Estelí, Nicaragua, is no place for late sleepers. At 5:30 a.m. every workday, an alarm rings out across the town. The faint but persistent clanging will rouse most sleepers from their beds, but those who haven't stirred are treated to roosters screaming at the rising sun. Anyone still slumbering is assaulted by a piercing air-raid siren that goes off at six. The uninitiated scramble for cover, but it's only the local version of the whistle to work, signaling the start of another long day of labor. More often than not, that job is making cigars.

This is the epicenter of the cigar industry in Nicaragua, the No. 3 exporter of premium cigars to the United States. The cigarmakers in this small city are familiar with one another, and they often drive by one another's factories. When they happen to pass Segovia Cigars, where Nestor Plasencia works, they make the sign of the cross.

It's not that the competition has a soul-numbing fear of Plasencia, and they aren't trying to ward off a hex. Segovia is a dead ringer for a church, right down to the stained glass windows and the rounded cross over the arched door.   Plasencia makes several brands here, including Mayorga and his eponymous brand, Plasencia. "Too many brands," Nestor says with an ever-present smile. "I produce for too many customers."

Completed in May 1997, the large building has two rolling galleries. Rollers on one side of the factory make cigars that go into boxes; those on the other side make bundle brands. In the middle is an open courtyard with a fountain. It's undoubtedly the most attractive cigar factory in all of Central America.

Inside his office (which bears no resemblance to a confessional), Plasencia is pointing out his operations on a map of Nicaragua. There's the factory in Estelí, where he's standing, plus a farm outside the city, a tobacco warehouse in Ocotal, close to the Honduran border, and two farms in the Japapa valley, where he grows tobacco. He also buys quite a bit from local farmers. "Two thousand people in Nicaragua work for me," says Plasencia.

Plasencia is a huge man with a harsh glare, but he's as gentle as a teddy bear. Most people thought the 50 year old had retired from the cigar business after selling two factories to Spanish tobacco giant Tabacalera S.A. in September 1997. Plasencia made more than $20 million on the sale, prompting his friends to tease him relentlessly about not picking up the check at restaurants. But it also gave people the wrong impression about his employment status.

"I went to RTDA this summer," says Plasencia, describing a visit to the annual tobacco trade show . "People said, 'You're here? Why?' " he recalls with a laugh. "I didn't close. I'm still in business." This year, he says that between his factory in Nicaragua and three in Honduras, he'll produce about 25 million handmade cigars.

Plasencia's Segovia plant is quite busy, and some of the workers there are creating a unique cigar that takes the term handmade to a new level. In the cigar industry, most handmade cigars are created with the aid of a few tools. In the Dominican Republic and Jamaica, bunchers make the insides of a cigar (known as the bunch) with a Temsco machine, which is a hand-operated device with a leather pad that helps form the bunch and roll a binder leaf around the filler leaves. Most cigar factories in Central America don't use Temscos, and a buncher makes the inside of a cigar strictly by hand. The bunch is then put into a cigar-shaped mold made of wood or plastic, which helps the cigar keep its shape.

After it rests in a mold, a roller takes the bunch and rolls a wrapper leaf around the cigar, creating the finished product.   The Segovia rollers make the Danneman Artist Line of cigars with neither Temscos nor molds, making them some of the only cigars in the world that can truly claim to be entirely handmade.

Eliminating the mold slows production considerably. "A roller can only make 100 cigars a day, compared to 350 to 400 for other brands," says Plasencia.

Segovia works like a well-oiled machine. Tobacco comes in the back, then moves through the building as it is rolled into cigars. The cigars are packaged in rooms at the front of the building and shipped out the door. "Moving, moving, moving," says Plasencia.

He, too, is always on the move. Plasencia was a tobacco grower long before becoming a cigarmaker, following in the footsteps of his father, who grew tobacco in Pinar del Río, Cuba. Today, the younger Plasencia grows tobacco and makes cigars on both sides of the Nicaragua/Honduras border. Monday through Thursday he's in Danlí, Honduras, and on Thursday afternoon or Friday, he travels to Estelí. On Monday, he returns to Honduras.

"This factory is not [only] for the boom time," says Plasencia, standing in a shadow thrown by the courtyard roof at Segovia. "We worked tobacco 100 years ago, and we will work it for 100 more."

The Plasencia family's involvement in the tobacco business outdates the history of cigars in Nicaragua. It wasn't until the early 1960s that Cubans began cultivating cigar tobacco here. At the time, Nicaragua boasted one of the stronger economies in Central America, and the cigar industry thrived. Nicaraguan cigars were given to guests in the White House, and many people insist Cuba used Nicaraguan wrappers on its exported cigars after a devastating outbreak of blue mold in the 1980s. (The Cubans deny the story.)

