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April
2003

HABANA
CUBA

Cigar Company

Anchored with the U.S. rights to a native Cuban cigar brand, Habana Cuba Cigar Co. is forging a niche in premium flavored cigars and expanding its portfolio of traditional cigars.

By Bob Ashley

Native Cuban cigar brand Oliveros, resurrected in 1996 in the United States as a flavored cigar, is being expanded into the non-flavored markets by its new owner, Habana Cuba Cigar Co., Miami Lakes, Fla.

The expansion began with the initial production last year in Nicaragua of Oliveros Gran Reserva and the self-named Habana Cuba Cigar Co. Premier Selection, and will continue when Habana Cuba releases the Dominican-made Habana Cuba premium Classic Cameroon at the 2003 RTDA Trade Show in August.

Later this year, Habana Cuba also plans to open a new 5,000-square-foot factory in Santiago, Dominican Republic, in partnership with veteran cigar maker Milton Germosen, who has manufactured Oliveros cigars since 1996.

"We continue to develop and expand the flavored lines, but at the same time, we don't want to just be a flavored cigar manufacturer," says Habana Cuba vice president Hank Bischoff. "Our goal is to be able to offer the retailer whatever they need - flavored or non-flavored, mild, medium, and full-bodied."

While it's often suggested that reflectively smoking a cigar is good for a person's mental health, Bischoff and Habana Cuba president Rafael Nodal left the mental health industry to get into the cigar business.

"We both were in health care and we were looking for something else to do," Bischoff says. "We both liked cigars and the Internet was still up and coming so we decided to give it a shot."

Initially Nodal and Bischoff started an Internet site to sell cigars at retail, and a year later became wholesale distributors of Oliveros cigars.

"Oliveros asked us to help them as a consultant with sales and marketing strategy," Nodal recalls. "And while sales grew for a year, they still had administrative problems and closed the company.

"The factory in the Dominican Republic that was making Oliveros cigars got together with us for distribution."

Nodal, a Cuban native, came to the United States in 1980 with his family when he was 15 years old, during the so-called Mariel Boat Lift during which thousands of Cubans emigrated to North America.

Nodal's family relocated initially to New York City and then to Miami, where Nodal studied classical music and later was hired to conduct a local amateur opera company.

"The classical music industry down here was pretty bad at the time," Nodal recalls. "I took a job cleaning floors at South Shore Hospital in Miami Beach." Five years later, he was South Shore's director of finance.

Nodal met Bischoff in Florida while they were executives of America Day Treatment Centers, a chain of 28 mental health centers with headquarters in Annapolis, Md. Nodal also met his future wife, Alina Cordoves, MD, a psychiatrist working at the center, who had just relocated to Miami after finishing her residency at the University of Maryland. The two were married in 1998.

"My wife's family has been in tobacco for three generations in the Pinar del Rio region in Cuba," Nodal says. "The neighbors on one side were the Olivas and on the other side were the Placensias."

Serious expansion of the Oliveros brands began after Bischoff introduced Nodal to Miami cigar manufacturer Nick Perdomo Jr. "I went into Nick's store as a consumer," Bischoff says. "I introduced myself, and he made the effort to come out of his office and talk to me. Just by the way he talked, I knew that Rafael and he would hit it off."

At the time Oliveros was well known for flavored cigars that incorporated a process that used molasses, honey, and premium wines for flavor.

Since then Perdomo has begun to manufacture a new non-flavored premium Oliveros Gran Reserva line for Habana Cuba and also makes Habana Cuba Cigar Co. Premier Selection, another non-flavored cigar line.

Habana Cuba Cigar Company has not only been successful at expanding their premium cigar lines, but they have also experienced an increase in sales of their flavored cigars.

The reason for Habana Cuba's growth in the flavored cigar market, Bischoff says, is the quality of the cigars and changing attitudes among cigar smokers.

"Our particular success has been making good flavored cigars instead of just making cigars," Bischoff says. "Until very recently there has been a dramatic increase in the purchase of flavored cigars. That has to do with many people dropping cigarettes and moving to cigars. And many traditional cigar smokers want an alternative. They realized that flavored cigars aren't the horror that they imagined, so they have opened themselves up to that experience.

