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Cigar Industry

Nicaragua: The New Start for Nicaragua

This Central America country makes a strong comeback in the cigar business
| By David Savona | From Gen. Tommy Franks, Nov/Dec 03
Nicaragua: The New Start for Nicaragua
Nestor Plasencia (background) and his son Nestor Plasencia Jr.

The clouds burst with fury over Ocotál, Nicaragua, as four visitors run for the shelter of a brick warehouse on a side road off the Pan-American highway. Inside is one of the largest collections of cigar tobacco in Central America. The building is a relic, built in 1978 by Anastasio Somoza Debayle, the Nicaraguan dictator, tobacco grower and cigarmaker. Somoza is long gone, and the Plasencia family, one of the largest tobacco growers in Nicaragua, now owns the warehouse. Nestor Plasencia Jr., a short, goateed 33-year-old, leads the group of visitors through the sprawling facility, past an army of women who sort through soft piles of cured leaves. The leathery, earthy aroma of cigar tobacco hangs in the air.

Plasencia Jr., who learned the art of tobacco growing at a university as well as at the side of his father, leads the group into a huge room. Asleep in its darkness, hundreds of tons of fermenting sun-grown tobacco are segmented into piles and covered by sheets of burlap. The leaves will be sold to clients in Nicaragua, Honduras, the Dominican Republic and elsewhere and some will go to the Plasencia-owned factories in Nicaragua and Honduras. The workers in Ocotál will process some 10,000 bales of tobacco this year, as much as is grown on 550 acres of land. Unable to hide his pride in the bounty before him, Plasencia Jr. flicks on the light switch, and a half-dozen bats flutter away, seeking to return to the gloom.

After its own 10-year sleep to 1995, a period when it was only a bit player in the American cigar market, the Nicaraguan cigar industry has reawakened. The turmoil of Somoza's rise and fall brought war into his fields, armies into the cigar factories and ruin to the Nicaraguan cigar industry. Now, withstanding war, embargo and recovery, Nicaragua has posted a strong revival. In 1995, only 2 percent of the premium cigars sold in America were Nicaraguan. This year, production of Nicaraguan cigars will make up approximately 11 percent of the handmade, premium market as it maintains the fastest such growth of any country. Millions more cigars made outside the country will incorporate flavorful Nicaraguan tobacco in their blends. Having rediscovered a taste that harks back to the country's glory days of the 1970s, Nicaragua is once again making some of the world's finest cigars.


The Hottest Cigar Brand in America

Jose Orlando Padrón and his son Jorge. It's opening day for the new Padrón factory in Estelí, and the rollers and bunchers are getting back into their routine after a two-week break. In the empty packing room, president Jorge Padrón is smoking a Padrón 3000, fresh from the rolling tables. The 35-year-old has a stern look belying his easygoing personality. He's a picky smoker, especially now, worried that some of his staff might be a touch rusty after the 14-day hiatus.

Padrón is one of the smaller brands produced in Nicaragua, but it's arguably the best. Retailers recently declared the company's Anniversary Series line the hottest brand for the second straight year in a poll conducted by Cigar Insider, the newsletter from Cigar Aficionado magazine.

The move to this new spot in Estelí will make Padrón a more efficient cigar producer. Previously, it had to move the bales of leaf from this storage facility to its old factory, a five-minute drive away.

The addition, comprising a large rolling gallery and offices, is 12,000 square feet, 50 percent larger than the old factory. Half of the 80 or so cigarmakers are bunchers (all of them male) who sit in the back of the room. The rollers (all of them female) sit in the front.

Making cigars is but a small part of the Padrón operation, for most of the 17 buildings the company owns in Estelí—75,000 square feet in all—are used for curing and storing tobacco, and a particularly mammoth room is where tobacco is sorted and graded. The rooms are filled with Nicaraguan leaves from the three major tobacco-growing regions of the country. Padrón uses only Nicaraguan tobacco, and it has a six-year inventory, enough to make more than 25 million cigars.

That's a lot of tobacco. Much of it rests in pilones, waist-high bulks created by the careful layering of hands of tobacco leaves, placed stems out, tips in. Periodically, Jorge and his father, Jose Orlando Padrón, the silver-haired, mustachioed patriarch of the company, will test some of the contents of a random pilone, smoothing out a wrinkled leaf of tobacco from one of the buried hands, still warm from the fermentation process.

The fermentation is key to developing smooth, rich flavor. The pressure of the leaves (a pilone weighs more than a ton) and the water added to the tobacco initiate fermentation, which causes a chemical change in the tobacco, burning off impurities and smoothing the flavors of the leaf. One can smell the ammonia coming off freshly cured tobacco, an aroma that differs considerably from that of a mature pilone, one that has gone through several rounds of temperature changes. Done properly, it can take as long as two years for heavy tobacco to be fully fermented.

