Sunday, February 25 2007
"We are starting with a fresh sheet of paper, planning a factory like no other in the industry," says Torano Cigars president Charlie Torano.
In contrast to Philip Wynne, who removed his cigar-making operations from Nicaragua in the aftermath of the election of Daniel Ortega as the country's president, the Toraño family has decided to move ahead with the construction of a major new factory in Esteli, Nicaragua.
The facility is expected to open late in 2007 and will be named Esperanza after the family's farm in Cuba which was seized by the Castro government in 1959.
"It will be imposing and conspicuous," noted Torano. "Immediately following the ‘Welcome to Esteli' sign on the main road into the city, one will see its formal entrance: a sign with ‘Esperanza.' The facility is located on our newly-purchased 30-acre plot of prime growing land. Although we have no plans to grow commercial tobacco there, it may well become an exhibition and experimental farm.
"In contrast to most cramped, dimly-lit and poorly laid-out factories, this will be spacious, well-lit and organized for a smooth flow of raw materials to finished product. Equally important, it will be aesthetically pleasing and visiting to visitors; they will not feel they are interfering with workers who are swarming around them, as is often the case. We want them to feel an ambience almost like a winery as soon as they enter. They can relax in a tasting room, walk through the cigar aging rooms and open rolling galleries and conduct business in a formal meeting room.
"We are planning a large area for social events and other functions in the center of the building. The decor will include items of memorabilia that chronicle the rich history and accomplishments of the Torano family's four generations in tobacco and cigars."
Altadis S.A. reported its full-year financials for 2006, showing revenues of just about $5.21 billion U.S. (converted from 3.97 billion Euro) for the year, down only about 3.5% in a difficult year for cigarette sales in the company's main market of Spain. Profits were good, down only about 7% from 2005 at more than $1.5 billion U.S. and an overall profit margin of 28.9%!
Those figures are excellent, but not as good as the top-flight performance of the cigar division. Cigar revenues were up just slightly for 2006 over 2005, at $1.16 billion and a very healthy profit margin of almost $369 million, an increase of 10.8% in profits from 2005 to 2006. For the Cigar Division as a whole, profit margins were a superb 31.7%, the highest profit margins in the entire company. Although revenues and profits were up, the actual number of cigars sold was down by 4.6% from 2005, at 3.28 billion cigars worldwide.
In the U.S., sales were up by 4.1% in U.S. dollars to $611 million, led by Altadis U.S.A.'s premium cigars and its machine-made brands with natural-leaf wrappers, especially Dutch Masters and Backwoods. Those two groups accounted for 860 million cigars sold in 2006 – up 8.1% – while the machine-made brands with homogenized wrappers and little cigars totaled 1.39 billion units, down 8.6%. All told in the U.S., Altadis sold 2.25 billion cigars in 2006. Wow! J-R Cigars, controlled but not yet wholly owned by an Altadis subsidiary, had sales of 52 million Euro in 2006, equal to about $68.2 million at today's exchange rates.
Sales of Havana cigars through Habanos S.A., half-owned by Altadis, garnered $177 million for the company's 50% share or about $354 million worldwide. That's up more than 12% over last year indicating continuing expansion of the Habanos brand, especially in Russia, Asian markets and in Latin America. The company's commentary also noted strong sales of Havana cigars in Germany in 2005.
Altadis is still selling a lot of cigarettes, of course: 119 billion in 2006! In fact, the company's leading brand, the famous French Gauloises, had sales of more than $589 million all by itself. Fortuna had sales of more than $320 million. All together, Altadis sold $2.22 billion in cigarettes, close to double its cigar sales.
The celebrity cigar smoker of the month has to be Colorado Republican Congressman Tom Tancredo, who was enjoying a cigar in his office a couple of weeks ago when the press secretary of freshman Democratic Congressman Keith Ellison (D-Minnesota) called Capitol police to investigate smoke coming into his office next door.
The incident made for considerable drama with Ellison eventually sending Tancredo a hand-written note of apology for the complaint. But not before CNN got into the act and interviewed Tancredo in his office, reviewing the incident and showing off his travel humidor.
Lo and behold, the humidor was filled with about a dozen of what appeared to be the Perdomo (Red Label) Reserve V – 6 3/4 inch by 56-ring perfectos – with maduro wrappers, a hearty, full-bodied smoke from Nicaragua! Bravo, Congressman!
- Rich Perelman in Los Angeles
Want more? Join Rich for daily coverage of cigars, accessories, people and issues at CigarCyclopedia.com.
-----------------------------------------------------------------
Reprinted by permission. Heard in the Humidor is a publication of Perelman, Pioneer & Company. Copyright 2007; All rights reserved.