"Many people have said flavored cigars are for women, but 80% of flavored cigar smokers are males."

Pat Morano, the man in charge of Oliveros Gold Series production, and Raphael Nodal.
Oliveros brands include the box-pressed Oliveros Gran Reserva, manufactured in Esteli, Nicaragua by Tabacalera Perdomo, and offered in four sizes with either an African Cameroon or Nicaraguan Maduro wrapper. Suggested retail prices range from $5.36 to $6.06.

"They are medium-bodied cigars," says Nodal. "It's a shape that holds very nicely in the mouth, and it burns evenly, which is very hard to accomplish in the box press."

Oliveros Flavors are manufactured in seven sizes in the Dominican Republic with a natural Sumatra wrapper and Dominican and Brazilian mata fina filler for $4.50 to $4.70. Flavors include Honey Sweet, D'Vanilla, Peach, Orange, Cinnamon, and Chocolate.

"It's a high premium flavored cigar with a price point higher than you usually find," Nodal says. "But we age the filler with honey, molasses and wine for about four months, and after the cigar is made it is aged for another three months in a special humidor to marry the flavors to make sure they don't overpower the tobacco."

With a Connecticut shade wrapper and flavored with 70-year-old French Kelt Cognac, Oliveros Gold Series, also manufactured in the Dominican Republic, is sold in toro and double corona sizes and packaged in glass tubes in a 10-cigar box or 28-cigar single-sales display with a retail price of $6 and $7 each.

Box-pressed with a Brazilian maduro wrapper, the flavored Oliveros Platinum Series is available in two 51/2-inch ring gauges - the Reyes at 42 and a toro at 50 - priced at $4.50 and $5.20, respectively.

"It's a very unique sweet cigar," Bischoff says. "It has quality construction and an outstanding presentation."

Two new brands introduced under the Habana Cuba Cigar Co. label at the Retail Tobacco Dealers Association (RTDA) trade show in Las Vegas last summer were Cuban Pleasures Aromatic and Premier Selection.

Cuban Pleasures are constructed with an aged Connecticut shade wrapper available in petite corona and corona sizes in Tropical Sweet, Dutch Chocolate, Aged Cognac, and French Vanilla flavors in vertical or horizontal display boxes of 20. The Dominican-made cigar retails for $4 and $4.20.

All-Nicaraguan non-flavored Premier Selection cigars are offered in toro, torpedo, and Churchill sizes and are wrapped in a Cuban-seed Nicaraguan-grown Criollo leaf. Retail prices range from $6-$6.80. "With the Criollo wrapper there is no harshness or bitterness," Nodal says.

The Dominican-made Habana Cigar Co. Classic Cameroon, made with a Dominican-grown Cameroon wrapper and Nicaraguan and Dominican filler, will be available at the 2003 RTDA Trade Show in toro, torpedo, and Churchill frontmarks, offered at a retail price of $3.50-$4. Habana Cuba plans to debut another wrapper with the same filler in the Classic line later this year. "It's a full-bodied cigar that burns impeccably," Bischoff says of the company's upcoming launch.

After assuming ownership of the Oliveros brand, Habana Cuba beefed up its sales by engaging eight independent sales reps throughout the United States, including Dave Topper, Topper Sales for New England; Bob Morrison of RAM sales for the Mid-Atlantic states; Scott Weeks of Weeks Associates in the Southeast; Michael Perales of Impact Force in the Midwest; Tom Ryan and Jason Poehler of Southwest Marketing in the South; Charles Janigian of JMG International in the West; and Paul Hernandez of Broadleaf Tobacco in Florida.

Habana Cuba Cigar Company, 15348 N.W. 79th St., Miami Lakes, 33016, Toll-free: (877) 902-8226, Tel: (305) 557-6919, Fax: (305) 557-2219, Web: www.oliveroscigars.com.


SMOKESHOP - April, 2003