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Inside Cuba

Big-Wrapper Crisis

The Lack of Large-Sized Wrapper Leaves is Creating a Shortage of Big Cigars
| From Ron Perelman, Spring 95
Big-Wrapper Crisis

Last summer, cigar merchants in London were celebrating the imminent arrival of a shipment of large cigars from Cuba, including the Hoyo de Monterrey Double Corona and the Punch Double Corona. Customers had been badgering the retailers for months for boxes of these big, robust cigars, even though British merchants hadn't had any since the beginning of 1994. Day after day, it was the same story--an angry telephone call or a tongue-lashing from a visiting customer. No one would believe them when they said they didn't have any to sell.

The merchants' revelry, however, was short lived. When the Cuban cigar shipment finally arrived in August, it included a mere 280 boxes of the double coronas, which were distributed among the best cigar shops in London. Most of the double coronas never even reached the shelves, because prized customers were automatically allocated a box or two. The rest sold out in a few hours. "We got about 1,000 cigars," says Robert Emery, who oversees the London cigar shops of James J. Fox, Robert Lewis and Harrods. "We sold out right away. We are still taking orders all the time for double coronas. We have pages of people who want them. They are like gold dust."

Adds Simon Chase, marketing director for Hunters & Frankau, the leading agent in the United Kingdom for Cuban cigars, "we could have easily sold more than 3,000 boxes of Hoyo Double Coronas last year if we had had them. We are in a silly situation. If everyone had Hoyo Double Coronas, it might be different, but I could pick up the phone today and sell 40,000 of them with very little trouble at all. And that might be to just one person." The situation in London is no different than any other place in the world where connoisseurs harbor a penchant for big, premium handmade cigars.

Regardless of their origin, many large-format cigars--especially double corona and Churchill sizes--are in extremely limited supply, primarily due to a shortage in large wrapper tobacco. The outer leaf surrounding a cigar is more significant than some believe; not only can a poor wrapper ruin the appearance of a cigar, it can also throw off the balance of its tobacco blend, making it smoke harshly or unevenly. With less top-quality wrapper leaf available to serious cigar manufacturers, many are finding it harder and harder to produce larger-sized cigars--which usually are their flagship sizes.

In view of the dwindling selection of large cigars in fine shops around the world, shrewd cigar lovers, especially Havana aficionados, have already begun stocking up on large cigars to assure a steady supply over the next year or two. If your favorite cigar is a Churchill or a double corona, you would be wise to buy several boxes--a few dozen might be better--and put them away to survive the shortage. This is especially true if your favorite cigars are Cuban or made with a Cameroon wrapper. Leading cigar merchants in London say customers' personal stocks are already increasing each month. And for the tasting of double coronas in this issue, we were simply unable to find many brands in the marketplace.

Most key cigar producers do not expect the shortage to end for a year or two. Cigar production simply can't keep up with demand, especially in the larger sizes. Look at the growth in cigar sales from the Dominican Republic. Annual exports of cigars are now close to 74 million; just a few years ago the number was in the mid-50s. Most of the stellar growth comes from the United States, where cigar makers report customers doubling or even quadrupling their orders last year. Many key cigar makers have back orders for millions of cigars.

"We could sell at least 50 percent more large cigars, if we had them," says Carlos Fuente Jr., the president of Arturo Fuente cigars in Santiago, Dominican Republic, which produces cigars under his family name as well as for Ashton, Cuesta-Rey and others. "I think that we have panic ordering. I have never seen anything like it." Adds Richard Meerapfel of Brussels-based Meerapfel & Söhne, a major player in the Cameroonian tobacco business: "The problem is that if the demand outpaces tobacco plantings, there is nothing we can do. We only have one crop a year. I was just in the States, and I couldn't believe it. I was in a hotel, and I saw five or six people in the bar smoking cigars that could have been mistaken for small baseball bats. The demand is crazy."

The soaring demand for large cigars--anything from a lonsdale 6 1/2 inches by 42 ring gauge to a gran corona 9 1/4 inches by 47 ring gauge--only adds to the frustration of many cigar makers. "Everybody has been caught with their pants down," says Fuente. "We weren't prepared for it. I think it will take two to three years to get production up to the levels of demand."

Francisco Padron, until recently the president of Havana-based Habanos SA (formerly Cubatabaco), the worldwide distribution company for Cuban cigars, had hoped that the shortage of export cigars from Cuba might be solved sooner, especially with this year's harvest, which is expected to be bountiful. "Although we will slightly increase the production from this year's levels, we will continue to have a supply problem," he says, adding that Cuba's total exports in 1994 were expected to hit between 50 million and 55 million cigars, a significant decrease from about 75 million just nine years ago. "We might have 500,000 more large cigars. But our current production [of large cigars] is only about 2.5 million. If we had the raw material, we could produce about 6 million big cigars."

