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Quarter 4, 2008

Nicaragua Rising

Nicaragua’s lush tobacco farming belt from Estelí north to Jalapa and Condega has long been attracting tobacco growers and cigar makers intent on producing world-class cigars.

By E. Edward Hoyt III

The city of Estelí is about a two-hour drive north from the Nicaraguan capital of Managua and home to nearly a dozen cigar makers. While it may not be evident from the Pan American highway as it descends from the surrounding hills into the city’s valley, Nicaragua’s cigar-making capital is booming.

Cigar makers who were luxuriating in vast new factories just a few years ago are bursting at the seams, having outgrown them faster than many had ever imagined. With premium cigar imports from Nicaragua to the United States up 23 percent last year - a growth rate far exceeding either Honduras, the Dominican Republic, or the overall increase of cigars into the United States (about 7 percent) - there’s no hiding the fact that Nicaraguan cigars are gaining market share.

While there is no shortage of tobacco in Nicaragua, finding well-aged leaf on the open market can be a challenge when local factories are operating at full tilt. Nicaraguan producers that don’t already have the ability to control tobacco from farm to cigar, overseeing tobacco crops, harvesting, curing, and fermenting - “working” leaf through its multi-year journey to the point that it’s ready to be used in rolling cigars - are recognizing the need. Having full - or as much control as possible - is a cigar maker’s greatest source of consistency, quality, and creative control.

Tabacalera Esteli's "Kiki" Berger and wife, Karen
Controlling the entire manufacturing process has always been one of José Orlando Padrón’s cornerstones, a key to his dead-on consistency in cigar making and high level of quality. Leaf is an investment - handling it is labor intensive and requires considerable amounts of storage and working space. “Leaves are repeatedly sorted and checked,” says Jorgé Padrón, Orlando’s son. “We’re always removing leaves at various stages to set aside for wrapper. Any leaf that’s uniform in texture and color is OK for wrapper.” One tobacco plant will yield an average of 18 leaves during its harvest, according to Padrón, and he says it’s considered good to get up to two wrapper leaves per plant.

Nicaraguan factories are becoming just as concerned about creating their own destiny through complete control of tobacco processing as they are in increasing the sheer number of cigars they produce. A surprising number have been successful on both fronts.

The first glimpse one will see of a cigar factory as the two lane-highway descends into town are the roadside gates of Latin Cigars S.A., which is constructing a new compound on a high bluff with a commanding view of the Estelí valley not far from its old facility. Extending a partnership of the Olivas and Toraño families that began in 1997, the facility continues to evolve, with several new and renovated buildings that will be reconfigured once construction of an all-new cigar factory is complete. Currently producing up to 28,000 cigars daily, Latin Cigars, which also operates a larger facility in Honduras, expects to reach 50,000 cigars per day when the new factory is online. According to Aldrin Olivas, the family hopes to break ground for the 60,000-square-foot building in 2009. The Olivas also own and operate 300 acres of farms in Estelí and in Pueblo Pueblo near Condega, as well as financing growers in Esteli, Condega, and Jalapa. A separate Olivas-owned company ferments up to 6,000 bales of tobacco annually; purchased wrapper leaf requiring additional fermentation is handled directly at the factory. In addition to Carlos Toraño brands such as Noventa, the factory produces cigars for CAO, the Dunhill Signed Range for B.A.T., and the Black Pearl Morado for La Pearla Habana.

All Nicaraguan cigar makers owe a giant nod of respect to the country’s first commercial cigar enterprise, Tabacos Puros de Nicaragua, home of Joya de Nicaragua cigars. Dating back to the 1950s when it conducted the country’s first tobacco studies, it is still reverently known as the “university of tobacco,” since many managers of Estelí’s other cigar factories got their start there. The business was bought back from the government by Dr. Alejandro Martinez Cuenca, and reunited with Joya de Nicaragua in 1999. While the large facility has plenty of excess capacity, Martinez has been more than content to position his brands as high-quality hand made products valuing craftsmanship and quality over soaring production numbers. In addition to reviving the original Joya de Nicaragua “classic” line, Martinez launched the powerful Joya de Nicaragua Antaño six years ago, and the similar-tasting but not-as-strong Joya de Nicaragua Celebración four years ago - all Nicaraguan puros. Then, last year, the medium-strength Series C was added, with a Connecticut-seed Ecuadoran wrapper, his first blend to include tobacco from outside Nicaragua, one he says dispels the notion that light colored cigars are mild or, conversely, that mild cigars can’t come from Nicaragua. The factory, which produces 12,000 cigars daily, contracts with growers for all of it tobaccos, but undertakes a time-consuming process of fermenting the thick corojo wrapper leaf naturally, moving it at various stages into progressively warmer and more humid rooms, a process that lasts up to two years.

