Nicaragua: Growing by Leaps & Bounds (cont.)

Tabacalera Perdomo S.A.
Nick Perdomo Jr., president of Tabacalera Perdomo S.A. with factory manager and uncle, Tony Perdomo.
Nick Perdomo Jr., president of Tabacalera Perdomo S.A. and one of the more established of the "new wave" of cigar makers to have settled in Estelí, has made tremendous strides during his seven-year history in Nicaragua.

Having first set up shop in a converted motel, the family-owned business relocated to a sprawling new 80,000 sq. foot facility it built from scratch on the edge of town three years ago.

The company's cigars, which include La Tradicion Perdomo Reserve, Perdomo Estate Seleccion, Cuban Parejo, and its most exclusive cigar to date - the pricey Perdomo Edición de Silvio - have become well known for their characteristic reddish-brown rosado wrappers, square press shape, and full body flavor. The factory also does a brisk business in contract brands for a number of clients.

"The mainstream line of cigars that we sell are between six and 12 dollars," says Perdomo, who notes the pressure to compete in the three to five dollar range has left that segment of the marketplace extremely saturated. "Our number one selling brand is the Perdomo Reserve. We have a size called The Act, a 7 x 52 torpedo that retails for $7.99 to $8.50. That's not inexpensive, but that cigar continuously sells like wildfire."

With Edición de Silvio, Perdomo has taken his longest aged tobaccos and created his most costly line to date, retailing for upwards of $25 per stick.

While Perdomo has dedicated considerable time and money in developing new brands and stand-out packaging, the factory complex itself continues to grow and evolve too, primarily with an eye to integration. Perdomo recently completed construction of a large-capacity curing barn, which joins a new leaf storage facility and complete box factory.

Henry "Kiki" Berger, who first came to Esteli eight years ago, is a true traditionalist who has created a hands-on, vertically integrated operation on all on the grounds of his own farm on the outskirts of Esteli.
Tabacalera Estelí
Henry "Kiki" Berger is quite happy to be creating his own destiny in Nicaragua these days. Originally one of several investors in a cigar business that went awry during the height of the cigar boom, Berger never originally intended to become an Estelí resident and cigar maker by trade. Eight years later, Berger has become not only a permanent fixture in Estelí, but one of the most unlikely champions and knowledgable practitioners of the completely integrated cigar operation. Having purchased fertile land on the outskirts of Estelí and industriously cleared it of rocks, he coaxed it into arable farmland for tobacco, earning the local nickname "Kiki Flintstone" along the way. "People invest in land to guarantee their tobacco," explains Berger, whose fields are under his own constant watch just yards from his factory.

A thatch-roofed Cuban style curing barn - the only one of its kind in all of Nicaragua - has been constructed and a brand new factory and curing facility is nearly complete on the grounds, creating a closed "seed-to-cigar" system all on the same property. He also grows tobacco on land in Jalapa under long-term leases.

Berger, whose father was a small-time roller in Cuba, now employs 400 people in all. He has long been the hidden face behind other people's successful brands including Savinelli Nicaragua Reserve, Cupido, and 5 Vegas. "Now it's time for me to make my own cigars, to use the best material I have to make the best cigars," says Berger, who is rolling Nicaraguan puros from tobaccos he planted, grew, harvested, cured, fermented, and aged, all on the farm. "This is where people have to invest, in their quality control and their assurance of having the same tobacco all the time, so when you buy a cigar it's always the same tobacco from the same farm," says Berger.

Berger's new brands include Vegas of Tabacalera Esteli, Cuban Crafters which are rolled with long curly head caps and Cuban tails, and his top-of-the-line J.L. Salazar y Hermanos Reserva Especial, a classic, full-bodied, Cuban-style box-pressed cigar with quadruple fermented tobaccos. "I've been aging it," says Berger of his stash of tobacco. "I've been taking my time with it. I haven't rushed it."

Tabacalera Tropical
Cuban tobacco expert Arsenio Ramos (left) with Eduardo Fernandez (right, owner of tobacco producer Aganorsa.
Eduardo Fernandez, a former New York financier and self-made entrepreneur who created one of Europe's most successful fast foot chains, started in the cigar business on the agricultural side, having acquired tobacco farming lands in Condega and Jalapa that had belonged to the post Sandinista-era farming cooperatives (Tainsa). Having land but lacking expert staff, the highly-charged Fernandez brought in retired wrapper leaf growers and fermentation experts from Cuba in an effort to "do something special" on the fertile tobacco lands. As president and owner of Aganorsa, he oversees production of 10,000 bales of cigar tobacco annually.

