The Gurkha Way
"I was young and drunk off my ass at a beach in Goa [India]," says Kaizad Hansotia. Some 26 years later, the head of Gurkha is in his headquarters in an industrial park in Florida, recalling his unlikely entry into the cigar business. "There was a guy selling cigars out of a little hut, and they were branded Gurkha. I was intrigued." Three bottles of rum later, he had bought all the shop's wares as gifts for the customers of his duty-free business and then acquired the entire brand for a mere $149.
Today, Hansotia has established Gurkha as among the most lavishly packaged and expensive cigars in the business. At more than $1,000, he's sold single sticks for a price that outstrips his original investment by some seven times.
Halfway across the globe in this suburb north of Miami, Hansotia has not forsaken the roots of his brand. A statuette of the elephant-headed Hindu god Ganesh sits in a dark corridor. It's difficult to tell whether or not Ganesh is a true relic or a reproduction, but it doesn't matter. A single beam of light gives its burnished brass details a transcendent quality either way. Around the corner, candles flicker on either side of another deity. Between the gods of war, gods of temperance and supreme gods, there are more sculptures in this series of quiet rooms than there are people. And the living souls who are here walk around like monks on a vow of silence. At the end of the corridor is an office full of more relics. This is not some mountainside temple in the Himalayas or after-hours at a museum. It's the headquarters and distribution center for the Gurkha Cigar Group.
Easy to overlook, the building is discretely located in an industrial park on the western edge of Tamarac, a flat South Florida suburb known for—well, nothing. Besides the Everglades on the other side of the expressway, Gurkha just might be the most compelling attraction in town, though no one would ever know it from the outside.
"I'm not Hindu," says Hansotia with half a smile. "But I love the icons and the art." He isn't Christian either, nor Muslim or atheist. He's actually Zoroastrian. One of the oldest monotheistic religions, Zoroastrianism predates Christianity by about 1,500 years.
Hansotia reclines in a leather chair puffing on a Gurkha Cellar Reserve 15 and ashes it into a bronze skull. According to Hansotia, the mold was made from the skull of a Taliban leader and fashioned into an ashtray. A few of these bronze skulls were cast and one ended up in Hansotia's office. Every relic in his office has a story, some benign, some macabre.
"My wife bought me that," he says. It's a canvas of a god-like face that materializes out of a gloomy backdrop in an all-knowing, all-seeing kind of way. But it isn't all statues and icons. Hansotia has an affinity for the modern U.S. military's special forces, not to mention weaponry in general. Swords and knives are strewn about the offices, some of museum quality, some very convincing replicas. And there's also a secret chamber loaded with sniper rifles. One might think that Hansotia sees himself as some sort of reincarnated warlord, but that's far from the case.
"I'm a pacifist by nature," he says, tapping more ashes into the skull.
Hansotia made his mark in the industry by packaging cigars in highly decorative—and, at times, absurdly expensive—boxes. Although perhaps the term absurd is relative in this case. Back in 2006, when Hansotia put 100 Gurkha Black Dragon cigars in a humidor made of intricately carved camel bone, it seemed perfectly reasonable to charge $115,000 per box. That averages to $1,150 per cigar. He made five boxes and sold them all. One was purchased in the United States, the rest internationally. The trick is knowing how to connect these high-priced packages to the right buyer. Once you can do that, the six-figure price doesn't seem absurd at all. As for who these buyers were, Hansotia won't say.
Despite his ability to find a market for a $1,000 cigar, Hansotia claims, as he puts it, no pedigree in the cigar business. He is not a product of tobacco lineage and refuses to recite any of the exaggerated clichés that often come with it. Rather, Hansotia entered the business via the watch and duty-free industry. His father was responsible for distributing watches throughout the world's duty-free channels and Hansotia decided that his family's duty-free business would be a perfect market for fancy cigars. As the Gurkha cigar lore goes, it all started on a beach.
Having recounted the anecdote of the company's inception, Hansotia lets out a small laugh at the memory. He's large and affable with a seemingly jolly disposition, but the world-weary 47-year-old is not given to regular outbursts of laughter. Perhaps the urge to stifle his own laugh stems from his upbringing in a London boarding school. He was born in India and educated in the U.K. after his parents relocated to Hong Kong. The family business brought him to South Florida where he finished out his teenage years.
It didn't take long for his vision to become more ambitious. Simple tokens of appreciation for preferred clients may have been a cute idea when under the influence of rum, but once he established a consistent factory for his cigars, Hansotia leveraged the connections of his family business and brought his product to duty-free. Unlike other well-established cigar brands found in the world's duty-free outlets, Gurkha's advantage was its unusually ornate packaging and unusually high price tag, which tends to attract high spenders.
"When I came into the business, I noticed that there was nothing in the super high end," Hansotia explains. "Davidoff was the only expensive cigar. I also noticed that everything looked the same. Everything was either in a dress box or in a cedar cabinet. I wanted something that really stood out."
