Gurkha Eyes Stake In Cigar Factory

Gurkha Eyes Stake In Cigar Factory
Gurkha Cigars brand owner Kaizad Hansotia inside the American Caribbean Cigar factory in Estelí, Nicaragua.

Gurkha Cigars intends to buy its own cigar factory. Brand owner Kaizad Hansotia is entering into a partnership with American Caribbean Cigar Inc., and as part of the deal, Gurkha will acquire the American Caribbean Cigar factory located in Estelí, Nicaragua.

Over the past five years, the two companies have fostered a working relationship together, with the Nicaraguan facility producing several of Gurkha's premium cigar brands. Gurkha says the deal is slated to be completed this week.

Eddy Guerra, director of marketing for Gurkha, told Cigar Aficionado: "Owning our own factory will allow us to take better control of our inventory... and it opens up the possibility of factory tours, which would bring our customers closer to our brands."

The American Caribbean Cigar factory is owned by Damian Tapanes and his business partner Alex Menendez. According to Menendez, the deal with Gurkha, which he describes as a partial acquisition, will give Gurkha the right to call the factory home—but much of the internal workings of the factory, including rolling contract brands for customers, will remain unchanged.

"The factory will go to Gurkha. The branding on the outside of the factory will be Gurkha," Menendez said. "But this doesn't affect our current or future customers. None of our clients will have their portfolios removed from production because of this partnership. We have our own cigar, a proprietary blend called La Rosa de Sandiego, that will continue to be made."

The American Caribbean factory is perhaps best known for rolling Gurkha cigars, but it also makes cigars for Leccia Tobacco. In the past, it also made cigars for Toraño Family Cigar Co.

"We still roll Sam Leccia's cigars [of Leccia Tobacco], but we parted ways with Toraño over a year ago," Menendez stated.

In addition to American Caribbean, Gurkha cigars are made at a number of other factories, most notably Las Lavas S.A., which rolls the Gurkha Cellar Reserve lines, (except for Cellar Reserve Platinum, which is rolled at American Caribbean) and PDR Cigars, which rolls brands such as Gurkha Ghost and Gurkha 125th Anniversary. Both factories are located in the Dominican Republic.

When asked if Gurkha plans to bring its entire cigar portfolio under one roof to American Caribbean, Guerra told Cigar Aficionado that it is not planning to do so.

"Our current thinking is, ‘Why fix something if it isn't broken?' We will continue to work with those factories," Guerra confirmed. "The Cellar Reserve lines will remain at Las Lavas. Gurkha Ghost and 125th Anniversary will still be made at PDR."

Financial terms of the deal have not been disclosed.

This article first appeared in the May 16 edition of Cigar Insider.