The Padrón factory has air-conditioned work areas, unusual for Nicaragua. A system of wells beneath the floor collects rainwater, which the company uses to work its tobacco. (The local drinking water is chlorinated, and is avoided to keep it from changing the flavor of the tobacco.) But the factory is far from complete: the back office has only one desk, few chairs and just one phone line. The elder Padrón is walking through the factory, measuring tape in hand, plotting an additional wall here, a window there.

"The most important thing is to get the factory rolling," says Jorge, refueled by a hearty lunch of salted garlicky steak, rice and beans, and bananas. He's smoking what could be his eighth cigar of the day. "Once that's done we'll start all the finishing touches."

Despite all the extra space, there won't be many extra Padróns produced. The family-owned Miami company plans to make only 4.4 million cigars in 2003, about 10 percent more than it made in 2002. Only half a million will be Anniversaries.

"We could make 20 million cigars if we had to," says Jorge, "but we'd rather make those 20 million over four years."


The Giants

Tabacalera Perdomo S.A. owns one of the largest cigar factories in Nicaragua. In addition to making its own cigars—Perdomo Estate Selección, Perdomo2 and Dos Rios, to name a few—the Estelí factory also crafts smokes for a host of clients, from C.A.O. International Inc. to retailing giant Thompson & Co. to distributor Philips and King. The factory is packed with rollers, who work under fluorescent lights that hang very low, as in a billiard room, just a few feet over their heads.

"People are shocked at the number of cigars and brands that we make," says vice president Mike Argenti, alluding to Perdomo's simple rule of thumb. "A lot of guys, they're captive to a couple of brands, and if those brands wane, they're out of business. You need to make cigars."

Perdomo's goal is to be as self-sufficient as possible. "We make our own cellophane, we have a box factory, we do just about everything," says Argenti. He proudly shows off a cigar roller making a cigar with a Cuban-style, three-seam cap for the company's most expensive cigar ever, the Perdomo Reserve Edición de Silvio, and displays a pair of $30,000 laser engraving machines that are etching logos onto cigar boxes. Cutting boards are made of steel, rather than the traditional wood.

The factory is four years old. Perdomo, facing growing pains, had to move from its smaller facility in Estelí (it's now used by Jonathan Sans, who makes his Acid brand of flavor-infused cigars there) and before that had to expand out of Miami to meet demand for its smokes. "We started with five people," says Argenti. "Now we have close to 600."

He walks out of the factory into a blaze of midday sun and steps through muddy soil and around several deep puddles still waiting to drain after a heavy rain. (A pair of swans sit, quite happily, in two of the largest ones—Nick Perdomo Sr., who runs the factory, is fond of animals, and has several roaming around the grounds of the factory.) A curing barn sits behind the large factory. Perdomo has begun to grow its own tobacco. Inside the barn, recently picked leaves hang from the rafters. Charcoal fires smolder in holes dug into the dirt floor, trying to cut the heavy humidity and raise the temperature of the barn.

"This is a very blue-collar business," says Argenti. "You get up early in the morning; you have to be a taskmaster to earn the people's respect. The reality is the very successful guys who make cigars are blue-collar, very nuts-and-bolts kind of guys. The very flamboyant guys are not going to go to a third-world country and start something from scratch. The reality of the industry is much different than the perception."

The only factory in Nicaragua that can make Perdomo look small is Nicaraguan American Tobaccos S.A., known as NATSA, in Estelí. One of its owners is Lew Rothman, the owner of JR Cigars, the largest cigar retailer in the United States. Rothman's motto is: "Supplying the widest variety of tobacco products to people from all walks of life; fast, fresh and cheap." NATSA is one of the reasons for his success.

It's impossible to imagine a busier factory. Cigarmakers sit nearly shoulder to shoulder as hundreds of pounds of tobacco—whole leaves, shreds, a mix of both—disappear in the hands of the workers, transformed in a flash into cigars. NATSA includes three buildings, with some 1,000 workers, 700 of them cigarmakers. They create a variety of cigars by hand: some made from long filler and others a combination of long and short filler that are known as Cuban sandwiches. The factory hums with activity, like the proverbial beehive.

The eight-year-old NATSA has been expanding. "In the last two years, we've doubled the amount of the factory, the people, everything. We expanded the building by one-third," says Lazaro Lopez, who has moved here from Tampa, Florida, to temporarily run the company. The manager, Triki Bermejo, was nearly killed in a car crash that left him with a broken skull and pelvis, among other grave injuries. The factory has gone on without him.