But today Nicaragua is one of the poorest countries in the region. It is still struggling to right itself after being hammered by a combination of setbacks, beginning with a 1972 earthquake that killed more than 10,000. Attempts at international aid disappeared into the pockets of the Somoza government, sparking unrest. A revolutionary movement, the communist Sandinistas, took control of the country in 1979, and two years later the Reagan administration cut off U.S. aid to Nicaragua and began to fund the right-wing contras. In 1985, the United States levied a trade embargo on Nicaragua, which lasted five years and cut even deeper into the bleeding Nicaraguan economy. Finally, in October 1998, Hurricane Mitch destroyed virtually every bridge in the nation and claimed 11,000 lives across Central America.

The Nicaraguan cigar industry's fate followed the vicissitudes of the country's politics and economy, as well as U.S. demand. In the '80s, production was sometimes slowed by the constant threat of the gunfire of civil war. The product went off the U.S. market from 1986 to 1989, due to the embargo, and the industry was slow to emerge from the ruins.

Nicaraguan cigars dribbled into the United States until 1995, when premium cigar exports soared from 600,000 to 3.5 million, according to Cigar Insider, Cigar Aficionado's monthly cigar newsletter. Nicaraguan exports grew to a peak of 44 million in 1997 before cooling to 27 million last year, as the cigar boom flattened in the United States. At press time, 1999 exports were on pace to reach about 18 million cigars.

Some of the least expensive cigars in the world are made in Nicaragua, along with some that cost well over $10 each. Padrón Cigars Inc. makes some of the world's most sought-after cigars here. Tabacos Puros de Nicaragua S.A. makes the nation's oldest brand, Joya de Nicaragua. Nicaraguan American Tabacos S.A. (NATSA) makes bargain-priced cigars such as La Finca and José Martí for retailing giant 800-JR Cigar Inc. Carlos Toraño makes C.A.O. Gold and Carlos Toraño Nicaragua Selection cigars. Today, with peace having returned, Nicaragua makes more cigars for the United States than Jamaica and Mexico combined.

Tabacalera Perdomo doesn't take the peace for granted. The company looks prepared for the next uprising, with an armed guard at the gate and four guns in holsters hanging on a peg behind Nicholas Perdomo Sr., who runs the factory when his son Nick is in Miami. The 64-year-old Perdomo is a huge, burly man who looks as tough as a truck-stop steak. He once had a too-close encounter with a would-be assassin and still carries the bullets in his stomach. "My father's belly button is over here," says Nick Perdomo Jr., a grim look on his face as he points to a spot on the body where most people have an appendix.

The 34-year old Perdomo, a Miami native, has been making cigars in Nicaragua for four years. He may be a relative newcomer to Estelí, but he says the place has changed dramatically during his short tenure. "When I first moved here, there wasn't even paint on the buildings," he says, turning the wheel on his Nissan Patrol. "This was the center of the Sandinista war. There were bullet holes in the walls, no streetlights. Now, there's a TCBY here."   Perdomo Jr., a former air traffic controller, opened Nick's Cigar Co. to make cigars in Miami in 1992, but his high prices alienated some smokers. "A few years ago, some guy came up to me and said, 'I really love your cigars, but I can't afford them," he says. "And it bugged me. I told my dad we had to make an affordable cigar."

Perdomo Jr. flew trained Miami rollers to Nicaragua in 1995 to get his workforce up and running, but he wasn't pleased with the initial results. "I was infuriated when I was down here, seeing the way they rolled cigars," he says. "We had to teach them how to make torpedos, because they were making trumpets," an industry term that refers to the slim-headed cigars made by many factories in Central America.   Tabacalera Perdomo makes brands under contract for other companies, most notably the new C.A.O. L'Anniversaire 1968-1998 Cameroon series of cigars. Its own brands include Perdomo2, a recently released line of box-pressed smokes.

The Perdomo factory is messy, showing the strains of expansion. It's simply run out of room. Rollers fill the slightly chaotic, very busy and sultry rolling gallery. (Perdomo Jr. claims with a straight face that the workers voted down central air conditioning, preferring a hot, humid environment. He says the heat makes it easier for them to turn tobacco into cigars.) The sweet aroma of butterscotch wafts from a far section of the factory where Perdomo's workers make flavored cigars for mail-order giant Thompson & Co. Upstairs, a few workers have found room to put bands on completed smokes. Perdomo Jr. says the factory makes nearly a million cigars a month, including nonpremium smokes.

"The problem is, we don't have the room to increase here," he says. His solution is slowly taking shape a few minutes down the road as workers with pickaxes chip away at the hard dirt. By January, this plot will be the new home to Tabacalera Perdomo, a 72,000-square-foot factory more than triple the size of his present one.   One of the largest factories in Estelí is owned by Tabacos Puros de Nicaragua, the maker of Joya de Nicaragua cigars. The brand was created in 1967, the first brand from Nicaragua, and has been made at its present factory in Estelí since 1978. The current owners purchased the brand in 1995.