So the cigar itself went from rags to riches. What was once a nondescript stogie sold on a beach was now a glittering prize accessible only to international air travelers. The cigar donned an ornate band full of gold scrollwork, but what really stood out was the main image. It was an idealized portrait of a mustachioed Gurkha—the legendary Nepalese soldiers known for ferocity. Produced in the Dominican Republic, Gurkha cigars made their duty-free debut in 1990. The first run of 50,000 cigars sold out very quickly. That year, Hansotia sold 200,000 Gurkhas all through duty-free outlet stores.
"During the reign of the British Empire, the military established officer's clubs throughout foreign territory for its British commanders," Hansotia explains. "The idea of the officer's club was to provide a grand atmosphere abroad to keep the traditions of the Empire alive in foreign countries. I wanted to make an opulent cigar that would have fit right into one of those officer's clubs."
At its debut, Gurkha came in three sizes—Churchill, toro and torpedo—and they retailed in duty-free shops for $14 to $17 per cigar. While most cigars on duty-free shelves were only sold by the box, Gurkhas were available by the individual stick.
"People needed to smoke something different. A $17 cigar in 1990 was almost unheard of."
The Gurkhas were infused with Cognac by a process that Hansotia claims he not only invented, but uses to this day. He also had a non-infused line that sold for a bit cheaper.
Gurkha cigars remained a duty-free exclusive for five or six years until Hansotia met Nestor Miranda of Miami Cigar & Co.
"Nestor was interested in carrying our product," Hansotia says. "I thought it was a good idea. He distributed our regular brands to retail cigar stores but the infused product was left to duty-free. We just didn't have enough of the infused product for both. He introduced me to a lot of people and a lot of retailers. I am grateful to him for that."
For about a year, Gurkha cigars existed simultaneously in duty-free and cigar retail outlets until Hansotia made the complete transition to traditional retail tobacconists.
"The change was painful," he recalls. "We had five distributors for duty-free. All I had to do was provide these distributors cigars until they reordered. They were the ones bringing the cigars to the shops. Once I switched to retail, I had to travel across the United States and meet each and every retailer. It was very hard work."
But Hansotia missed the mythic cigar boom of the 1990s. Gurkhas entered retail after the boom had already smoldered and stores were stuck with excess inventory they couldn't move.
"The retailers were very upset with me," he says with a chuckle. "They said ‘Are you kidding me? You're putting out a $14 cigar when we can't even move what we have here in the store already!' " Clearly, Gurkhas were not for everybody. As Hansotia made inroads throughout the retail landscape, he took back distribution, confident that he could handle it himself.
Hansotia rises restlessly and walks past a pile of bayonets that look as though they've been through the Crusades. He continues down the dark, quiet halls, passes a few statues and walks into an elevator. It's tea time.
The elevator door opens to the second floor of his office building. This is Hansotia's lair and it has a distinctly more colonial feel than the offices downstairs. The Florida sun struggles to penetrate the large wooden slats covering the window, and the room is even darker than the first floor. By decorating in dark woods and leather furniture, he may have perfectly reproduced one of those Officer's Clubs he was referring to. A steaming cup of tea awaits him on a table near more leather chairs.
"I can't tell you the kind of people that use this place," Hansotia says before taking a sip. "Government officials come to town. Celebrities sometimes. They ask to use the space to conduct meetings. It's totally private."
The art on the walls and on the shelves is an amalgamation of gifts, auctions and Hansotia's world travels. But one of his major turning points in the world of cigars was meeting the Toraño family.
"I started working with the Toraños in 1998," he says. "That's when they started making my cigars. The father, Carlos, was an expert on leaves. Plus, the family had pedigree in the industry. We were trying to create small-batch cigars. I didn't care about prices, I just wanted A-Grade wrapper and I wanted unusual tobacco. Lots of factories can roll a good cigar. Very few know how to buy tobacco properly and process it correctly."
The first cigar brand made by the Toraños was the Gurkha Master Select. It featured an Ecuadoran Habano wrapper and the cigars came wrapped in a canvas strap. Master Selects didn't cost $1,000 each, but they still were not cheap cigars.
"When they came out, the Master Select retailed for $8 to $12 per stick," says Hansotia. "In the late '90s, $8 was still expensive for a premium cigar. We had an old box of Cuban Bolivars from 1957. Charlie Toraño was instrumental in getting those Master Selects to taste similar to the Bolivars."
In the scope of Gurkha's portfolio, a $12 cigar was Hansotia's version of a working-man's stogie. Compare that with the price of a Gurkha His Majesty's Reserve. It was created a few years prior and a single cigar retailed for $250 per stick, or $5,000 for a box of 20.
"Our duty-free guys wanted something even more high end than what we were making for them. They wanted something elite and unusual, so we came up with His Majesty's Reserve."
The HMR, as it's more casually known, is infused with Louis XIII Cognac. As word got around of this inaccessibly expensive duty-free cigar, a few retailers approached Hansotia and wanted to carry it.
"We still make about 20 to 30 boxes a year," says Hansotia. "It's a secret infusion and people don't ask too many questions about it. They buy it because they like it." The cigars don't come cheap. "One of my biggest HMR customers is in Russia," he says. A box of His Majesty's Reserve costs $25,000 now.