Nicaragua's Oldest Cigar

Alejandro Martinez Cuenca smokes one of his Joya de Nicaragua cigars. The Joya de Nicaragua logo is painted proudly in red, green and white on the brick facade of Tabacos Puros de Nicaragua S.A., one of the largest cigar factories in Nicaragua. Much of the space inside is empty; 20 cigarmakers sit in a room that could easily accommodate a hundred more, slowly rolling dark, strong cigars. Still, the factory is busier than it has been in years.

Sales are up 30 percent, says Mario Perez, the marketing manager of the company. The reason? A new version of the brand, the oldest in Central America, called Joya de Nicaragua Antaño 1970.

The word antaño loosely translates as circa, and for Joya de Nicaragua the era around 1970 was a beautiful time. The company that originally made the cigar—Nicaragua Cigars S.A.—was created in 1964, and in 1970 the owners trademarked the Joya de Nicaragua brand. The cigars were a hit, and became a must-smoke in the United States. The puros were strong and flavorful, and rivaled Cubans. In 1976, the company sold 9 million in the United States alone. In 1979, however, a major problem arose with one of the founding partners.

His name was Somoza. When he wasn't growing tobacco or helping run a cigar company, Somoza was the dictator of Nicaragua. Revolution led to Somoza's overthrow in 1979, and for good measure rebels burned the Joya de Nicaragua factory to the ground. It was rebuilt out of brick a year later, but in 1985 the United States placed an embargo on Nicaraguan goods that wouldn't end for five years. The nation's cigar industry didn't begin to truly recover until 1995.

The Joyas of the cigar boom were mild, uninspiring cigars made with Connecticut-seed wrappers grown in Nicaragua. The new Antaños, which were released last year, are anything but. They are made with a Cuban-seed hybrid wrapper grown by Nestor Plasencia Sr.; and one can almost see the oil drip from the cigars, the strongest of which are robust and as spicy as a habanero. Perez credits the entire 30 percent increase to the new brand: "We want this cigar to become what this brand was in the '70s, when it was the most popular brand from Nicaragua."


The New and the Small

The cigar boom of the mid-90s found the cigarmakers of the Dominican Republic battling over tobacco and rollers when a horde of newcomers flooded the country in the mid-1990s at the height of the cigar boom. Some newcomers came to Nicaragua at the time, but not on the same grand scale as in the Dominican Republic. One cigarmaker estimates that there were 40 companies making cigars in Nicaragua in the mid-1990s, and that today there are 20.

A handful of relative newcomers have weathered the storm at the end of the cigar boom. One is Tabacalera Tambor, one of the smallest cigar factories in the country, which relocated from Costa Rica to Estelí in 2001. The factory makes Bahia cigars. Oliva Cigar Co. (no relation to Tampa's Oliva Tobacco), known for its Oliva "O" cigar, which comes in a circular box, was at work building a new factory in Estelí in June. A third company, Tabacalera Tropical (known as Tropical Tobacco until this year), was acquired in 2002 by Eduardo Fernandez, who has planted massive crops of shade in Jalapa. Tabacalera Tropical and its cigar factories, called Tabaco del Valle de Jalapa S.A., are turning Fernandez's leaves into premium cigars.

Philip Wynne, owner of Felipe Gregorio Inc., bucked trends by building a cigar factory in the tobacco town of Condega in 1994. Wynne's company was once known as Cigars of Honduras, but when Consolidated Cigar Corp. (now part of Altadis U.S.A. Inc.) acquired the Flor de Copan factory in Honduras where Wynne once made his cigars, he shifted all of his production to Nicaragua, including the Felipe Gregorio and Petrus brands. In addition to producing his own cigars, Wynne also makes private-label brands for Thompson and Finck Tobacco.

Kiki Berger, a rotund man with an easy smile and friendly demeanor, has been making cigars in Nicaragua for eight years. The 47-year-old has a small factory on the outskirts of Estelí attached to a practically empty building the size of an airplane hangar where he intends to build a new factory, when time allows. Berger looked rather silly when he planted a tobacco field alongside a road several years ago, but today that leaf is powering many of his blends, including the well-received Savinelli Nicaraguan Selection cigar, a dark, box-pressed beauty.

"I still have to build my offices, everything," says Berger, moving through the dark, empty rooms of the larger building. His wife, Karen, a young, slim blonde, helps him run his operations: Berger has to travel to Managua several times a week for dialysis, and when his health improves he hopes to focus on finishing the new factory. In the meantime, Karen practices her cigar-rolling technique.