Pepin Garcia and his son, Jamie examine their first crop of their new Esteli farm.
Martinez believes Nicaraguan cigars have collectively come to develop their own unique identity among smokers. “We have our own way of making cigars,” says Martinez, “and we know people in America appreciate it. The consolidation of the Nicaraguan cigar in the last 10 years has been incredible.”

If Nicaraguan puros have traditionally defined the Nicaraguan cigar smoking experience, then the most well-known puro would have to be a Padrón. José Orlando opened his first factory in Miami in 1964, and came to Nicaragua in 1970, starting with only four rollers. A regional brand catering largely to Cubans in the Miami area, it wasn’t even targeted to the national market until the 1990’s.

Although both of Padrón’s parents had farms in Cuba, only about one acre of his father’s 150 acres are still under cultivation there today. After four decades of languishing conditions in Cuba, the real cigar expertise and knowledge, he maintains, is now in Nicaragua. Orlando’s son Jorge, who is president of the family’s Miami-based importing, sales, and distribution operations, says if the family every had the opportunity to go back to Cuba and “cultivate tobacco under our terms, and do things the way we like to do them, we would certainly go, grow tobacco, but bring it back to Nicaragua and make cigars here, with Cuban tobacco.”

Pick up speed on the Pan American leaves Estelí to the north, and you’ll pass a new compound under construction belonging to the family of José “Pepin” Garcia. By nearly any measure, García’s swift rise from a talented master roller and blender in Cuba to a celebrated manufacturer of star brands in Miami and Nicargua, has been startling. García, who has been involved in tobacco his entire life, left Cuba in 2001 to join tobacco grower Aganorsa in Nicaragua, part of entrepreneur Eduardo Fernández’s vision of tapping Cuban experts to create Cuban-style puros with tobaccos grown entirely from Nicaragua’s rich farming land. When Aganorsa merged with Miami cigarmaker Tropical Tobacco, García’s rolling talents were fully engaged, and he soon established El Rey de los Habanos (“king of the Cuban cigars”) in Miami as his own personal project. Two years ago, García and Fernández established Tabacalera Cubana de García y Fernández S.A. in Estelí. The two factories have spawned a king’s ransom of brands including Garcia’s own Don Pepin Garcia lines to Tatuaje, Espinosa Ortega’s 601, Troya Classic, Ashton’s San Cristobal, and - until just recently - several Padilla brands. In classic Cuban style, the cigars are primarily medium- to full-bodied, and the business run with the help of a dozen of García’s family members.

Now, García will be supervising one of Estelí’s newest and largest factories, currently under construction along the Pan American Highway on the north outskirts of town. Owned this time entirely by his son Hymie - a university-trained agronomist - and son-in-law Amílcar Pérez, this facility will be an entirely family affair. While the small Miami factory of 11 rollers makes about 3,000 cigars daily, and Tabacalera Cubana’s 130 rollers produce about 18,000, the new factory will eventually double these production capacities. A new box factory is already up and running and several other buildings housing pre-industry leaf operations are nearly complete. The factory itself, where bunchers and rollers will work pairs, will soon rise on an adjacent area of land. Reaching full production capacity will take at least three years, though, as García is simultaneously embarking into farming, and will be awaiting his first crops of tobacco to be fully fermented and aged, ushering in new blends and new brands.

To that end, García planted his first fields of tobacco just north of Estelí on his new farm in February, on land still being fully cleared not far from his new factory. One recently-expanded tobacco curing barn, or casa del tobaco, is already complete, and another is under construction. While such major undertakings could seem daunting or even risky, García is quite calm, citing a lifetime of preparation and plenty of family expertise ready for just such an opportunity.

Cuban-born (and German-descended) Henry “Kiki” Berger, founder of Tabacalera Estelí, has not only embraced all aspects of cigar making, he’s integrated them in an extremely unique way by locating his cigar factory right on his tobacco farm a few miles north of town. “I have a farm where I grow my own tobacco, so my fields are here and my factory is here. The only thing I don’t have right here right now is a box factory,” Berger explains. It’s easy to forgive Berger on that account, as it has no bearing on the quality of his small-batch cigars, which include Don Kiki, Cuban Crafters, J.L. Salazar y Hermanos, Cupido, and La Carolina. “I don’t want to get into making boxes, so I outsource it,” Berger says.

