A Q&A With Zander-Greg Founder Arthur Berberian
You may not know the name Arthur Berberian, but chances are you’ve purchased a cigar from him in one way or another. He’s the owner of Zander-Greg Inc., a tobacco and cigar wholesaler with a huge portfolio of premium smokes. After starting in the jewelry and gem business, he decided to switch careers and go into the distribution of tobacco products. Based in California, Zander-Greg sells to retailers in half the states in the country and not only stocks most major brands, but has a few brands of his own.
Born in Lebanon and now a resident of California, Berberian still has the Lebanese accent of his youth, but has come to know the American market quite well. Cigar Insider’s Greg Mottola sat down with Berberian to talk about his distribution business and how it fits into the bigger picture of premium cigars.
MOTTOLA: Before we get into your past, let’s start with what you do right now. You don’t sell directly to consumers, you just sell to other businesses wholesale, right?
Q: Could you explain why a retailer should buy premium cigars from Zander-Greg? Can’t they do business directly with the cigar companies or is there a different law in California?
A: First, when you say only California, we’re licensed in more than 25 states, and according to what product we sell in that state, anywhere from cigarettes to chewing tobacco, roll-your-own to premium cigars, each state is licensed differently.
Q: What would be the incentive to buy from a wholesaler like you? Most cigar companies will do business directly with the retailer.
A: It’s a one-shop center where you can buy cigars from all of the manufacturers at one place. We have a free shipping policy. We tend to sell at the same list price as the manufacturers do. There can be some difficulties dealing directly with the manufacturer especially with the smaller stores.
Q: What difficulties?
A: The requirement for them to buy certain amounts. And also, some of these companies do not open direct accounts unless you are at a certain size.
Q: So, you’re able to spare the smaller shops some of the red tape like minimum buy-ins?
A: That’s correct. We’ve got even some of the larger stores that deal directly with the manufacturer and they get all of the specialties and the volume and the discounts whenever they go to the trade shows, but they still use us as a secondary source or as a daily backup as a supplier.
Q: How many different SKUs would you say Zander-Greg distributes between cigarettes, machine-made products, premium, everything?
A: There’s probably between about 11,000 to 12,000 SKUs altogether.
Q: You obviously don’t own all the brands you distribute. Which cigar brands belong just to Zander-Greg?
A: We’ve got the Nat Cicco brands. We acquired Epic three years ago. We own Casino Real, Elephant Ears, there’s the Cuban Legends, the original Rejects, the Nicaraguan Rejects. We acquired John T’s flavored cigars about eight or nine years ago. They had been around since 1984, those are the pipe-tobacco flavored cigars.
Q: Zander-Greg isn’t a public company, is it?
A: No, it’s not.
Q: When did you start Zander-Greg?
A: I want to actually go back and talk about how I came to be and my life just a bit further. Since I was 13 years old, I was prepped—groomed—to be a jeweler. I come from a family of jewelers, fine jewelers in Lebanon. And since I was 13, every summer I’d go to the factory with my father to learn the aspects of making fine jewelry, from manufacturing and gold to casting and polishing. Each one of these sectors in fine jewelry, he wanted me to master.
Q: How long did you do that for?
A: From 13 to 18 years old—consecutive summers. The reason I wanted to mention it is because it all plays in with manufacturing fine cigars as well. It’s the same process, different material. Each one has its own expertise.
Q: How did you end up in the U.S.?
A: In jewelry, there was one thing left for me to complete: to study gemology. I was given two options. One was in Antwerp in Belgium. And the second was in Santa Monica. Of course, who would leave Santa Monica and go to Antwerp [laughs]? So, I chose to come to Santa Monica and I studied gemology. I graduated from the American Institute of Gemology. From there we opened an office in L.A. manufacturing fine jewelry and all of that.
Q: Were you doing this for consumers or was this for wholesale?
A: This was manufacturing in wholesale.
Q: How was business in California?
A: We started manufacturing gold and fine-quality jewelry and the output we used to put in was as high as the quality of some of the main international name brands, but we didn’t have that brand recognition. There’s no way we were going to be able to compete especially when you’re working with your own funds. The competitors actually have, especially in the diamond sector, there are governments that would credit these companies. You’ve got the government of Israel that sponsored some of these major, major departments that sell and grade and cut diamonds, and you have the Indian government that subsidizes some of these companies as well.
Q: Was it the competition from the big companies that made you change professions?
A: I was looking for something more stable, something that I could progress and excel in it and grow. I’ve always had the vision of establishing something and growing. Always long term.
Q: And you thought you could find that in tobacco?
A: One of our family members was actually in the liquor and the tobacco business and that sparked the idea of getting into the wholesale section since manufacturing and wholesale was all I knew. So that was the start with tobacco and still to this day the company is a national distributor of all tobacco products.
Q: Did your family start Zander-Greg?
A: No, I did.
Q: That started in 1995, is that correct?
Q: Did you start it alone or with another family member?
A: No, alone.
Q: Where did the name come from?
A: We incorporated in 2004 and called it Zander-Greg. Originally, we started it under my name. And in 2004 I had already two boys, one called Alexander, the second one is Gregory and decided when we incorporated to put both boys’ names on it. Alexander became Zander.
