put my name on the cigar. Certainly '95 and '96 I had no idea what a great quality cigar was. Your palate matures over time, and I would say it wasn't until '97, '98 that my palate started developing.
Q: What was your first really groundbreaking quality cigar, that showed that you were taking a step away from your origins in the cigar business? What was your graduation cigar?
A: I think the graduation cigar had to be the [Indian Tabac] Super Fuerte. It was one of the first rich, fuller-bodied cigars on the market. When we came out with that cigar there weren't too many cigars with that boldness, that richness, that character, all mixed in together. That was our groundbreaking cigar.
Q: When was that released?
A: 1997. We got some great reviews on that cigar. And that was at a time when we still didn't have control of our manufacturing, so that cigar was not as consistent as we would have desired it to be. That cigar really took off, then it started tapering off because of inconsistency. That's when we decided we needed to have control of our manufacturing process, or that was going to happen with every brand that we make regardless of how good the brand is.
Q: I remember smoking some of the early ones, and they were great. But you couldn't make it on a consistent basis?
A: We weren't getting the same wrapper, maybe it didn't have the same age, or one of the binders would get changed without our knowing about it. We realized we needed to have a large amount of tobacco, the same tobacco, of whatever brand we make. Now we take that tobacco and we ferment it ourselves, and sometimes we stop production on a particular line until a tobacco is completely fermented, so the cigar stays consistent. For example, we had to stop [production] on Decade for two months because the wrapper needed fermentation.
Q: When did you stop production?
A: We stopped production on that in January. We started again [in late March].
Q: So you learned that even though it's expensive to have a cigar off the market, you don't want someone to get a cigar that doesn't live up to the expectations.
A: The market is so sophisticated. The cigar smoker that buys our cigar is so educated. It's better to make sure the cigar stays consistent. We've really fought hard to keep that quality. It's easy to make a couple hundred thousand cigars or 50,000 cigars, but when you start making two, three million cigars in a particular blend, you have to have a lot of raw material to make that. For example, in every single line we have, we have three different categories. We have firsts, factory selects and seconds. The firsts have a very strict standard of color. If the cigar is a little darker or lighter, then the cigar becomes a factory select. The seconds have a few extra blemishes, a few extra veins. We almost have 40 percent factory selects and seconds, both in our Vintage and in our regular lines, such as Decade. Q: That sounds like an expensive process.
A: It is, but that's really been the key to our success. When people get our cigars, they expect a certain standard.
Q: If you had one way to describe all your cigars, what would it be?
A: I think our cigars definitely deliver a ton of flavor, but at the same time they're clean, elegant and balanced on the palate. I think the key to success in making these types of blends is you have to have a big inventory of tobaccos from all over. Right now, for example, we have filler from Nicaragua in Estelí, Condega, Jalapa; in Honduras, Jamastran; Ecuador Sumatra; Ecuador Connecticut; Panama; Brazil, so we have diverse amounts of good tobacco, and the relationship we have with the Plasencias allows us to get a lot of tobacco, because not only does [Nestor Plasencia] grow a lot of tobacco, but he also contracts with farmers in some of those other countries. So, because of these resources, we're able to make a larger quantity and make diverse blends.
Q: But it's more than just your cigars—people also respond to you. I saw it last year at the Las Vegas Big Smoke when you were up there with [Cigar Aficionado senior features editor] Jack Bettridge. People like you.
A: Well, I think we're very sincere in what we do. They see the heartfelt effort that we've gone through to build our brand. There's a reason we take 2,000 people a year down to the [El Paraíso] factory, 'cause I can talk about all the things that we do till I'm blue in the face, but when they're down there at the factory and farms and see what we do, that's impressive, and they actually see the proof in the pudding when they smoke the cigars. I've managed to build a lot of relationships, also visiting the cigar stores throughout the country. And we're not only a cigar company, but we also do have fun and enjoy life. We enjoy great Scotches, great wines. We like to have a good time, we like to laugh. We're like the common man's cigarmaker, and we treat everyone like a friend whether it's the CEO of a company or a blue-collar worker. Whether it's cooking at the house, playing golf or playing cards with them, we really interact, all of us—myself, my brother Nish, [my cousin] Nimish—everybody that's associated with this company is really in touch with the end consumer. We've built a bond that goes beyond cigars.
Q: I would guess that you meet more cigar smokers than the typical owner of a cigar company.
A: Definitely, 'cause we're out and about. We spend a lot of time and effort. We're very diverse, and we get out and really socialize with our consumers.
Q: Were you always an outgoing and friendly person?