Cigar rolling is currently located in a building that was originally intended for pre-industry, well off the road. But the small, tight-knit group of employees here are eternally grateful that cigars are being made at all. The factory itself was to be built near the Pan American highway, but when Berger became seriously ill with kidney failure several years ago, expansion plans were halted. While the factory never stopped rolling cigars during Berger’s wait for a transplant, production was dramatically curtailed, and his usually hands-on presence, overseeing every aspect of farming and cigar production, was sidelined. It’s been a year and a half now since his successful transplant - Berger’s wife Karen, an Estelí native and cigar roller, literally saved his life by donating a kidney - and he’s picked up right where he left off, crafting quality cigars in small quantities. “Papi is back!” chuckles Berger with his trademark laugh, referring to his employee’s delight when he returned back home to his farm.

“The growers that are selling leaf want to grow big and want to grow tall,” explains Berger, who limits his tobacco plants to about waist-high to derive greater strength from each leaf. “They want to get as much tobacco as possible to sell. I grow for myself. I don’t sell any tobacco,” he notes. Berger also employees other extremely traditional production methods such as planting seeds in the field rather than greenhouse seedbeds and dries his leaves naturally rather than using gas or charcoal burners. While Berger grows ligero in Esteli, he contracts with farmers for his sweeter Jalapa leaf. “If you use tobacco from one farm,” Berger notes, “you’ll never be able to blend it. It’ll taste awful. You have to blend it from different farms.”

Jonathan Drew, a New Yorker who became so inspired by Nicaragua nine years ago that he moved to Estelí to embark on an adventure of total immersion, has always been guided by one simple mantra - “the rebirth of cigars.” Now, he and founding partner Marvin Samel’s quest has taken the team to an improbable achievement: their year-old Spanish Colonial-style factory, La Gran Fabrica Drew Estate S.A., hugging the top of a steep embankment affording a serene view of the Estelí River river below and the tobacco farms of Omar Ortiz, is the largest (96,000 square feet, 860 employees) and grandest in Nicaragua. It consolidates 10 factories that were in operation previously, now all under one roof.

Drew, the maker of Acid, Natural, Chateau Real, La Vieja Habana, Liga Privado No. 9, and Sauza cigars emphasizes that creating the new factory has never been about being the biggest or having the most employees, but fulfilling a longtime vision. “We don’t look to be different in what we do,” explains Drew. “We are different in what we do because there’s a very clear plan and its been laid out for a number of years now. When we started, it was an eclectic, high-energy, think-tank-style of operation. It was frenetic energy. It was a lot fun.” But there was also a lot of uncertainty and even fear, says Drew - about surviving the boom and the subsequent market glut. When cigar shops began to give the counter-culture brands a vote of confidence, however, a corner was turned and everything began to “fall into place.”

The vision is evident from the moment a visitor steps inside the factory, which looks more like a museum than a factory, bearing local crafts and antiques and murals created by its own 36-person cigar art studio called Subculture Studios. Visitors, in fact, are fully embraced through four-day “cigar safari tours” (cigarsafari.com) that include private accommodations at the new factory, tours, and visits to local eco-tourist sites.

“We’ve added an innovative, stylish dimension to the cigar industry,” says Drew, but solidly embraced the tradition of making superior cigars exemplified by Drew’s coveted heroes like Padrón, Fuente, and Davidoff. All of Drew Estate’s cigars are blends and he feels no need to create Nicaraguan puros, as there are already others who make the best puros already. Drew visits the Dominican Republic, Mexico, and Brazil to “develop his skill set” and gain an intricate understanding of their tobaccos. “It’s about spirit,” stresses Drew. “I’m not in this to compete with my heroes.”

Nick Perdomo was once the “new kid” on the block but these days seems as settled in as Estelí’s old guard. Perdomo started the company in 1992 in Florida with his wife Janine, working out of his garage of my home, relocated to Esteli in 1996, and built his own 80,000 square foot “dream factory” in 2000. In recent years Perdomo has squeezed more rolling tables into his factory’s rolling gallery, while adding new buildings to bring additional processes onsite: a new pre-industry building and three curing barns adjacent to a tobacco field that is used for developing experimental hybrids. In addition to the company’s core brands - Perdomo Reserve, Estate Seleccion Vintage, Perdomo Fresco, and the super-premium Edición de Silvio (honoring his late grandfather) - Perdomo newest releases include Perdomo Lot 23, named after one of his Estelí farms, and Perdomo Habano, a line of Nicaraguan puros blending Cuban-seed tobaccos from Nicargua’s different farming regions. This summer, Perdomo is bringing back the square-pressed Perdomo Squared. Also on tap is the Perdomo Patriarch honoring Perdomo’s late father, Nick Sr. “It’s a super premium,” says Perdomo, “but it’s going to be very value priced, between $6 and $8. My father always said, ‘if you ever make a cigar after my name, make sure it’s reasonable so everyone can smoke it.’”

