Cigar Industry

Dominican Dominance

Not so long ago, the Dominican Republic was a small player in the world cigar market. Now it leads the way.
| By David Savona | From Alec Baldwin, May/June 2004
Dominican Dominance

Guests at the mountaintop resort of Rancho Camp David in the Dominican Republic are an adventurous sort, for it's a long, skyward drive up a narrow and at times haggard road to get to the hotel. Their reward is an unparalleled view of Santiago, the cigar-making capital of the Dominican Republic. At night, the city is a sea of lights, a brilliant tapestry of winking white that provides the idyllic backdrop for an evening spent with a locally made cigar. In the morning, thick, white mist hangs low in the valley like clouds captured from the sky, making the view even more breathtaking.

Santiago is impressive. In a decade, the city has grown from a population of 365,000 to more than a half million. Cigars are part of the reason. The Dominican Republic is making as many premium cigars as Cuba—more by some estimates—and more than half of the handmade cigars sold in America every year. If you smoke Fuentes, Davidoffs, Romeo y Julieta 1875s or Macanudos, you're smoking cigars that come from here and contain a hefty amount of locally grown tobacco.

It's hard to imagine a cigar world without the Dominican Republic, but the country hasn't been a market leader for long. Although its oldest cigarmaker, La Aurora S.A. has been in business for a century, most of the cigars it made in the past were for local consumption. In the 1970s the first free trade zones opened in the country, welcoming companies that would make cigars strictly for export. It took nearly a decade for the Dominican Republic to overtake the Canary Islands and Jamaica to become the leading cigar producer for the United States. The increases in cigar production here have been extraordinary. Dominican cigar exports were a paltry 5.8 million in 1977, grew to 33.7 million in 1981 and stand today at 160 million. In 2003, shipments of handmade Dominican cigars grew by more than 5 percent over 2002 levels, greater than the overall market.

"The growth of the Dominican cigar is so incredible over the past 20 years—it's been in business such a short time," says Ernesto Perez-Carrillo, the maker of La Gloria Cubana cigars. He's smoking one of his freshly rolled La Glorias, perhaps his only vice. Carrillo, a slim 53-year-old, is an avowed fitness nut—one of the bedrooms in his Santiago apartment has been transformed into a miniature gym.

When Carrillo outgrew his original space in Miami, he opened a factory in the Dominican Republic to try to satisfy the raging demand for his cigars. He began making cigars here in 1996 in a factory in the Pisano free trade zone, outside Santiago, and quickly outgrew that space, so he opened a factory next door. After selling his company to Swedish Match AB in 1999, Carrillo moved to his current space, a large factory in Santiago.

He's outgrown that as well. He walks up some steps to an area on the side of his rolling gallery, where rows of tables have been set up for junior cigarmakers. The space used to be a cafeteria.

"We have 190 people, we're going to get to 220," he says. He walks over to a table and picks up a long perfecto, with a tapered tip and foot. It's wrapped in Ecuadoran leaf grown from Sumatra seed, as are all natural La Glorias. "This is the first shaped cigar La Gloria Cubana has made in 20 years," he says. It's his only perfecto.

He moves from his factory to a room in a huge tobacco warehouse, where the workers greet him with smiles and hearty hugs, and begins looking at his impressive stocks of tobacco that come from Ecuador, Connecticut, Nicaragua and the Dominican Republic. His Ecuadoran wrapper is three years old, his broadleaf and Dominican tobacco is five. You can hear the pride in Carrillo's voice as he looks it over. "Let me tell you something," he says. "I think the Dominican has come into its own, as far as being compared with Cuba or any other country."

The sale of the company to Swedish Match has untied Carrillo's hands, allowing him to focus on cigar making rather than bookkeeping and the like. During the cigar boom, Carrillo couldn't answer his phone calls, let alone design a new cigar shape.

Getting creative with cigars has been a hallmark of Litto Gomez, who co-owns the La Flor Dominicana brand with his wife, Ines Lorenzo-Gomez. His newest cigar shape is unique and eye-grabbing, a love-it-or-hate-it creation called the Double Ligero Chisel, a strong figurado with a head shaped like the hand tool for which it is named.

Litto Gomez spends each week here, commuting via plane from Miami. He's typically in his Dominican office late Monday through Friday, splitting time between his factory in Tamboril and his farm in La Canela.

Gomez, who co-owns the farm with cigarmaker Jochi Blanco of Tabacalera La Palma, has improved his farm with each crop. The Chisel, which has an Ecuadoran wrapper, gets its guts from the farm.

Gomez is becoming increasingly less dependent on outside tobacco. Three years ago, he estimates, 40 percent of the tobacco he used came from outside vendors. Today he's reduced that ratio to 20 percent.

"This is beautiful stuff, brother," Gomez says with a smile, wearing his trademark Montecristi Panama hat. He has a passing resemblance to actor Andy Garcia and looks younger than his 50 years, especially when walking in his tobacco field. His shade crop is a few weeks old. The small plants are a vibrant green, vivid against the dark brown earth. At this stage they are nothing more than a few tufts of beautiful leaves not far from the ground, but soon they will be standing as high as eight feet, bristling with nearly two dozen spade-shaped leaves.

