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Drew and Swisher

October 20, 2014 · By · No Comments

It has been announced today that Drew Estate has been acquired by Swisher International.  Details of the agreement have not been released.  The rumors about the deal have swirled for many months, but today the news officially came out.  This is a huge deal for both Swisher and Drew Estate.

According to the news release, the current Drew Estate management team will continue to operate as a subsidiary of Swisher.  The release adds:

“We began under the Manhattan Bridge Overpass in Brooklyn, N.Y. with a laser focus on ‘The Rebirth of Cigars.’ Friends, retailers, and consumers connected with our passion and authenticity, supporting us at each stage of our growth. We are eternally grateful to all of those who have helped build Drew Estate, and look forward to advancing the Drew Estate legacy with a great partner,” stated Jonathan Drew, Co- founder of Drew Estate, from Hopkinsville, Kentucky.

Drew Estate Co-founder Marvin Samel added, "This is a dream come true. From the moment we met the team at Swisher and began speaking of a possible acquisition, it was clear that, as a family business, they understood the culture we have created and completely supported our desire to keep our family at Drew Estate intact. The team we have built in Miami and Nicaragua represents the heart and soul of ‘The Rebirth of Cigars’ and will continue to drive that vision into the future. In fact, we're just getting started.”

“As a global leader in the cigar and OTP categories, Swisher prides itself on developing, manufacturing, and distributing the most innovative and high quality tobacco products available. I see those same principles in Drew Estate,” said Peter Ghiloni, President and CEO of Swisher International. “The products produced by Drew Estate and its distribution partners Joya De Nicaragua, Royal Agio Cigars, and Tsuge pipes are top-quality market leaders in their respective segments. The creativity, passion and innovation of Drew Estate employees and management are a perfect match for Swisher, and we look forward to welcoming them to our family.”

The deal is expected to close in the last quarter of 2014.

While it may look like an odd proposition, it really is not because there is history there.  Alex Goldman is head of Swisher’s Royal Gold division of premium cigars and Goldman’s history with Jonathan Drew goes back to Jon’s first days in the business.  The origins of Drew Estate are pretty well known.  Jonathan and Marvin Samel had a cart at the World Trade Center in 1995.  He bought some of his cigars from Mom’s Cigars in Manhattan and House of Oxford, which was owned by Alex’s father.  Alex worked in the store while he was in high school and Jonathan helped out when he wasn’t working the cart.  Said Jonathan, “He didn’t pay me I would just go there and work the phones and learn stuff.  He started us with credit and that’s how we got the cart at the WTC. He liked Marvin and me.  He gave us a lot of help to get started.”  Marvin Samel came into the store one day and Alex realized the two had gone to the same youth group.

The Goldman’s also gave the fledgling company a few feet in their booth at the Retail Tobacco Dealers Convention in Cincinnati  in 1996.  Two years later, Drew had its own booth and was on its way. 

It has never been easy for Drew Estate.  That first year when they were officially at RTDA, they sold several hundred thousand dollars of cigars made for them by Perdomo.  Shortly thereafter, hurricane Mitch hit and decimated production.  Drew had the sales, but no cigars.  By the end of 1998, Drew Estate was basically bankrupt but Jon and Marvin would not give up. Jonathan decided to move to Nicaragua to make his own cigars. Alex’s dad Mark, provided Drew with some help financially and lots of advice.  The company had La Vieja Habana being made at Nick Perdomo’s factory during the day.  At night, Jon worked non-stop building his own factory and coming up with ideas for cigars - new ideas.  The result was ACID. It took off starting in the summer of 1999.

From those small beginnings, the company has grown from a handful of employees to about 1600.  Its tiny factory is now the largest in Nicaragua, covering nearly 100,000 square with a second building opened earlier this year almost equal in size for tobacco processing.

When Royal Gold debuted with its lines, there was the Casino Gold made by Nestor Placensia,  Kismet made by Nirka Reyes in the Dominican and Nirvana made by Drew Estate.  The relationship continued between the Goldmans and Drew.  There have been rumors over the years that Drew Estate was for sale, but all of those have been bogus.  Bottom line is that pretty much every cigar company is for sale if the price is right. 

With the uncertainty about the upcoming FDA regulations and their impact on “flavored” cigars, the Drew / Swisher merger makes a lot of sense.  Swisher’s top product is the Swisher Sweets which the company began selling in the 50s and the company makes other flavored cigars.  It is the world’s largest cigar company in terms of units sold (over a billion) and exports cigars to 90 countries around the world. Swisher has the financial muscle to fight back against the FDA, which would be good for Drew and the ACID and other flavored premium lines.  Congratulations to both.