Carlos Oliva, founder of Tabacalera Oliva S.A. (Tabolisa), has been in the tobacco business all of his life, and was making cigars in Honduras before coming to Nicaragua to open a facility - originally in Ocotal, then Esteli. The company moved into its current factory about four years ago and at the time thought it was going to be too big, explains Gilberto Oliva who, along with his brother Carlos, run the factory. “Now, it’s too small,” he says. Production stands at 30,000 cigars per day, but with a recent addition to the building, Oliva hopes to reach 40,000. A year ago, the family also opened a facility in Danlí, Honduras, where it is currently producing another 12,000 cigars daily, gradually increasing production to as much as 19,000 daily.

The company has expanded its premium product line over the past few years, emphasizing several different blends in its flagship Oliva brand - Serie G, a medium-bodied blend and Serie O, a Nicaraguan puro - both offered in natural or maduro. Special S is a medium- to full-bodied, complex blend with a sun-grown Ecuadorian wrapper, while the newest and currently best-selling release - Serie V - is a very full-bodied blend. Every two or three years, the company also releases a Master Blends, a limited “artisanal” blend currently in its third edition.

Even Estelí’s most serene factory, Segovia Cigars - a joint-venture of Nestor Plasencia and Brazil’s Danneman that’s built around a center courtyard garden and fountain - extend its capacity to 30,000 cigars per day, by expanding its rolling gallery. It also produced another 20,000 cigars daily at a separate facility in Ocotal. In addition to their own Plasencia Reserva Organica, a limited production all-organic cigar launched in 2001, Segovia produces Don Lino Africa, Rocky Patel Decade, and Alec Bradley’s The Maxx and Tempus. Nestor Plasencia Jr., the fifth generation now running the family business, is also the president of a new Nicaraguan cigar maker’s association involved in fighting U.S. legislation.

Another passionate young talent just starting to build a growing reputation is 29-year-old Adbel Joseph “A.J.” Fernández, who came to Nicaragua four years ago from Cuba, having grown up in the shadow of legendary tobacco grower Alejandro Robaina. He’s been rolling cigars in Estelí for two years, but is now occupying what factory manager Kris Kachaturian calls the “lucky factory” in downtown Estelí - a space formerly occupied by Drew Estate and prior to that Nick’s Cigar Company.

With about 300 people, Tabacalera Fernández de Nicaragua S.A. is currently producing about 20,000 cigars per day including Rocky Patel Signature Series, Indian Tabac 10th Anniversary, Padilla Habano, and Sol Cubano Cuban Cabinet. Fernández grows most of his own tobacco on two farms in Estelí, one in Jalapa, and one in Somoto (north of Condega), although not wrapper leaf. Fermentation is handled at a separate building. This year, Fernández will start to introduce his own brands, although he doesn’t want to grow too quickly.

Victor Calvo, an animated native of Costa Rica, first came to Estelí in 2001 when Tabacalera Tambor relocated its manufacturing here from San Romano. Calvo had been managing the small Costa Rican factory, which produces cigars for a handful of clients including Tony Borhani’s Bahia and Bucanero, since its inception in 1996. Less than a year after the somewhat chaotic move, Calvo had the opportunity to buy a large stake in the business from its founder, Douglas Pueringer, who - rather than embark on the voyage had elected to retire, ultimately consolidating all of its scattered operations into his own building on Estelí’s outlying north side. There he joined nearly a half-dozen other cigar makers in the city’s “cigar making district” where there’s plenty of room to spread out and grow.

Today Tambor continues to specialize in high-end cigars and also makes several newer brands including Chamuco and Island Prince for Kauai Cigar Company - the latter using several varieties of tobacco grown on Hawaii’s Kauai Island. Calvo’s next step is to take greater control of tobacco processes, setting up his own bodegas to ferment and age leaf. “I’m going to buy tobacco to work by myself,” says Calvo, who still oversees a small cigar rolling presence back in Costa Rica that produces La Flor de Palmares, mostly for domestic market. Large-scale cigar making is economically difficult there, however - the reason why Tambor moved to Estelí in the first place.

Just around the corner, cigar maker Chris Kelly - a native of Chicago who literally grew up in his dad’s tobacco shop - certainly isn’t the first American from a big city to land in Nicaragua and profess a passion for cigars. And he may not be the youngest, although at 21 he’s certainly in the running. Fire one up, and they speak for themselves: he knows how to make a damn good cigar.

Kelly does all the blending for his cigars himself, and handles “about 90%” of the tobacco buying. “It’s a little more intricate when you have to come down here and learn the language, learn the culture because it’s radically different than it is in the States,” says Kelly, who’s been quite pleased with the feedback he’s received from other cigar makers who have tried his blends, perhaps the ultimate compliment. Getting to this point hasn’t been easy, but Kelly’s eager to keep growing.

Tobacco Products International - Quarter 4, 2008
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