The HMRs are not to be mistaken for the Gurkha Grand Reserves, which are also infused with Cognac, but not Louis XIII. They come at the far more merciful price of $15 to $18 per cigar.
By Hansotia's timeline, his company got its first major recognition with a curious brand called Gurkha Pre Embargo. He says he acquired several boxes of preembargo Cuban cigars. Some were inexpensive brands, others were high profile brands like Montecristo and Romeo y Julieta. To him, it didn't matter. Hansotia says he disassembled every last cigar, mixed the old leaves with some newer non-Cuban tobacco, and established a blend for a cigar that he ended up selling for $35 to $55 per stick.
"We were known in the industry, but never got a strong foothold until the Gurkha Pre Embargo brand," Hansotia explains. He says he acquired the stocks of vintage Cuban cigars from an associate in the industry. "That really put us on the map," he says of the smoke. "Everybody called us for that cigar. In two years, they were gone."
Hansotia takes another sip of tea. While his astronomically priced cigars are the ones that people tend to remember, it's important to understand that Hansotia does not cater only to that niche. True, Hansotia may be responsible for creating that market in the first place, but brands like the box-pressed Gurkha Regent, which showcased a flavorful Cameroon
wrapper, became very popular for the casual smoker. Scored in the 88-to-90-point range by Cigar Aficionado, they retailed for just $9 to $12.
"Most factories have a single flavor profile found in all their cigars," Hansotia explains. "Toraño was very diverse, so it was easy to diversify my own portfolio with the Regent. I was making about 300,000 of those cigars per year."
A major change came to Gurkha, however. In 2009 the Toraño family sold their cigar factories in Central America to Scandinavian Tobacco Group, at the time the parent company of C.A.O. Cigars International, whose cigars were also being produced at the Toraño factory. Hansotia said the change at the factory after the acquisition, including changes in the personnel that ran the operation, led to delays in getting his Gurkha cigars.
"I had to pull out altogether," Hansotia claims. "It wasn't any one particular person's fault."
Hansotia took his blends and found a new manufacturing partner with Louis Cuevas in the Dominican Republic. Prior to Gurkha, Cuevas wasn't making any well-known cigars, but once he took on the Gurkha portfolio, he was now in charge of a series of brands like The Gurkha Regent, Master Select, Gurkha Beauty and Gurkha Beast.
Hansotia also changed his business philosophy. Between 2001 to 2010, 65 percent of Gurkha's business came from catalog sales. That changed once he hired Gary Hyams as company CEO to help him shift the business to a more brick-and-mortar, retail-centric format.
"When we came into the business, a lot of retail stores were closing down. The instinct was to gravitate to catalogs. That's where the business was and the catalogs had the ability to make much stronger purchases. But we changed our concept. Catalogs have their own Gurkha brands and so do retailers."
The Gurkha portfolio today bears little resemblance to the offerings of 10 years ago. Newer brands like the Ghost, Royal Challenge and Seduction are popular favorites. A brand called The Cellar Reserve 15, which retails for $10 to $13 is his current best-seller and the Gurkha 125th Anniversary XO earned The No. 9 spot on Cigar Aficionado's Top 25 cigars of 2013. Hansotia even formed a subsidiary called East India Trading Company. It allows him to create less expensive, experimental brands like Red Witch and Wicked Indie, without impeding on or cheapening the Gurkha name.
All told, Hansotia produces around 3 million cigars a year, most of which are affordable to the average smoker of premium cigars.
It doesn't take an economist to realize that not everyone can drive a Rolls Royce or Bugatti Veyron. There are certain levels of luxury commensurate with certain levels of wealth, and Hansotia is completely at peace with that. Nevertheless, there is still a thrill for him when he has the opportunity to produce a jaw-droppingly expensive package. Some will recall the Raja, which was made in 2011. A very ornate box made of solid silver held 30 large double coronas. Only two boxes were made, carrying a price tag of $200,000.
As with any symbol of wealth and prosperity, Gurkha gets its share of criticisms. Some have charged that his clientele are nothing more than vanity smokers with more money than sense. Others have dismissed his products as merely hype and pretty packaging for mediocre cigars. Hansotia scoffs at these notions.
"The people who say that are morons," he asserts. "And I'll tell you why. If that were true, I wouldn't still be here. It doesn't matter how great the packaging is. If the cigar wasn't any good, I'd be out of business. We've been here more than 20 years and every year we've seen a 20 percent growth. The criticisms come from customers who can't fathom spending over a certain amount for a cigar and resentment towards those who can."
As much attention as Hansotia puts into his products, you're not likely to find him at many consumer cigar events. He tends to be elusive, and is the first to admit that there's an intentional bit of distance between himself and his customers.
"I don't want the brand to be about me," he explains. "If I die tomorrow, the brand will live on. Some other brands are all about the owner. Remove the owner from brands like that, and the brand dies. That's not what I want for Gurkha. I want the people who buy these cigars to have an experience accompanied with a piece of art. A Gurkha box is a piece of beauty and nobody throws them away. They're nice enough to be handed down. It could be a box of Warlords or Genghis Khans. After the cigars are gone, the owner will probably keep the box forever."