Cigar Industry

Q&A: Akhil Kapacee of Regius Cigars

Jun 22, 2017 | By Gregory Mottola
Q&A: Akhil Kapacee of Regius Cigars
Akhil Kapacee of Regius Cigars discusses his breaking into the business and entering the U.S. market.

Smokers may recognize the Regius brand, but perhaps fewer are familiar with the young man behind it, Akhil Kapacee. Born in London, Kapacee abandoned a brief career in the financial industry to enter the world of cigars. Regius was released in London before making its way across the pond to the U.S. Kapacee intended the brand to be reminiscent of the only cigars he knew—Cubans. Senior editor Greg Mottola sat down with the 30-year-old to discuss his breaking into the business and entering the U.S. market.

MOTTOLA: What did you do before cigars?
KAPACEE: I was in the financial sector as an investment banker with Barclays Capital. I only did that for a year and a half. Was in banking and trading bonds for awhile, but didn't really like it. The whole concept of working 10,000 days in your life you might as well enjoy it. Didn't like going to an office and didn't like looking at a computer screen all day. I left when I was 23.

Q: How did you get the idea of going into cigars?
A: Being in the banking business, I smoked cigars—all Cuban. The problem was that a lot of Cuban cigars in London were very expensive, and one in four were plugged. I wanted to make a cigar for the British market.

Q: How did you enter into the industry?
A: The British embassy put me in touch with a Nicaraguan investment company called ProNicaragua. I flew from London to Managua and they took me around to see a few factories. That was the first time I smoked Nicaraguan tobacco. I thought I could make something unique out of Nicaraguan tobacco, but the cigars I tried were too spicy or too strong for the European palate.

Q: Which factory was your favorite?
A: When I walked into Plasencia's factory, I found that this factory was really organized and very professional. Nestor [Andrés Plasencia] said, "Why don't you try and play around and see what you think." I worked with his master blender. I said I want something that's not aggressive. They told me to stick with lower priming tobaccos.

Q: How were your first blends from Plasencia?
A: They weren't bad cigars, but they lacked that magic that makes you want to come back. I sent the cigars back to London to John Darnton, who was previously with Hunters [& Frankau, the U.K. distributor for Cuban cigars]. He told me we have to do better. But I was very confident that Nicaraguan cigars could compete with Cubans. I added a few viso tobaccos to the blend and a ligero.

Q: What year were you officially in the cigar industry?
A: I sold my first cigar in 2010.

Q: What was your first brand?
A: Regius. It was sold exclusively in the U.K. and I distributed it myself. It's not the easiest thing to be your own distributor. The problem is taxes. They're very high and it's a big investment but I had confidence in the product. It took on very quickly. John became my sales guy and got it into 50 accounts in one week.

Q: What exactly were you looking for when you created your first smoke?
A: I wanted something that I would smoke regularly and that was consistent. I wanted something that stood out. I wanted a cigar that tasted Cuban, in that profile.

Q: When you say Cuban, what do you mean exactly?
A: Meaning, it starts smooth and builds a nuanced richness.

Q: And you think Regius achieved this?
A: Judging from the sales we had in London, I'd say yes. I credit the Jalapa tobacco in Nicaragua. The soil in the valley is dusty and the tobacco is sweet, creamy and complex.

Q: Did you find any non-Cuban cigars to be Cubanesque?
A: No. Not one cigar I tried in Nicaragua had what I wanted.

Q: How involved were you in the blending process?
A: Very. The Plasencias know the tobacco, but I know what flavor I want. They're used to making cigars for the U.S. market. That's very different from what I was looking for.

Q: What was the initial reaction to your first brand?
A: The retailers took it in as a favor and the customers kept coming back. It picked up a loyal following.

Q: How many different brands do you make?
A: Six, all of them made by Plasencia. Black Label was the first and is the biggest seller.

Q: How many cigars do you make per year?
A: Last year, 250,000.

Q: Who distributes the brand?
A: Oscar Valladares Tobacco & Co.

Q: How do you feel about the term "boutique cigarmaker"?
A: I think it's redundant because cigars are boutique anyway. It's not a machine-made product. It's not a commodity. There's no futures market in the tobacco industry. It's artisanal and very specialized. There are demands for various leaves, various tobaccos and various primings at different times. It's not like cigarettes.

Q: Do you consider Regius a boutique brand?
A: By virtue of the fact that we're not mass market, yes, I do. Our quality and flavor appeal to the connoisseur.

Q: How would you compare the U.S. smoker with the London smoker?
A: British people smoke what their grandfathers smoked. They smoke Cubans. In the U.S., because of the embargo, they've become accustomed to other flavors, so the palate is more wide ranging.

Q: Being a relatively new brand, what are your thoughts on the FDA?
A: Taking the long view, the cigar business is here to stay. I'm prepared for it. If it ends up costing $200,000 per size to get approved, I'll be out of business. But $20,000 per size is no problem. Nobody knows what the final costs will be. But I think it will be a non-issue.

Q: Has the FDA ruling affected you yet?
A: I've started to pay user fees and health warnings. So far, it's added about 5 cents per cigar. It may sound arrogant, but I wouldn't be investing in my company if I thought it was an issue I can't deal with. Plus, I have the European market, which finances my growth for the U.S.

Q: What was one of the biggest mistakes you made in the cigar business?
A: I underestimated how tough it was to get into the U.S. market. I came at it from a very European perspective. In England, if the cigar's good, it will sell itself. In the U.S. there has to be a lot more marketing behind it.

Q: What is your newest brand?
A: Regius Exclusivo USA. I still wanted flavor progression and a clean finish, but with the strength of Nicaraguan tobacco. I call them my fusion blends. Red, White and Blue labels are my tribute to America. I wanted to be recognized for making good cigars and America is the only place to do it.

Q: What makes you say that?
A: The U.S. is 50 percent of the world's premium cigar consumption. It has the best shops and the most lax smoking laws. Compared with investment banking I feel like I've done something worthwhile. It's a tough business, but it's a lot of fun. n

This article first appeared in the June 6, 2017 issue of Cigar Insider.

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