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No CommentsTags: cigar industry · cigar news · Drew Estate · Swisher

RIP Kiki

September 30, 2014 · By · No Comments

Kiki Berger

Enrique Kiki Berger passed away last week at the age of 56.  A heart attack was the cause.  Don Kiki, as he was called, got into the cigar business during the boom.  But unlike many others, he stayed in and had his own factory in Esteli.  Mostly, Kiki made brands for others although he  also made Cuban Crafters cigars named for the shop he also owned in Miami.

Berger was the one who made Savanelli’s first cigar by using tobaccos he planted next to the Pan American highway by his factory.  Kiki, despite health problems over the years, was optimistic and friendly towards almost everyone.  He helped young Jonathan Drew and countless others in Nicaragua.  The Padrons sent their respects via Cigar Aficionado:

We are sorry to have lost Enrique 'Kiki' Berger, a champion of the cigar industry who was always happy to help others despite his health issues. By the sacrifice and selfless act of his wife, Karen, donating a kidney to him, his life was lengthened, giving us all additional time with this great man. The Padrón family is united in offering our condolences to Karen and the rest of his family as we pay our respects. We will never forget him; rest in peace."

In 2012, Kiki came out with the first certified kosher cigar made for a Miami company.  Kiki was a big man with a big heart and he will be missed.

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No CommentsTags: cigar industry

NOLA smoking

September 26, 2014 · By · No Comments

The IPCPR has said next year’s convention will be in New Orleans.   New Orleans has been a rather friendly city for smokers, but by the time the convention rolls around, maybe not so much. City Councilwoman LaToya Cantrell recently pushed for a smoke-free week in the crescent city and plans to go further with some help from her anti-tobacco friends…

Statewide Healthier Air for All Campaign under the Louisiana Campaign for Tobacco-Free Living (TFL). TFL has led the charge in Baton Rouge to push for statewide bans on smoking in bars, though that legislation has failed. But several cities and parishes have recently adopted their own legislation to prohibit smoking in barrooms. Mirroring recent laws in Alexandria, Monroe, West Monroe and all of Ouachita Parish, this fall Cantrell plans to introduce legislation to make New Orleans bars and public buildings smoke-free.

So a tobacco convention is set to spend many bucks in New Orleans next summer and the council wants to ban smoking.  That should work out well.

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No CommentsTags: cigar industry · IPCPR

The Other Shoe

September 23, 2014 · By · 1 Comment

Last week, we told you about General Cigar buying Toraño Family Cigars.  It was announced on September 11th and took effect immediately that day.  At the time, we wondered about Sam Leccia, whose blends have caught more attention of late than Toraño –although the new Captiva from Toraño is a good cigar.  Sam is known for last year’s White and Black labels and this year’s Luchador.  Sam said a deal was in the works for distribution… It now seems it was more than simply a distribution deal.  On the 17th, General announced that the company has hired Sam as a “cigar and blend specialist”.  In addition, General bought Leccia Tobacco Company meaning it owns the lines effective now.  Sam is coming into General’s Foundry Tobacco Company – which Foundry head Michael Giannini calls the skunkworks of the company.   (Skunkworks was an official alias for Lockheed Martin’s Advanced Development programs and is used widely in business to mean a group within a company with lots of autonomy and little bureaucracy.)

According to the release:

In his new role at General Cigar, Sam will continue to develop his brands while leveraging the company’s vast tobacco resources, premium cigar blending expertise and creative talent. He will also bring new, innovative products to the premium cigar market.  As an ambassador for his brands, Sam will continue on his quest to share his passion for premium cigars with retailers and consumers across the country.

In other words Sam will still be on the road humping his lines except now he will have a regular paycheck.  It also means that Sam will get to play with all the tobacco in General’s famed library just like Michael Giannini has been doing with his Elements series.

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1 CommentTags: cigar industry · General Cigar

Happy Birthday

September 17, 2014 · By · No Comments

While last year marked the 10th anniversaries of both Tatuaje and My Father cigars, this does seem to be the year of birthdays.  Manuel Quesada and his family marked 40 years in business earlier this year with the release of their 40th anniversary line. The 40th anniversary cigars used a nice dark San Andres wrapper over Dominican binder and a combination of Dominican and Nicaraguan fillers.  These were limited cigars with a box press, but the good thing is the same cigars, albeit in different shapes, will be available on an ongoing basis.