Business has been good for Gomez. "We have a strong market of smokers," he says. "It's steady. It's not going down, it's not like after the boom. Now you have a definite market of consumers." Gomez can't fill the orders for his Chisels, which are fat, powerful cigars that pack a punch, fueled in part by his homegrown ligero. They're worlds apart from the original cigars he made, which were mild smokes with Connecticut-shade wrappers.

"I was a nice guy who made these nice cigars for a while," he says, a Cheshire cat smile creeping across his face. "No more Mr. Nice Guy. From now on, what comes out of that factory is going to make you sweat."

Dominican cigars were once pigeonholed as mild, but that stereotype is wholly off base today. Carlos Fuente Jr. perhaps the world's premier blender of strong cigars, has no shortage of offerings that can make anyone's nose tingle, from the Ashton VSGs he makes for Robert Levin to his steroid-fueled Fuente Fuente OpusX X3, also known as the Power Ranger. Tabacalera de Garcia Ltd. the massive factory that makes all the Dominican brands for Altadis U.S.A. Inc. has been pumping out stronger versions of the company's best-selling brands, from Romeo y Julieta to H. Upmann to Montecristo. Montes, once available only as rather mild smokes with Connecticut-shade wrappers, now come in a host of stronger varieties: Montecristo Platinum and Montecristo White are pumped up with Nicaraguan tobacco in the filler blend. Macanudos, Davidoffs and Fonsecas are also available in stronger varieties.

For years the leading cigarmakers of the Dominican Republic have had large inventories of tobacco. They still do, but they're ordering new leaf at record levels to maintain their stocks and keep up with demand. While Dominican tobacco is a major part of nearly every cigar blend made in the country, the cigarmakers here are master blenders, and rely on foreign leaves to make their cigars.

"I'm selling more tobacco this year than during the cigar boom," says John Oliva Jr. an executive from Oliva Tobacco Co. of Tampa, Florida, one of the world's leading tobacco growers and brokers. Oliva's speciality is Sumatra-seed wrapper that grows on several hilly farms in Ecuador and is found on La Glorias and La Flor Dominicana Double Ligeros, among many others. Oliva is back-ordered on the Sumatra leaf.

"I don't know how to explain it," says Oliva, "but we're moving product."

Back orders, which occur when cigarmakers can't fill the orders they have on certain cigars, were common during the cigar boom, but were largely unheard of between 1998 and 2001.

Jose Seijas runs Tabacalera de Garcia for Altadis. The factory, located in La Romana, half a day's drive from Santiago, is the largest cigar factory in the country, if not the world, but it still can't make enough to fill all of its back orders. In 2003, the company added more manufacturing capacity.

"Last year we built our capacity, so we don't have to work on Saturdays," Seijas says. Still, when certain large projects need to be done and time runs short, the company works about two Saturdays a month. Some 3,000 people work there. Seijas and the Altadis team have come up with a large variety of new blends in recent years.

"Quality is foremost," he says. "I want an increase we can manage very well."

La Aurora has put an increasing focus on its popular Preferido cigars, the bulbous perfectos that are copies of the company's original cigar from 1903. Eleven Preferido cigarmakers sit in a special area, separate from the factory, that is designed for tourists. It's a gorgeous setup with a lector's table and a small shop off the rolling gallery where visitors can buy cigars, accessories and even a La Aurora tie. The energetic Eugenio Polanco leads tours through the rolling area, describing to tourists the art of enjoying cigars. Polanco, who is fluent in five languages, also serves as the lector. "My father used to roll tobacco, sell tobacco, make his own cigars," he says. "My father was a complete cigar man."

Cigar smoking is a thirsty business. After visitors to La Aurora watch the cigars being made, they can walk across the perfectly landscaped courtyard to the cafeteria and buy a sandwich and a cold Presidente beer to pair with their Preferido. After the refreshment, they can walk into a modern, luxurious museum—the only museum in Santiago—and view a showcase of Dominican art and history.

It's quickly evident that La Aurora is much more than cigars. The company makes most of its money from beer and cigarettes (it claims more than 90 percent of the local market for each), but has not forgotten its original business, cigars.

The Preferidos are rich smokes. The filler and binder tobacco for each cigar spends half a year in old rum barrels—the company keeps the tobacco behind a padlocked wire fence upstairs from the main production room.

La Aurora's newest Preferido comes in a gold tube. It's made with an oily, dark wrapper leaf grown in the Navarette region of the Dominican Republic from Corojo seed. La Aurora has been gathering the wrapper since 1999/2000 (the company lost half the 2000/2001 crop to blue mold).

The current crop looked good on a winter visit. The freshly picked Corojo was in the tobacco barns, already beginning to take on a bit of its signature reddish color, and the company was preparing to harvest its second crop of olor wrapper. (Olor, a seed variety that grows large leaves, is typically used as binder leaf.)