A: Yeah, I grew up in a big family. Not immediate family, but tons of cousins, lots of friends. I hate being alone. Let's say I come back from a trip, three weeks on the road, the first thing I do when I get to my house is throw my suitcases down, take a shower, and I'm out to the cigar bar. Cigars build a friendship.
Q: What do cigar smokers say to you when they meet you?
A: It's interesting. I just look at myself as a regular person who is trying to make a great cigar. There's nothing else I'd rather do. It's amazing to me how they're kind of awed by it. I think they want to learn how you got there, somebody from the outside who was an attorney. So they have a lot of questions. And then they meet you and realize you're a regular Joe and they like you even more.
Q: We've talked about this before, but you were an attorney, and didn't really smoke cigars until a girlfriend introduced you to them. How do you go from that to owning your own cigar company?
A: We were doing a lot of things in the movie business, and in the movie business on the set you hurry up and wait, so I started smoking cigars. I joined the Grand Havana Room [in Beverly Hills, California] because it was close to my office. And that's where someone approached me to make cigars in Honduras. It was an investment.
Q: You were just putting money into something.
A: I had a bigger vision and I wanted to make something out of this company, and I spent a lot of time in Nicaragua and Honduras, asking a lot of dumb questions and emulating the good qualities. And that's what took about five or six years.
Q: Did you ever have a problem with people not taking you seriously? You were a lawyer, had no background in the cigar business, you're not Cuban….
A: It was difficult, and that's what drove me even harder. Every day, I woke up, looked in the mirror and said, "I'll show them." Everyone thought I'd never make it, and they did frown at me. They laughed at me and said this is just a guy trying to make a quick buck in the business. And the only way I could show them is by outworking them and by doing my own thing—don't give up. You have to look at your competition in whatever business you're in, see what they're doing and try to do it better. I'm a dreamer, and I always dream of new ideas, new concepts, new taste profiles, so we were always progressive and took a chance. Making a real full-bodied cigar. When I came out with The Edge, people laughed at me. A 100-count tray? A cigar with no band? They said it would never sell.
Q: What was the biggest chance you took, besides becoming a cigar brand owner?
A: First, the name change. Everybody in my office thought it was ridiculous to put the name Rocky Patel on the brand. The second was the launching of The Edge. People thought that was nuts. And then that we managed to grow this company with independent reps. And nobody thought we could make a consistent cigar with Nestor Plasencia. I said [to him], "There's no reason with your pedigree, and the amount of tobacco you grow, that your name in cigar making cannot be compared to some of the greatest people in the business out there."
Q: Let's talk about the success of Decade. Obviously, the classic rating in our magazine is a landmark achievement. It's something we don't give out very often.
A: It's something I've dreamed of for a long time. As a cigarmaker, there's many things you look for in gaining acceptance. Certainly one is to your consumers—when they look you in the eye and say we love your cigar, and you can track it by the amount of sales. And I look up to Cigar Aficionado, and I strive personally to get a great rating, and on a consistent basis, because that shows you that the cigar has been accepted by the connoisseurs. I'm always working on a cigar to get to that level. For the Decade to get a 95, I'm very proud, and very happy.
Q: Were you surprised?
A: We knew we had a great cigar on our hands, and everybody who smoked it thought it was a great cigar. So you never know till the rating is out, and I didn't know until I got a phone call saying it got a 95, in Cigar Insider [Cigar Aficionado 's sister publication] first.
Q: Best cigar you ever made?
Q: What did that do, in terms of demand?
A: It's ironic that this rating came out at a time when we were out of boxes in our warehouse. It does increase your demand, and you see the demand for the cigar has gone up. To get a 95 is a classic rating—that's special.
Q: Is it a temptation to pump out more of them?
A: No, because that's what got us into trouble in the early '90s. When we were a small company, we were worried about cash flow. We're in a position now where we don't necessarily need that cash flow. We're looking to build on our pedigree. We're better off taking our time and releasing the cigars when we feel they're perfect.
Q: Your success has certainly gotten the attention of other companies in the industry. Lately, there's been quite a bit of consolidation, foreign giants especially. Have companies come looking for you, said, "Here's a check, what do you say?"
A: Um, no they have not. I can honestly tell you nobody has approached us. There are a lot of rumors. I get four or five phone calls a day saying "I heard you've sold your company, you're selling your company," but certainly that's not happened. Our vision is to keep making better cigars. It's nice to have the independence to make a decision, to not go through umpteen consultants. I'm happy to have that freedom.
Q: You work with your brother, your cousin. Ownership of the company, is it yours?
A: I own the company. It is a family business, but I am the main shareholder in the company.
Q: You have a partner?
A: We had a partner, but I bought him out four years ago. I own 95 percent of the shares.
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.