La Flor Dominicana is celebrating its 20th anniversary. Ernesto Perez Carrillo is marking 5 years, which doesn’t sound like much but when you consider this is Ernie’s second (or third) time around.  He began with El Credito and his father back in 1977 working out of the little Miami factory.  While the Carrillos made El Credito, they also started making an old Cuban brand, La Gloria Cubana.  The success of La Gloria helped the company grow, to the point that in 1999, Perez-Carrillo sold it to Swedish Match.  Swedish Match eventually bought General Cigar and merged the El Credito factory into its Dominican operations.  Ernie stayed with General until 2008 when he retired.  But by the next year, Ernie opened EP Carrillo cigars in the Dominican Republic.  His Tabacalera La Alianza is now marking its 5th birthday.  Perez-Carrillo makes the E-Stunner, the popular Inch line of cigars including this year’s special Inch Short Run and the New Wave Connecticut.

The company with the biggest birthday this year though is Padron, which is marking its 50th year.  Starting in 1964 Jose Orlando Padron started selling his first cigars.  The first cigars the company made were medium fill but soon Padron was making cigars in Nicaragua.  The company’s backbone is the Padron series.  The 3000 is their biggest seller and during the cigar boom, Padron did not hike prices and kept stores with product, earning a lot of respect from tobacconists.  Even today, the Padron Londres retails for under $4.  The Padron’s ventured into the high end premium market with what was called the Anniversario (today called the 1964 anniversary series).  Going a bit up the scale, Padron brought out the 1926 series to mark the 75th birthday of Jose Orlando Padron.  5 years later, the 1926 80 years came out to mark his 80th birthday.  The Padrons also have the Family Reserve Series which was rated 94 in 2013.  This year the family is putting out the 50th anniversary cigar as part of the Family Reserve Series in a 5” x 54 size.  Cost is $25.  There is another cigar the company is making but in very limited quantities.  It comes in a special 50th anniversary humidor which we showed you from the show.  The cost for the humidor and cigars is $5,000.

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No CommentsTags: cigar industry · new cigars

General Grows Again

September 15, 2014 · By · No Comments

Last Thursday, General Cigars announced its latest acquisition —Toraño Family Cigars.  In a way this is a logical extension for the company.  Scandinavian Tobacco Group in 2007 first bought CAO from the Ozgener family.  The cigars were made in the Toraño factories in Esteli.  The next year, STG purchased Toraño’s factories in both Nicaragua and Honduras. But the Toraño brands were not part of that deal except that STG helped with the distribution of the cigars.  In 2010, STG merged with Swedish Match in a joint venture that rolled everything into the General Cigar umbrella.  At that time, Toraño took back distribution of the family brands.  Toraño has a rich history, dating back to 1916. 

“There is a long-standing and proud history of partnership between General Cigar and Toraño, dating back to my family’s exodus from Cuba. There is no other company that I would rather have continue my family’s legacy, and I look forward to seeing the Toraño brands prosper under General Cigar’s expertise,” said Toraño president Charlie Toraño.

When Charlie’s grandfather was in Cuba, he sold tobacco to the Cullman family when it owned General Cigar, then when he fled Cuba in 1960, it was Ramon Cifuentes and General Cigar who gave him his first U.S. job growing Connecticut tobacco which he had been doing in Cuba before his exodus.

Says Dan Carr, president of General Cigar,

 “The acquisition of the Toraño brands represents an opportunity for us to strategically expand our portfolio. Our companies have been intertwined for over 50 years and I look forward to working with Charlie Toraño on plans to celebrate the upcoming centennial and to carry forward the vision, passion and innovation that is synonymous with the Toraño name while also leveraging our resources to bring even greater excitement and reach to our trade partners and consumers.”

Both General and Toraño say the blends of the current lines will remain the same.  My guess is this is a win for both companies in that General gets another line that can be sold overseas (remember the trademarks for Cohiba, La Gloria Cubana, Punch and Partagas are for the U.S. market only, Cuba has them elsewhere)  and Toraño gets wider distribution.  The deal was kept fairly secret…even Jack Toraño, Charlie’s cousin who worked for the company, said on Facebook he had no clue.  The fast changeover also begs the question of what happens to Sam Leccia’s lines.  Toraño had been his distributor for his Luchadore, Leccia White and Leccia Black cigars.  Sam says he is working to set up a new distributor. 

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No CommentsTags: cigar industry · General Cigar

No Exceptions

September 02, 2014 · By · No Comments

Who couldn’t have seen this coming?  Well probably most of the cigar industry.  In many talks with people about smoking bans and why we should always fight them, often many of the people in the business will say, I won’t be affected….I will get an exemption.  When you point out that exemptions may be only temporary things, they often scoff.

In Nebraska they aren’t scoffing anymore.  Last Friday the state Supreme Court struck down exemptions to the state smoking law as unconstitutional. Surprise.