Last year, Fernandez added a piece to his puzzle in the form of an expert tobacco blender, Cuban-born Pedro Martin, when he bought the cigar company Martin founded in 1978, now called Tabacalera Tropical. Martin, a lifelong tobacco veteran and expert in wrapper leaf, had previously operated his own factory in the Dominican Republic, but was amazed by the tobaccos being produced in Jalapa. The company's goal: to leverage its enormous tobacco resources and employ traditional, old-fashioned Cuban methods of processing tobacco and cigar rolling to make the best cigars possible. This includes assembling cigar tobaccos in an accordion-like fashion - entubado - rather than stacking during bunching for better construction and draw. All cigars produced by Tropical out of the new Estelí factory are also finished with "triple-caps" or gorro, perfect round cigar heads that require additional steps. Both methods, says Fernandez, are standard in Cuba but not in Central America. Last summer, Fernandez moved rolling operations from two tiny facilities located in the back streets of Estelí to a single, much larger facility on the Pan American highway, raising production capacity from 32,000 cigars daily to 70,000 sticks.

Fernandez sells about 80% of his tobacco production to other manufacturers, retaining the remainder for his own use in the Tabacalera Tropical factory. The first new cigar brands developed with Martin debuted at the 2003 RTDA Trade Show in Nashville, Tenn., and include Buena Cosecha, Lampido, Nicarao, and Condega, a strong, all-Corojo leaf blend.

Tabacalera Oliva S.A. (Tabolisa)
Gilberto Oliva Jr. outside the family's new factory in Estelí (above), now one of the largest in town, shown here under construction earlier in the year.
Yet another impressive new factory expansion to come on-line in Estelí this year is a surprisingly large facility belonging to the Oliva family's Tabacalera Oliva S.A. (Tabolisa), within walking distance of several other manufacturers on the edge of town.

The Olivas, who first came to Nicaragua as growers, added cigar rolling operations about eight years ago and now produce over 14 different cigar lines including Flor de Oliva and the much discussed "O" line. Cigar rolling is under the direction of Carlos Oliva, and about 85-90% of the operation's production is dedicated to the family's own brands; the balance comprised of contract work for private label brands. Carlos's father, Gilberto Sr. - who was literally born across the street from Cuba's Hoyo de Monterrey factory - first worked in Cuba's tobacco industry before embarking on an international career growing tobacco throughout the Americas. Today he oversees all growing, curing, and fermenting operations in the family business. In all, the family employs about 500 workers.

The new, larger factory can accommodate increased production, says Carlos's brother Gilberto Oliva, Jr., who is active in both the leaf and cigar rolling operations. In fact, it could theoretically produce up to 45,000 cigars daily, up from the former factory's output of 17,000 cigars per day, but such drastic increases are not in the works, explains Gilberto.

"We've always been careful about expanding too quickly," he says, and anticipates gradually ramping up production to about 25,000 cigars per day. The company's "O" cigar was actually Gilberto's personal smoke, which was developed into a commercial brand at the encouragement of others. "The wrapper takes a lot more aging - it's a true Havana wrapper," he explains. Oliva originally planned on making only 1,000 boxes per month, but demand has been steep.

Flor de Oliva is the company's flagship brand, and this year, the family launched Master Blends, a limited production annual release of only 375,000 cigars made from reserved tobaccos. The company also recently launched O Bold, a powerful Nicaraguan puro.

Drew Nica
Drew Nica, home of Newark, N.J.-based Drew Estate, one of the industry's most eclectic cigar makers.
Hands down, the one cigar manufacturer in Nicaragua that's broken the proverbial mold is Drew Estate. Overseen by company co-founder and Long Island native Jonathan Drew Sann, Drew Estate began as a cigar shop in New York City that had its own cigar made locally. Years later, the cigar shop is long gone, and the company is making its own cigars in a former motel in Estelí. Most of Sann's brands have been anything but traditional. The herbal and botanically-infused Acid line put Drew Estate on the map; the spice-infused Ambrosia continued that theme. But Sann, a non-stop bundle of New York-style energy, stresses that other Drew Estate brands, such as Natural which combines up to 12 different tobacco origins in a single cigar, take aggressive tobacco blending to a whole new level. The company is the largest importer of foreign tobaccos into Nicaragua, he notes.

Even non-aromatic, non-flavored lines, like Industrial Press and La Vieja Habana, prove that Drew Estates blends stand solidly on their own in even in traditional styles - further evidenced by this year's debut of La Vieja Habana-The Early Years, a longfill blend paying hommage to Sann's very first cigar brand. While the philosophy and culture at Drew Estate has always emphasized youthful exuberance and non-conformist attitudes, the company has also forged projects with gourmet coffee grower Martin Mayorga for Mayorga Coffee Infused Cigars; and General Cigar Co. for the new Kahlua Cigar line.

While Nicaragua's growth in premium cigar exports to the U.S. did cool down in 2003 (through September 2003, shipments were off by 23% over 2002, compared to a 38% jump in 2002), the number three supplier region to the U.S. none-the-less remained at the forefront of cumulative growth over the past several years. This includes transplants, such as Tabacalera Tambor, maker of Bahia and Bucanero brands, which relocated here from Costa Rica in recent years. But while greater capacity has come online, manufacturers are intently focused on pushing their craft to new heights. From importing expert personnel, to fine-tuning production methods and embracing the fresh tastes of the newest available tobacco strains, it's clear the recent production surge differs from those of the past: Quality has not been sacrificed.

SMOKESHOP - December, 2003