The factory is much quieter than in previous years. It has the capacity to make more than 30,000 cigars a day, which it did in the 1970s, when it produced more than 7.5 million cigars a year. The plant was making 22,000 cigars a day in 1997, but today that number has slowed to a trickle of 8,000. The aging rooms are overflowing with cigars.

Despite Nicaragua's reputation for full-bodied cigars, Joya de Nicaragua is one of the more smooth and mild cigars on the market. Tabacos Puros is experimenting with a stronger blend for Europe. "The usual blend we make is mild, with Connecticut wrapper," says Leonel Raudez, chief manager of the plant. "The export blend is Cuban-seed Nicaraguan [wrapper], and the blend is more spicy."

It's uncertain whether that cigar will ever make it to American cigar stores. Tabacos Puros is at odds with the brand's U.S. distributor, Tabacalera S.A., over the distribution arrangement for Joya de Nicaragua. Tabacalera acquired the American rights to Joya de Nicaragua when it purchased Hollco-Rohr Inc., an American distribution company, in February 1998, and it owns a Nicaraguan factory that it purchased from Plasencia in 1997. The 11,000-square-foot plant is located in Ocotal, where Tabacalera makes nonbranded cigars.\

"Right now, we're still trying to find the best use for [the fac-tory]," says Donald C. "Bo" Young III, the director of marketing for Havatampa Inc., a unit of Tabacalera. Tabacalera is considering making the Joya de Nicaragua cigars in its own plant.

Nicaragua has a reputation for making some of the world's least expensive premium cigars, a tradition that still lives strong today. Tabacos Ranchos Jamastran, a Honduran company that makes Baccarat and La Fontana cigars, has a factory in Estelí making cigars that it wholesales for 55 cents apiece. In other parts of the world, it would be impossible to make any profit selling cigars so cheaply.

Mega-retailer 800-JR Cigar Inc. owns a minority interest in a massive factory in Estelí called Nicaraguan American Tobaccos S.A., where it makes La Finca, Remedios and Flor de Farach cigars, among others. The factory makes about 11 million premium and nonpremium cigars a year for JR, most of which retail for $4 a cigar or less.

At the height of the cigar boom, the factory was making nearly double the cigars it makes now. Juan Bermejo, who runs Nicaraguan American Tobaccos, oversees 37 buildings in Estelí, where he stores tobacco and makes cigars. During the boom, the system was utter chaos.   "When I went down there, I was appalled," says Lew Rothman. "Bermejo had to keep referring to all these yellow legal pads to keep track of where everything was." Money and cigars were lost as Bermejo rushed to get cigars out the door to JR. Now, with a calmer market, the factory is making fewer and, in Rothman's opinion, better, cigars.

"We were buying any tobacco we could get our hands on," says Rothman. "Now cigars age for 45 days before shipping."

The cigar rollers in Nicaragua are quite different from their counterparts in other cigar-producing nations. In Jamaica, workers talk loudly to one another as they work. In the Dominican Republic, loud music is a common staple in factories, and the workers are quite energetic, moving around in their seats. One cigarmaker likes to joke that if you tied the feet of a Dominican cigar roller, he would be incapable of making cigars.

But Nicaraguan cigarmakers are all business, and they work in an almost eerie silence. Unlike Cuba, there is no welcome slapping of chavettas on wood for visitors. Employees hunker down, focus strictly on their work, and roll.   Jose Orlando Padrón and his son Jorge, the owners of Padrón Cigars Inc., are sitting in a pickup truck, staring at the river in front of them. It wasn't there a year ago. "This is new, from the hurricane," says Jorge. The driver eases the vehicle into the stream, tentatively driving across one of the many new or widened rivers that were cut through this country by Hurricane Mitch. Mitch brought relentless rains that flooded the region; locals say it was as if five years of rain fell in five days.

"That's the farm up there," says Jorge, 31, as he points from the truck. Paso Real is now a farm only in name--Mitch peeled away its rich topsoil like the skin from an orange, leaving a war zone behind. Now it's but a field of pale rocks with patches of scrub grass. A tree stump the size of an M-1 tank has been swept here by floodwaters to become a statue to remind future visitors about the horrible and savage power of the storm.

Two ruined tobacco barns are the only evidence that anything grew here. One collapsed entirely; another had its back wall blown out by the flood that poured through, nearly killing a family of three. They climbed the rafters as the water creeped higher, and were rescued by boat after nearly two days suspended above the floodwaters.