In Friday’s ruling, Judge Kenneth Stephan, writing for the majority, said there is no substantial difference in circumstances between cigar bars and other public places or workplaces that justifies treating them differently.

An Omaha pool hall was fighting the ban trying to get the law scrapped.  Instead, now it is worse.  But the pool hall now says, at least the playing field is leveled.  Yeah everyone is gonna be in the basement.  I hope the pool hall goes out of business.

According to news reports the court decided the exemptions were contrary to the legislature’s initial intent to ban smoking from the workplace.  Nevermind that the legislature changed the law to include those exceptions.

The Supreme Court ruled that only the exemption for hotel guestrooms is constitutional, because the evidence against it doesn't overcome its presumption of constitutionality, Stephan wrote.

That's not the case for tobacco retail outlets and cigar bars, he said.

"Allowing patrons of such shops to smoke simply because it is convenient does not comport with the purpose of the Act, which is to protect the public and employees from the dangers of second-hand smoke," Stephan wrote.

While most articles concentrate on the state’s 11 cigar bars,  it also affects cigar stores.

Jason Hutchison, general manager of Jake’s in Lincoln, is already predicting a 10 percent to 15 percent loss of business. He said he hopes he won’t be forced to lay off employees.

“I don’t think the judges look at the repercussions for things like this,” he said

No they don’t.  And do not think that the anti’s feel this is a victory.

For Mark Welsch, president of Gasp Nebraska, the ruling is bittersweet.

“I'm very pleased that the Supreme Court has ruled that you can no longer smoke in cigar bars, in tobacco stores. I'm disappointed that they still allow hotels and motels to be smoky and am most concerned that they allow smoking at in-home day care's and foster home businesses,” said Welsch.

Right….not far enough.  You can never compromise with these people and be certain they will use this decision in the future in other states and cities to get rid of the exemptions.

Now let’s take this a step further.  The upcoming FDA ruling, many have said, will likely end up in court.  They are right.  The trouble is they don’t think about what could happen.  For example, if mass market cigars are covered by the FDA and premiums are not, don’t you think someone is gonna go to court?  I have been told that of course the mass market size will get an exemption after the court challenge.  They have wonderful lawyers you see.  My point is that any legal challenge can always go against you.  Witness Nebraska.  Bottom line…be afraid, be very afraid.

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No CommentsTags: cigar industry · cigar laws

See you in Court

August 20, 2014 · By · 1 Comment

One thing is pretty clear about the FDA…no matter what they rule, there will be court cases.  For one thing, Altria—the cigarette maker Philip Morris—is concerned that the FDA control may force them to change the name of one of the best selling cigar brands.  Altria owns John Middleton Co., which makes the Black and Mild brand.  Middleton dates back to 1856 and it has almost a third of the U.S. cigar market.

Under the Food and Drug Administration proposal, cigar makers would have to remove descriptions like "light," ''mild," ''medium" or "low" from their products, raising a unique question about the fate of Black & Mild.

The descriptions were banned for cigarettes under a 2009 law because many smokers wrongly thought they meant the products were less harmful than "full-flavor" cigarettes. Cigarette makers have since replaced those words with colors such as gold, silver, blue and orange on such brands, which usually feature different filters and milder-flavored blends.

The company contends that forcing it to change the name would be unconstitutional.

"Neither FDA's regulatory authority or the First Amendment allows the FDA to ban words such as mild for cigar and pipe tobacco regardless of the context," said Altria spokesman David Sutton. "Here, when the word is part of a longstanding and well-established trademark like Black & Mild, such a ban would violate basic constitutional guarantees."

But, of course, constitutionality matters to the government.  See Washington Redskins owner Daniel Snyder for confirmation. 

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1 CommentTags: cigar industry · cigar laws · FDA

FDA marches on

August 19, 2014 · By · No Comments

The FDA is going through the comments now and last week in talking with Glynn Loope about the comments submitted, he told me that on the last day the Cigar Rights of America group delivered about 40 pounds of letters.  Yup, the old fashioned pre-Internet kind on paper, not electronic.  That is a lot of letters from cigar smokers and is a good thing.  Loope says the CRA is drafting another letter for consumers to send to Congress. Yes there still is a way to stop this, via Congressional action. (This is an election year after all.)

In the meantime, Florida’s Attorney General gets a pat on the back.  Pam Bondi wrote into the FDA to say she thinks they are overdoing it.  Unfortunately she was alone.