The sight of a Dominican cigarmaker with muddy boots is becoming more common, and many have been spending less time in their factories and more time in tobacco fields working on growing wrapper for their Dominican puros. After the rave success of the Fuente family's Fuente Fuente OpusX, which contains only Dominican tobacco, several other companies have followed suit. General, which has grown green candela leaf in the country for decades, now has a dark Dominican wrapper on its Ramon Allones cigar. Hendrik Kelner of Davidoff, once a vocal doubter of the notion of growing Dominican wrapper, released a Davidoff puro recently and is growing more wrapper. (Kelner had such a good growing season in 2003/04 that he ran out of space in his curing barns.) Gomez plans to release a Dominican puro this year, his 10th anniversary as a cigarmaker.

"If there was supposed to be a challenge to grow wrapper in the D.R. then it has to be a bigger challenge to grow in La Canela," Gomez says. The agricultural town is windy and sunny, forces that can make tobacco thick and veiny. Gomez fights the elements with a higher percentage of shade and other methods. But he thinks he and other growers have been given a break, in a way. "For us, it's even easier, because someone took the chance before us, and was very successful."

That someone is Fuente Jr. who turned a tobacco farm into a showcase with his Fuente Fuente OpusX project. The all-Dominican cigars put the Dominican puro on the map and set a new standard in the cigar world in terms of supply and demand.

Fuente Jr, has been in charge of his family's factories for more than five years now, and he has introduced a number of innovations-substantive as well as organizational. One of his greatest achievements, he contends, is the use of young people in his factory. Many of his best workers have rolled cigars for only a few years. "I don't know how we did it, but I think that we have changed the world of cigars with what we have done," he says during a tour of his main cigar factory in Santiago.

Tabacalera A. Fuente, in effect, is several small factories within one large factory. Large, separate rooms with selected rollers are used for crafting particular cigars, including Fuente Fuente OpusX, Ashton VSG, Arturo Fuente Hemingway and Don Carlos. The factory is extremely well organized and clean, with workers seemingly full of energy as they construct their cigars.

"I didn't want them to have worked with anybody else. They learned everything from us. They didn't have any bad habits," Fuente says. He began this policy in 1997, recruiting young, well-educated adults from middle-class families in Santiago. "Twenty years ago the Dominican Republic had a tobacco culture, but not a cigar culture. I think that we have helped build the cigar culture here that we have today."

The culture, in Fuente's own words, has been quality driven. Fuente doesn't judge his cigar rollers based on output. Many of his best rollers make 100 cigars or fewer a day. In addition, most use a cigar-bunching system called en tubado, whereby four or five leaves of filler are rolled into tiny tubes. It is an old system that originated in Cuba decades ago but is rarely used today as it is not time effective. "I think it is the best system, so I want my best rollers to use it," he says confidently.

Not all is good in the Dominican Republic. Scores of its cigar companies failed in the wake of the cigar boom, leaving behind inventories of cigars and tobacco. Bulk discounters bought the cigars from desperate owners (or the banks that repossessed their inventory of those who couldn't pay) and sold them on the cheap. Manuel Quesada, owner of Manufactura de Tabacos S.A. or Matasa, recalls turning down wholesalers who had asked him to supply tobacco at prices so low he would have to sacrifice quality and consistency. [Click here to read the interview with Quesada.]

Today, most of the lowest quality cigars are gone, but several cigar Dominican companies are supplying the discounters with handmade cigars for 25 to 30 cents apiece. Cigars can be made at those prices by skimping on production details and using unwanted tobacco, but they can't be made well, even with labor costs are at an all-time low due to the Dominican Republic's recent currency crisis. (As this story was being written, it took about 45 Dominican pesos to buy one U.S. dollar—a year earlier, it took only 20. Cigar companies have raised salaries, but workers are having difficulty buying items such as gasoline and even some foods. A national strike in protest of the president's handling of the crisis essentially shut down the country for two days in January, and more strikes were expected before elections in May.)

Once there were more than 100 cigar factories here, but today little more than a dozen are still in business. Tabacalera de Garcia, General Cigar Dominicana and Fuente are the giants, each making tens of millions of cigars annually. There are several midsize companies, such as Cigars Davidoff and OK Cigars, where Davidoffs and Avos, respectively, are made, as well as El Credito, Matasa and Tabacalera La Flor, where La Flor Dominicanas are produced. Philip Wynne has some of his Felipe Gregorio cigars made here, Cuevas y Toraño makes La Perla Habanas and other smokes, and the U.S. Cigar Sales factory makes several contract brands as well as Don Tomás Dominican.

The business has been boiled down to a select few, many of which were around before the boom and survived by not changing their patient ways of making cigars. The result is that the quality of Dominican cigars is superb, and consumers seek them out.

Picky consumers. "Forget about good," says Gomez, reflecting at the end of a day on his La Canela farm. "You have to come out with outstanding stuff. Very good is not enough anymore." He pauses, taking another puff from one of his cigars. "But it's very easy to work that way. You can keep your focus on where it should be."

James Suckling contributed to this report.

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