Padrón says the land is ruined, and not even goats can find enough sustenance here. Nothing will likely ever grow here again.   Despite the dramatic scene, the Padróns say the impact on their business will be limited. No tobacco was in the ground or in the barns, and the family owns another farm, plus it buys tobacco from several other farmers. The Padróns ensure a complex blend in their Padrón and Padrón 1964 Anniversary Series cigars by blending tobacco from at least three regions of Nicaragua in every cigar.

In the Padrón factory (which is known as Tabacos Cubanica S.A.) it's always easy to find Jose Padrón. Simply follow the scraps of tobacco. At 6 a.m., the 73-year old walks downstairs from his Estelí apartment, which is located on top of one of his tobacco warehouses, then crosses the street to his factory and lights his first cigar of the day. On a recent visit, he chooses a large cigar, a Padrón 1964 Anniversary Series Diplomatico. Within minutes of lighting, he walks to a pile of fermenting tobacco leaves, called a pilon, and removes a leaf. With a practiced touch he tears the leaf in half, then wraps the young tobacco around his burning cigar, relighting it with a disposable lighter. He draws in a few deep puffs and nods. Minutes later, he tears the burning wrapper off and drops it to the floor, then digs out another from the same pile to repeat the process. Before noon, he'll have sampled more than 20 pieces of tobacco.

This is Padrón's way of testing tobacco. He spends far less time watching the cigar rollers than he does lighting and tasting. The 20 leaves he smokes in a morning could have been used to wrap 40 cigars.   "We lose a lot of leaves," the older Padrón says of their process that forces them to handle the tobacco more than usual in their search for leaves that are properly aged. "There's a lot of breakage. But we prefer that to having tobacco that's underfermented."   The Padróns use only Nicaraguan Cuban-seed sun-grown tobacco in their cigars. "The easiest thing for a [cigar] manufacturer to do is to use Connecticut wrapper or Ecuador," says Jose Padrón, referring to the shorter maturation period of those tobaccos. Unlike a lot of tobacco growers, the Padróns don't grow tobacco specifically for wrapper--they grow one type of plant in the open sunlight, without shade, and from that they cull filler, binder and wrapper. The choicest leaves become wrappers for their Anniverary cigars.

"When I started in Miami," says Jose Padrón, speaking of 1964, "I tried a lot of types of tobacco--Brazil, Connecticut and Puerto Rico. In 1967, I started taking tobacco from here." The Padrón cigar was one of the first non-Cuban cigars to be box pressed--compacted to make it squared on the sides. The success of the brand sparked a box-pressing trend that is in full swing today.

"What makes a square cigar is not the square, it's the cigar," says the elder Padrón, handing a visitor a cigar that hasn't been pressed. The flavor is the same as the box-pressed variety.

"I was always searching for the Cuban cigar smoker," says Padrón, "the one who had experience smoking cigars." Experienced palattes have certainly embraced his product, but the company hasn't grown as quickly as many of its competitors. "Our production levels have never risen drastically from one year to the next," says Jorge.

Padrón sold only 3.7 million cigars in the United States in 1998, 5 percent more than 1997's 3.5 million. Padrón has only 35 rollers and 35 bunchers in the 12,000-square foot factory, and even fewer in a smaller plant it maintains across the border in Danlí, Honduras, as an insurance measure against future political problems in Nicaragua. (The Honduran plant kept Padrón cigars on the U.S. market during the Nicaraguan war.)

The Padróns hope to sell about 4 million cigars in 1999, but the company certainly could sell many more: a 1999 Cigar Insider survey of tobacconists ranked Padrón the second-hottest cigar brand in America in terms of demand behind Arturo Fuente.   Padrón's factories are now making two new cigars: Montecristo No. 2-shaped torpedos, a $15 addition to the Anniversary line, and Padrón Millennium cigars. Both went on sale in November. Padrón is selling only 101,000 Millenniums, which are packaged in numbered humidors and bear numbered bands, the only cigar produced with numbered bands since the Cubans released their 1492 cigar line for the 500th anniversary of Columbus' discovery of America. The 6-inch by 52-ring-gauge smokes, available in maduro and natural, sell for $3,060 for a humidor containing 100.

One thing that is absent from the Padrón factory in Estelí is an aging room for rolled cigars. "The aging is done before the cigar is produced, not after," says Jose, a Millennium cigar clamped between his fingers. The breast pocket of his striped shirt is stuffed with cigars for the night.   Jorge Padrón watches his father reach for his lighter, putting flame to yet another sample of wrapper tobacco as the afternoon begins to creep away. The rich aroma of burning Nicaraguan tobacco hangs heavy in the warm air as he sucks in the smoke, the ragged, wrinkled tobacco sample crumbling in the flame. Padrón nods his head, then stares down his glasses at the cigar he has made.   The son looks at the father, then at the bales of brown tobacco surrounding him. "It's impossible to make a cigar like this," says Jorge, "and to do it quickly."

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