The current predicament with Cuba's hottest cigar, Hoyo de Monterrey's Double Corona, illustrates why some large cigars are so hard to get. The cigar, which measures 7 5/8 inches long by 49 ring gauge, has a cult following among Havana cigar lovers. It's a rich and succulent cigar, delivering distinctive aromas and flavors. Many believe it is one of Cuba's greatest cigars. In the Winter 1992/93 Cigar Aficionado, we rated it 99 points out of 100, our highest score ever given to a cigar. In this issue we give it 96.

Unfortunately, production of the "Hoyo DC" continues to decline each year. A series of short crops has made it more and more difficult for Havana's La Corona factory to source the top-quality tobacco needed for the production of double corona, or prominente, cigars, as they are called in the factory. Last year's production was well under 30,000 cigars. Just a year before, almost 60,000 were made. "It's very simple," says Philip Jimenez Pares, manager of La Corona, who believes his factory may slightly increase the production of double coronas this year. "We just don't have the raw materials."

Benito Molina, the manager of the H. Upmann factory in Havana, has similar problems with his gran corona or Montecristo "A," Cuba's most expensive and largest cigar. "In 1994 we made only about 10,000 [of the] Montecristo 'A', " he says. "But we have the ability to make 20,000 to 25,000 a year. We just didn't have the quality wrapper leaf available." In addition, his factory usually produces up to 80,000 Upmann Churchill or Julieta cigars. Last year, he thought they would be lucky to make more than 50,000.

The problem is this: wrapper leaves for such large cigars should be at least 15 inches in length and about four inches wide, besides having a specific, uniform color, texture and elasticity, as well as aroma and flavor. This usually represents a tiny percentage of a good harvest in Cuba's key wrapper-tobacco growing areas, the Vuelta Abajo and Partidos. In a good year, only 10 percent to 15 percent of a plantation's harvest may be of sufficient quality to be classified as wrapper. Only the half dozen or so leaves located in the center of a plant are usually used for wrappers. Of those, leaves that are the right size and quality for large cigars represent a much smaller percentage. When harvests are short--as they were in 1992, 1993 and 1994--finding top-quality wrapper tobacco is even more difficult. It's like taking a pint of whole milk and pouring away half its contents. Most of the cream, the equivalent of top-quality wrapper leaf in a harvest, is the first to go.

The situation is similar in the Central African nations of Cameroon and the Central African Republic, which are jointly responsible for growing wrapper tobacco known as Cameroon in the cigar trade. In the past two to three years, the darker-brown, richer-flavored tobacco has become increasingly popular with top producers in the Dominican Republic as American and European consumers have sought more distinctive cigars. Unfortunately, upheavals in the political and managerial structure of the tobacco industry in Cameroon, not to mention poor weather, have drastically reduced recent tobacco harvests. New tobacco plantings in the Central African Republic have helped, but Cameroon still accounts for more than two-thirds of all tobacco sold under its name, and last year's killer drought reduced the crop in both countries by 95 percent.

"The orders for big cigars around the world are going up faster than we can grow leaf tobacco in a year," says Meerapfel, whose family firm now oversees a large part of the Cameroon crop. "That has really put a squeeze on clients. I hope the situation with the 1995 crop, weather providing, will be better in Cameroon and the Central African Republic. We are doing everything we can to assure that this happens."

With the exception of such Dominican cigars as Partagas and Fuente, all other brands currently using Cameroon wrappers will be in short supply. Some producers have even switched to tobacco from other countries for their wrappers. "Cameroon is a lost cause," says Manuel Quesada of the Dominican Republic's Manufactures de Tabacos S.A. (matasa), producers of Fonseca, Romeo and Julieta, Licenciados, Sosa, José Benito and Cubita. "There are no sizes available. Nearly everybody is out of it."

One alternative source for cigar makers is Connecticut. Although the plantations located a short distance from Hartford report having plenty of wrapper leaf, some key cigar producers say it is increasingly difficult to get the color and quality of Connecticut shade wrapper that they want. "In Connecticut, you can find large enough leaves to do what you need, but as far as the quality that we need for the cigars--it is very scarce," says Quesada. "It's not a problem if you need a light-brown [almost yellow] wrapper, but the trend is for darker colors. Those can be hard to get."

