Heard in the Humidor: August 3-10, 2009

"A customer told me, 'We sell Rolls-Royces here, not Hondas.' Now they are selling Hondas."

That comment from a tobacco store owner is one the favorite stories that 31-year-old Anto Mahroukian tells about his JM's Dominican brand that's caught fire in today's economically-challenged times. "Everyday cigar smokers are buying three or four value-priced cigars, like our JM's Dominican line, instead of one super-premium cigar. After they try a few of ours, they tell us and our retailers, 'Why haven't I been smoking these all along?'"

JM's began during the Cigar Boom in 1996, selling a high-end brand called Espanola. But after the Boom faded, the focus turned to the value segment and Anto took over the business from his father, John. The turn towards the value side has been a winner for JM, which calls itself "the everyday choice." Volume has now passed two million cigars a year, primarily in the JM's Dominican line, which comes in eight sizes and in a choice of Sumatra, Connecticut or Connecticut Broadleaf maduro wrappers.

"A lot of retailers are looking for an alternative, quality product they can sell," noted Anto. "They're making as much or more on a single cigar than they did on a carton of cigarettes.

"[Our wholesale] cost to the retailer is about $1 per stick or a little more; a Churchill is about $1.15, a Corona is less, but the average is around a dollar. I've seen then sold for $5.99 or $1.99 each. If they sell for $3.99-4.99 each and that's 50 in a box, they're making $2-3 per cigar times 50. That's a lot of money per box."

The Sumatra–wrapped version is the best seller, with the maduro second and not far behind with the Connecticut-wrapped edition third. The cigars are produced in JM's 15,000 sq. ft. factory in the Santiago area of the Dominican Republic, which has been expanded to handle the current production load and to store and age more tobacco. Anto notes that "Our cigars are made of top-quality tobaccos, but their Cuban-sandwich bunching . . .combining long- and short-filler leaves, reduces their price and still delivers a surprisingly opulent smoke."

All sizes are offered in boxes of 50 except for the hefty Gordo (5 1/2 inches by 62 ring) and Gordo Grande (6 1/2 x 62), packaged in boxes of 24.

The brand's popularity has grown significantly in recent years and is now sold in nearly 1,000 stores nationwide.

Mahroukian notes that the combination of the pricing and 50-cigar packings of the JM's Dominican line has made it rather unique on the current U.S. market. It's picking up steam not only as an everyday cigar, but a near-perfect choice for the golf course: plenty of flavor, easy draw and inexpensive.

The JM's line also includes a flavored line with the new Dominican Honeys now shipping nationally after being introduced at last year's International Premium Cigar & Pipe Retailers Association (IPCPR) trade show. These are handmade, corona-sized cigars of 5 1/2 inches by 42 ring gauge available in three styles: Honey, Honey Vanilla and Honey Rum, all offered in boxes of 24. Suggested retail for all styles is $2.50 each ($60.00 per box of 24), not including local tobacco and sales taxes.

>> Once you meet Heather Phillips, you're not likely to forget her. Already a rarity in the cigar trade as a woman who owns the Naples, Florida-based Heavenly Cigar Company, she's made quite a splash with her Heaven brand of handmade, flavored cigars, promoted by her team of "Heavenly Angels." Her drive, passion for the Heaven brand and flaming red hair helped give her the nickname, the "Red Lion."

So it's fitting that Phillips will introduce her newest blend – Red Lion – on her birthday (August 12) at the IPCPR convention and trade show in New Orleans.

The brand has been around since Heaven's founding in 1999, offered by Phillips as an add-on sale for retailers who wanted a reasonably-priced 60-ring cigar or a small 4 1/2-inch by 44-ring perfecto. But that Dominican-made version has been replaced by a Nicaraguan-made edition of the Red Lion that will now be heavily promoted by Phillips to sell alongside its Heaven brand.

"The fine-tuning of the complex, five-nation blend and smoothing out its power was a real achievement," noted Phillips. "Connoisseurs will be especially pleased by the depth and harmony of the blends. The power is tamed, but not at the expense of its richness."

Two wrappers are available: an Ecuadorian-grown Habano Rosado and a Connecticut Broadleaf Maduro, both combined with a Brazilian-grown binder and Nicaraguan, Dominican and Honduran-grown filler leaves. "I selected the Rosado wrapper for its character and spicy finish," said Phillips, adding "it also has a lustrous, reddish sheen that reflects the Red Lion theme."

The new Red Lion will be offered in three sizes: a Robusto of 4 1/2 inches by 48 ring; a Torpedo of 5 1/2 inches and 52 ring and a 6-inch by 60-ring Toro Gordo. The Robustos and Torpedoes will be offered in boxes of 20, with the Toro Gordos in boxes of 15. Pricing has not been announced as yet.

It's another move forward for Phillips, whose sales have been steady in the recent, turbulent months for cigars.

"We're doing well to date," she says, adding that "we have continued to build and strengthen our position in the marketplace. We know the business is coming back and we're preparing for that day." The company just moved into newer and larger quarters in Naples to handle more promotions and more sales at more retailers in the coming months. Said Phillips, "Even my dog, Maduro, puts in regular days at the office."

