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June,
2006

New Orleans
Gator Group

Surviving
Katrina


When Hurricane Katrina destroyed their cigar accessories wholesaling business, partners Leonard Haggarty and "Ed" Denney moved to Tacoma, Wa. to start all over.

Staff Report

For Leonard Haggarty, the summer of 2005 was shaping up to be a winner. Following a particularly busy exhibit booth at the Retail Tobacco Dealers of America (RTDA) trade show in New Orleans, orders at Haggarty's New Orleans Gator Group - which wholesales over 300 high-end cigar accessories - were rolling in, and gross sales were up 14% over the previous year's. The company - at the time located two miles outside New Orleans in Metairie, La. - distributes humidors, lighters, cutters, hygrometers, cigar cases, and Griffo activation solution which it owns and manufactures. "Things could hardly have been better," he recalls.

That bright outlook, however, would quickly take a dramatic turn for the worse.

With a major hurricane roiling in the Gulf of Mexico, Haggarty hastily embarked on his fourth evacuation since living in the city. In the early morning hours the day before Katrina struck New Orleans, he grabbed two changes of clothes, golf clubs, several gallons of water, and a laptop and left his home - located in a large warehouse that was home to part of his business. He drove towards Houston. That night, he slept in his car.

The following day, he checked into a hotel in Lafayette, La. - about 100 miles north of New Orleans - andwatched the news pour in. Unable to return to the city, he settled in at a coffee shop with Internet access and attempted to track down his employees, either by phone or email, and stay in touch with industry associates.

Back in New Orleans, Haggerty's friend and business partner, Steven "Ed" Denney, had been weathering the ordeal firsthand. Originally from Ohio, Denney had moved to New Orleans 13 years ago and joined up with Haggarty about five years later, managing a statuary company that was also part of Haggarty's business holdings in Louisiana.

In talking with locals who remembered hurricanes Betsey and Camille in the 1960s - the largest storms in recent years to have rattled the city - Denney found considerable optimism before the storm: if the city had survived those, it would survive Katrina as well, it was commonly believed. Denney had already moved goods in Gator Group's mid-city warehouse upstairs to avoid any floodwaters. By the time the hurricane had passed, it appeared that the city had indeed escaped devastation. There was about two feet of water outside the warehouse, and Denney was confident he could navigate his way out of the industrial neighborhood.

But then the waters started to rise. Rapidly. The building was inundated by nine feet of water within hours, reaching the second floor. The levees had failed. He was trapped inside. At night he could hear the looting, gunfire, and the breaking of glass in the surrounding area. By the fourth day, still waiting to be rescued, Denney had run out of fresh drinking water, and decided to leave. He cobbled a pair of five-gallon buckets together into a makeshift flotation device and swam two miles through murky water contaminated with oil, gasoline, chemicals, waste, and worse. He finally reached a roadway where he joined a single-file march of "people just walking, not talking." One of the thousands of other evacuees congregating in New Orleans, Denney was eventually bused to the Astrodome in Houston, where the scene was tense and conditions dangerous. When he finally was able to get his cell phone to work, he made contact with Haggarty, and eventually joined him at the coffee shop in Lafayette.

As the severity of the situation in New Orleans began to sink in, Haggarty decided to rent an apartment in Lafayette. Working from copies of invoices, he began to reconstruct a basic customer list to get word out within the industry that they were "still around," although not exactly business as usual.

It wasn't until three weeks later that they returned to the warehouse in New Orleans. Despite ominous news reports, the scene there was much worse than either had imagined. The wind broke the warehouse door at an estimated 175 mph. The smell - generated by a stew of chemicals, sewage, and death - was "extraordinarily horrible." Green and black mold had grown rampantly, and anything it touched was unsalvageable. Haggarty estimated his loss -including inventory, computers, furniture - at $330,000.

After several trips back to the warehouse, and witnessing the second punch of Hurricane Rita, which followed in Katrina's trail, it was obvious that New Orleans simply wasn't a safe place to live or rebuild the business. Haggarty decided to return to his hometown of Lakewood, Washington, outside of Tacoma. Denney, who had lost his own home and two vehicles, decided to start a new life there also. What few things from Gator Group that had remained dry were loaded into a rented truck, and the partners embarked on a six-day, 3,200-mile drive northwest, stopping at tobacco retailers along the way.

"What we went through in Lafayette was to save this business," says Haggarty of Denney. "He's a survivor with me."

TURNING OVER A NEW LEAF In South Tacoma, Haggarty borrowed some space in the back room of a friend's business. While small amounts of assistance from the local Red Cross and other organizations were greatly appreciated, it was a $5,000 interest-free loan from the Retail Tobacco Dealers of America (RTDA) that was the crucial lifeline that allowed New Orleans Gator Group - an RTDA associate member - to remain in business. (Insurance payouts, both for the business and for the partner's personal property, still remain in limbo 10 months later). A month after Katrina hit, Haggarty and Denney attended a cigar-related trade show and were soon signing hundreds of new accounts and writing many more orders. Despite the formidable challenges, the loss of customers has been minimal, and many retailers have shown tremendous good will.

All inventory is now onsite, shipped from what Haggarty calls the company's "west coast distribution center." He continues to look for permanent space in the Tacoma area, most likely a building he can buy. Downsizing from a 7,500 sq. ft. facility in New Orleans to just over 900 sq. ft. now has been just one of many adjustments. Before the hurricane, the company was staffed with nine people, but now has four full-timers, and one part-timer. Yet, amazingly, as of June 2006, monthly business has returned to pre-Katrina levels. In addition to the company's proprietary Griffo Activation Solution, Ms. Griffo Odor Eliminator, and cigar-related accessories, Gator Group handles golf-related cigar accessories. Haggarty hopes to restore the company's own brand of Griffo hot sauce and coffees when he can: the New Orleans company that manufactured them was itself severely damaged by the flooding.

As far as New Orleans is concerned, Haggarty feels it's going to be a long road to recovery. Nine months after Katrina hit, the city remains an ongoing disaster. Although Gator Group continues to maintain a sales office in Lafayette, Haggarty has no intentions of returning to the city any time soon, aside from visits.

New Orleans Gator Group, Tacoma, Wa., Toll-free: 1-888-822-2808.


SMOKESHOP - June, 2006