Not everyone who uses Connecticut shade has problems. General Cigar Company, producers of Macanudo and Partagas (Dominican), has all the top-quality wrapper leaf it needs, according to Daniel Nunez, director of Culbro Tobacco's operations in the Dominican Republic and Connecticut. General Cigar and Culbro Tobacco, which is a key grower of Connecticut shade tobacco, are both subsidiaries of Culbro Corporation. "We have no problem as far as General Cigar," he says. "Macanudo works on a two-and-a-half-year inventory, and we have a very comfortable situation. We have never been better protected for wrappers in the past 10 years, especially for Macanudo. Any wrapper on a Macanudo is guaranteed to have two-and-a-half years of aging."

Nunez admits, however, that his company is in a less secure--but still stable--position with its Cameroon wrapper cigars, such as the Partagas. "We are very comfortable [with Cameroon tobacco] now. For our 1995 production of Partagas, for example, we have all the Cameroon wrapper we need in our inventory," he says. "If there is a good harvest in Cameroon this year, then there shouldn't be a problem."

Nunez says that building a solid inventory of the best-quality wrapper tobacco is one of the main reasons General has been investing millions of dollars into its Connecticut shade operation. "Let's remember that Culbro Tobacco is primarily for General Cigar and to protect its brand, Macanudo," he says, adding that they have significantly increased the production of darker-colored wrapper leaf in recent years. He estimated that 50 percent of his company's wrapper-leaf harvest will now be considered dark-colored, compared with only 15 percent to 20 percent five years ago. "Whatever surplus wrapper we have is for sale. But this [surplus] is not usually up to the standards of Macanudo."

Nonetheless, Nunez thought that more top-quality, darker-colored Connecticut-grown wrapper tobacco would be available in the coming years. "You can't change things from one day to the next," he says. "It takes a long time; it is a very expensive business growing tobacco, and especially in premium cigars. I foresee that in 1995 and 1996 there should be enough Connecticut shade for all premium handmade cigars."

So why haven't other cigar manufacturers followed General's example and carried large stocks of tobacco to buffer shortage periods? "Building an inventory in tobacco is a tremendous investment," says Meerapfel. "So the shortage will be most difficult for people with small inventories. It could even cause a fluctuation in the quality of cigars next year from smaller producers. At the present pace, there will be a very tight situation in everything, whether it is long filler, binder or wrapper."

Moreover, tobacco growers are extremely slow to adapt to changes in the marketplace. This is primarily due to the nature of growing and handling tobacco. It may take as long as three years for new wrapper tobacco to find its way to a cigar: one year of growing, six months of processing and an additional 18 months of aging. Also, new plantings require massive investment--even though only a percentage of the total can be sold as wrapper or premium tobacco. Wrapper can represent only about one-tenth to two-thirds of the entire crop, depending on its provenance. So the risk of harvesting only small quantities of top-quality, saleable tobacco is too high for most farmers.

Another factor sometimes forgotten but still significant is Mother Nature. She can be very tough on tobacco growers. Last year's crops in both Cuba and Cameroon were severely damaged by poor weather during the growing season. In fact, Cuba has not had a good wrapper crop since 1986, although many in the tobacco business there claim this year could break records--if the weather is good. "We have everything we need this year," says Padron, who, after receiving millions of dollars in aid from his worldwide agents, purchased and distributed fertilizer, petrol and other goods to growers in prime tobacco regions after last year's small harvest.

"It is the first time in four or five years, maybe longer. We have the tapado [tent cloth], the wood, the fertilizer, everything. If we have a big harvest this year, then there will be a big increase in big cigars. That means more Hoyo de Monterrey Double Corona, more Punch Double Corona. We must pray to have a big crop this year. We must pray." Padron says the export factories in Havana could easily handle the extra work, although factory owners in other countries were less convinced they could carry the extra workload if the raw materials were available. "The industry has grown by leaps and bounds, but we want the growth to be a gradual thing," says Fuente. "To increase your production of large cigars, you have to order more molds and train your rollers. It is a question of priorities: we sell other cigars also, don't forget."

In addition, none of the cigar producers we interviewed want to risk reducing their quality to meet the demand. "The demand is fantastic, but we can't just think that we can make a killing in sales, not worry about the quality and then retire," says Quesada. "We can't supply the demand without the quality. So until things get better, we'll just have to suffer."

Quesada and other cigar-trade members aren't the only ones suffering. Frustration runs all the way down to the consumer in knowing that fewer and fewer Churchills, double coronas and other large cigars are available. Still, it could be worse. "It is not as bad as it seems," admits London cigar merchant Emery. "People will usually take a Punch Punch or Robusto if they can't get a Churchill or a double corona. They don't want to leave empty-handed."

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