Bondi’s letter was separate from a letter signed the same day by 29 other attorneys general that implored the FDA to make the proposed regulations even stronger, particularly in regard to electronic cigarettes

Bondi said the FDA should consider the economic impact of what it is doing.  (Remember it already has put people in San Antonio out of work when Finck’s cigar factory closed and I doubt there is much call for cigar makers in Texas anymore.)  Bondi is concerned that J.C. Newman in Tampa would have to cease its manufacturing in that city.

“This 119-year-old premium cigar company with 130 employees is truly unique in this industry and should not be regulated in the same manner as the nation’s largest cigarette companies,” Bondi wrote on Friday, the deadline for submissions on the federal plan.

Florida’s Senators also have been involved.

U.S. Sen. Bill Nelson, D-Fla., and U.S. Sen. Marco Rubio, R-Fla., have requested an exemption to the new rules for companies that don’t mass-produce cigars, such as J. C. Newman. The FDA is already considering an exemption for premium cigars that are handmade. J.C. Newman uses vintage machines.

We’ll see how this plays out.

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No CommentsTags: cigar industry · cigar laws · FDA

More on FDA

August 06, 2014 · By · 1 Comment

The FDA says it uses science for its rulings.  But does it? Nope not a whit.  Take the e-cig deeming.  You would think there is research on e-cigs to back up the agency’s proposal.  Not so much.  You see the FDA is spending $270 million of your money on research into e-cigs.  The research is underway and the regulations could happen within the year.

“Final results may not be available before 2018, researchers leading the FDA-funded projects told Reuters. That timetable, which has not been reported before, underscores how the slow pace of science is contributing to a regulatory vacuum, allowing e-cigarette makers to sell their products virtually unchallenged.”

Note the editorial comment above…emphasis mine.  So then why are they doing it?  Big Pharma.  The International Tobacco Growers Association has outlined the reasons for this and the WHO tobacco control agenda.  IGTA chief executive Antonio Abrunhosa:

"This is big war. Pharmaceutical companies always dream of replacing each cigarette with nicotine patch. They have been campaigning very heavily against tobacco for many years. They fund heavily for the campaign against tobacco," Abrunhosa alleged while talking to reporters.

"We are poor farmers, we cannot fight with big companies. They have millions of dollars. But we have millions of people on our side," he added.

While this fight goes on, the retailer trade group is still wrestling with definitions of premium cigars…how much should it weigh, what size, what price and who should be exempt.  To me this is the equivalent of re-arranging deck chairs on the Titanic.  Just leave cigars alone. All cigars.

An example is the Quesada Petit cigar introduced last month at the trade show.  It is little and weighs almost nothing, yet it is hand made out of all tobacco and it is even long filler!  The price about a buck.  Hand made and long fill make that a premium cigar to me, but others disagree. 

Then what about the premium cigars that J.C.Newman makes in Tampa? They are machine made and would not get an exemption.  That could kill the last cigar factory in “Cigar City” because the FDA would have to review all “new” products.

“The gatekeeping role includes requiring cigar manufacturers to spend thousands of hours, according to an FDA analysis, to test new products before submitting an application to sell a single new brand or size of cigar.  New packaging on an existing cigar also would require FDA approval, and the tightened manufacturing practices could prohibit J.C. Newman’s vintage equipment.”

Remember we have already lost one factory--Finck Cigar Manufacturing in San Antonio.  There are those in the cigar industry who think they can work with the FDA.  Nothing could be further from the truth.  If cigars are deemed to be under FDA control, in addition to most likely banning walk-in humidors (no self service) the agency would have to approve all new products.  How does that work out?  Not great.  Just last week, the Wall Street Journal editorialized how skin cancer is one of the most easily preventable diseases in the U.S. with melanoma killing one person per hour.

“One reason is that the Food and Drug Administration refuses to approve superior prevention technologies. The FDA last blessed a new sunscreen in 1999. Eight new chemical ingredient applications are awaiting regulatory decisions—three of them since 2002, and another three since 2005.”

As for the Tobacco office itself,  Senator Richard Burr of North Carolina cited a GAO report on the FDA’s approval process in tobacco which relies on Substantial Equivalence (SE).

“According to Burr, the GAO report concluded that since 2009, the FDA has collected more than $1.1 billion in tobacco user fees. However, as of now, the agency has only made final decisions on 17 tobacco products out of the 3,788 total SE submissions in the three years since the FDA received the first SE submission in June 2010. “

Bottom line, this is serious and more needs to be done quickly.  Get involved and make sure your friends are involved as well.  Contact your Senators and Representatives to back the bills, which would prohibit the FDA from regulating cigars.  And then get every cigar smoker to rise up and literally flood the FDA with comments this week.  After Friday, it will be too late.

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1 CommentTags: cigar industry · cigar laws · FDA