Q: When you started was it just Arthur Berberian?
A: Yes, DBA Arthur Berberian. From thereon in I got involved in more of the business and fell in love with the premium section of the business where there’s more refinement and more detail.
Q: What were the primary products that you had when you started in 1995? What did the portfolio look like?
A: Mostly cigarettes. Cigarettes and whole tobacco products and accessories as well. We carried some convenient store items also.
Q: It says on your website that you got into premium in 2010. Can you talk about that?
A: The way I got into the manufacturing part of the business is in 2006 I met John Parker, who was the previous owner of Phillips & King, and he owned a company called Nat Cicco, abbreviated from “National Cigar Company.” That company has been around, the Rejects line and Jamaican Rounds, since 1965. I got to know him through becoming a member of the board of the California Distributors’ Association. One day he said he wanted to fully retire and I have this company if you’d like, so I purchased the company from him, so that was the start of us going into the premium cigar manufacturing part. The Rejects line has been manufactured from the beginning by General Cigar. And the Jamaican Rounds, the name comes in if you recall General Cigar had the factory in Jamaica where they used to make Macanudos.
Q: Temple Hall.
A: Yes, that’s where Jamaican Rounds comes from. So, we continued with them and I wanted to get into the larger gauges as the demand of the market changed as far as what people wanted—bigger cigars. I had some difficulty with General Cigar getting into the larger gauges. They had the machinery, they didn’t want to invest, they procrastinated, and they went through a lot of change as well with the purchase by Scandinavian Tobacco Group. The only other choice that I had was I had to find another source and went down to Nicaragua. The first line that we did was what I needed to get into the larger ring gauges but Cuban sandwiches, something that’s less expensive and that would complement the Rejects line that we had.
Q: You needed to find a new manufacturer for the Rejects line?
Q: Omar Ortez makes the premium line, is that who also makes the Rejects?
A: The original Rejects are still manufactured by General Cigar in the Dominican Republic. But the Nat Cicco Cuban Legends are made by AgroIndustrial Tabacos.
Q: That’s Omar Ortez, right?
A: Yes. That’s him and his brother and the Ortez family. With Cuban Legends, we did a Cuban sandwich with larger gauges, 7 1/2 by 54 and 6 1/2 by 58. And it was very successful. The following year in 2010 we went into premium. We launched two different premiums which was the Nat Cicco HHB and the second one was the Aniversario 1965.
Q: You took the Nat Cicco brand, which was known as an inexpensive cigar and you made a premium line out of it. What made you take a name that was associated with an inexpensive cigar and turn it into something premium as opposed to starting a whole new brand?
A: In any business, it is much better and much easier to start, to rebuild on something that’s already laid and grounded. My belief in retail is the same story in manufacturing, wholesaling it’s much better to glorify something already established than starting from scratch.
Q: Even if it was an inexpensive cigar, you think the strength of the brand name is still better to build upon?
A: I believe so. And it all depends on the product and how you market it.
Q: The 1965 certainly rated well with us. It’s ended up on our Top 25 list. But it must have resonated with consumers as well. How many of the 1965s do you produce a year?
A: We do over a million.
Q: Did you see an increase in percentage in sales and volume overall over the last two years?
A: For sure.
Q: What percentage up just in terms of volume?
Q: Is it starting to level off now?
A: It’s still going strong, but leveling off just a little bit. But still very strong, double digits.
Q: What percent of your sales would you say premium cigars account for?
A: Probably 50, 55 percent.
Q: Given the recent cigar boom and the logistical problems that came with Covid, are you having difficulty getting product?
A: Yes. Definitely, but it’s becoming better. The pipeline has been filling quite rapidly, especially with the increase of volume of production.
Q: For premium cigars, which are your highest volume markets?
A: We have a strong presence in the Midwest and Texas of course. The West, California, Arizona. Those areas.
Q: Is it difficult to do business in such a high-tax state as California?
A: There’s the saying if you make it in New York you can make it anywhere. In the tobacco business, if you can make it in California, you can make it anywhere.
Q: Who are your main competitors?
A: We tap into a lot of sectors, but if you mean premium cigars, Phillips & King’s Kretek is the main competitor.
Q: Is there anything upcoming from Nat Cicco that you want to share with us?
A: The Nat Cicco Aniversario 1965 in maduro, a complete line with San Andrés wrappers on them. They’ve been produced and they’ve been aging and we’re waiting for a time to release them. Another thing is that we have an agreement with Chaz Palminteri. And Chaz wants to make a cigar called A Bronx Tale, after the movie that he owns. We’re trying to launch the brand with Chaz’s presence at the Big Smoke in Miami next year. That’s the target.
Q: I think that will certainly be exciting to a lot of cigar smokers.
A: Chaz is dedicating those cigars to his grandfather. He wants to get involved and it’s dear to his heart. We’re very excited to see that come to fruition.
Q: Do you think there’s still room to grow on the premium side?
A: Definitely. I believe that it will continue to grow. We’re going to see more and more people go into the natural premium cigar than any other part of the smoking industry.