The existing building is rough around the edges, but Berger has grand hopes. "I'm not looking for a pretty factory," he says, "I'm looking for quality."


Under the Radar

Father and son team Charlie (left) and Carlos Toraño. "We're going to take you to what we call our stealth factory," says Charlie Toraño, a tall, lanky, soft-spoken 36-year-old. His grandfather was one of the biggest names in Cuban tobacco in the final years before Castro nationalized the industry, but Toraño worked as an attorney before becoming vice president of Toraño Cigars in 1996. "I remember asking my father if I would have a chance to work with him. I distinctly remember him saying, 'I don't think so.'" The revival of cigar sales allowed him to join the family business. "It's one of those businesses that gets under your skin," he says.

The car pulls up to a building without a sign. A passerby would never give it a second glance, but inside 140 very active cigarmakers are making such brands as C.A.O. Criollo and Carlos Toraño Nicaraguan Selection.

Toraño Cigars has owned the factory—called Latin Cigars de Nicaragua S.A.—for six years, and has expanded the production by 200 percent since opening. Fidel Olivas and his sons run the day-to-day operations. Unlike most cigar factory managers, who have Cuban roots, Olivas, a burly, large-framed man with a shock of thick black hair, was born and raised in Nicaragua. He has worked for Nestor Plasencia and at the Joya de Nicaragua factory.

He has a new boss: In late January, the Toraños partnered with client C.A.O. International Inc. to form C.A.O. Fabrica de Tabacos in Nicaragua and in Danlí, Honduras. In Honduras, half the building is now used exclusively for making C.A.O. cigars. In Nicaragua, the front of the rolling gallery is inhabited by C.A.O. rollers.

"Two years ago this place was so much smaller," says Tim Ozgener, the vice president of C.A.O. cigars. Standing in front of the rolling gallery wearing jeans, a loosely buttoned white shirt and a pair of Italian sunglasses, his shaved head gleaming, the 34-year-old looks like a Hollywood star who has wandered off course. "It was teeny. C.A.O. was maybe two tables."

Today, half the workers are making C.A.O.s, including the company's Gold line and the L'Anniversaire Maduro, which had been made at Tabacalera Perdomo. The Toraño partnership gave C.A.O., which has always had its cigars made under contract, the ability to acquire and stockpile its own supply of tobacco, as well as more control over how its cigars are made.

There isn't much room left. The tables for the first row of workers are pressed nearly up to the front wall. "It's close to maxed out," says Toraño, as he and Ozgener look about the room, as if they're trying to imagine other ways to add space. "We may have to change that, Charlie," says Ozgener with his ever-present smile. "I need those maduros."


A Focus on Growing

Back in Ocotál, Ozgener and Toraño are examining the leaves put before them by Plasencia Jr., who is describing the company's new method of tobacco fermentation. Typically tobacco is aged in primings—groups of three tobacco leaves that define different heights on the plant. The higher up the plant, the stronger the tobacco. Plasencia uses a more exacting method of sorting that takes into account that different varieties of tobacco and different methods of cultivation create different ratios of the three categories if the tobacco is defined by strength of flavor. Those types are seco, the mildest type of tobacco; viso, stronger leaves that grow higher on the plant; and ligero, the most powerful variety. While they generally appear in ascending order on the plant, some plants may have larger or smaller segments of each type. The new method separates leaves by these three types, and each is fermented separately.

"People say the first priming is seco," Nestor Plasencia Sr. says in his typical enthusiastic, staccato voice. "No, no, no, no, no. It depends." Seed variety, the time the plant is put into the ground, the amount of rain that falls as the crop grows, the soil and fertilization, and at what point—if at all—the flower bud is removed from the top all can change the ratio of tobaccos on a plant.

The Plasencias also make a considerable number of cigars on both sides of the border, including the Bering brand, which the company owns, as well as the Indian Tabac brand, made under contract for Rocky Patel, of Naples, Florida. But growing tobacco is the heart of their business. By having technicians sort the crop early and determine what is what, seco can ferment with seco, viso with viso, and so on. Seco needs the least work to treat; ligero the most. The Plasencias have been doing it this way for the past two years. Now, in addition to making what the Plasencias believe is better tobacco, the extended sorting even allows the company to offer customers three tones within each color style, along with all the varieties in strength, from filler to binder to wrapper.

Ten years ago, the Plasencias primarily grew filler. Today, they've switched their focus to wrapper, which commands a far higher price. The business is booming. Much like Nicaragua itself.

"If you want to keep in this business," says Plasencia Jr., "you have to improve all the time."

Photos by Angelo Cavalli

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