>> In the cigar industry, virtually nothing gets thrown away. Factory managers can always find a new use for old shape molds, leftover filler, cigars made by student rollers and especially for old brand names.

So C.A.O. is recycling an ancient Cuban brand, La Traviata, for its new blend to be introduced at August's IPCPR convention. Introduced in the 19th Century, the brand took its name from the famed opera written by Italian composer Giuseppe Verdi that was first performed in 1853 in Venice, Italy.

The La Traviata brand was owned by the Tabacalera Cubana, the largest exporter of Havana cigars to the U.S. in the early part of the 20th Century and the maker of celebrated brands such as Bock & Co., Henry Clay, La Corona,

Santa Damiana and Villar y Villar among others. The La Traviata brand was made at least until 1940, when it was present on the roster of Havana brands for export, but disappeared prior to 1959.

The decision to go ahead with the La Traviata brand is a fairly recent one for C.A.O., as the trademark application with the U.S. Patent & Trademark Office was only filed on March 6, 2009. However, the company made significant efforts to try and honor the artwork and design of the original packaging.

"The inspiration for La Traviata came from smoking numerous classic Cuban cigars," said C.A.O. president Tim Ozgener. "We wanted to create a cigar that appealed to sight, smell and taste.

"The oily sheen of the Ecuadorian wrapper compels you to pick it up. The pre-light has a distinct pepper and leather nose. The flavor bombards the palate with intense, rich notes of cedar, anise and leather, evolving along the way into a lush and creamy finish. We've also stayed true to the original La Traviata vista and artwork circa 1901-1904."

The La Traviata blend, made at the C.A.O. Fabrica de Tabacos in Esteli, Nicaragua, is designed as a full-bodied cigar with an Ecuadorian-grown, Habano-seed wrapper, Cameroon binder and ligero filler tobaccos from Nicaragua and the Dominican Republic. It will be offered in boxes of 24 in three sizes: Divino (5 inches by 50 ring); Radiante (6 x 52) and Intrepido (7 x 54), varying in price from $4.95 to $5.75 each, not including local sales and tobacco taxes.

>> "It is hard to imagine the amount of money that has been lost, and just how far-reaching this illegal operation truly is," said Jefferson County (Al.) Sheriff Mike Hale in the aftermath of the arrest of two men caught counterfeiting cigars.

In this case, the cigars being copied were two of the best-selling machine-made brands on the U.S. market, Swisher Sweets and Black & Mild. The case was opened last March when a customer complained to Jacksonville, Florida-based Swisher International about problems with a pack of Swisher Sweets Cigarillos; the company recognized that the returned cigars were, in fact, fakes. According to a story on the arrests in the Birmingham News, Swisher builds in security identifiers into its packaging just for such situations.

Apparently, the arrested men – Jegil Wilissac Dugger, age 30 from McCalla, Al., and Faisal Hassan Elnaham, 32, from Homewood, Al. – were the leaders of a ring which imported cheap cigars from India under the brand name "Dank" and then had Swisher Sweets and Black & Mild packaging made up in China, assembling the final product at multiple sites in Jefferson County, including a bingo hall! Distribution of the fake cigars was apparently spread throughout the Southeast.

Dugger and Elnaham were arrested on July 23 during an operation which included searches of eight different locations, including two convenience stores, two bingo halls and four residences. Thousands of counterfeit cigars (worth about $75,000 at retail), packaging material, computers and weapons were seized. The Jefferson County Sheriff's Office is asking anyone who purchased such cigars to call them at (205) 731-2769. The investigation is continuing and additional arrests are possible. Both men were charged with multiple counts of theft of a trademark and were jailed with bail set at $600,000. Elnaham posted bond and was freed pending trial last Friday while Dugger remained in jail; he was already out on bond for promoting gambling at the time of his arrest.

The scale of the enterprise was what stunned Sheriff Hale. "It has to impact the bottom line in the hundreds of thousands, if not millions, of dollars in lost revenues to the company, tax revenues and on down," he said. He also noted that the U.S. Customs Service, Immigration and Naturalization Service and Food & Drug Administration were being notified of the case, raising the possibility of significant additional charges to be added.

Naturally, the folks at Swisher were irritated about the entire matter. "The customer unknowingly purchased a counterfeit Swisher Sweet Cigarillos cigar, found it to be of poor quality, and became disappointed with the Swisher Sweet brand," said Swisher president J. Thomas Ryan. "That disappointment in Swisher has the potential to ruin the brand's reputation."

Fortunately for Swisher, that angry customer's return of what he thought was a legitimate Swisher cigar led to the break-up of only the latest in a continuing line of cigar-counterfeiting cases.

>> Short fillers: Find our latest tasting review, of the Perdomo Grand Cru and the new Alec Bradley Family Blend and Select Cabinet Reserve, in our News & Views archives for July 31.

-  Rich Perelman in Los Angeles

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Reprinted by permission. "Heard in the Humidor" is a publication of Perelman, Pioneer & Company. Copyright 2009; All rights reserved.