The Dominican's Bumper Crop

from Smoke Magazine - Summer 2016 (Vol.19, No.3)

by Smoke Magazine - Cigars & Life's Burning Desires

THE LAST WORD

Brilliant sunshine, dry weather, and modern irrigation have bestowed growers in the Dominican Republic with a bountiful crop of rich, flavorful tobacco this past growing season, the perfect backdrop for the 2016 Procigar Festival.

>By E. Edward Hoyt III

hile Cuba has struggled with crop issues in the past few seasons, the Dominican Republic has benefited from great growing conditions, a feather in the country’s cap in light of its already growing stature on the global market for premium cigars.

“It is not a surprise to anyone that to make a good cigar you need good tobaccos,” explains Nirka Reyes, president of De Los Reyes Cigars, in sharing her insight to this year’s Dominican tobacco crop. While little can be done about excessively rainy growing seasons that often wreak havoc on crops with mold and disease, the opposite is true on modern, irrigated farms when there’s little rain. And the difference at harvest time is immense.

“Basically, we had a very dry season, and this is a good thing because on farms that have irrigation systems, the tobacco gets better,” due to the abundant sun combined with root-level irrigation, Reyes explains. “The tobacco is [a] friend of dryness, because with an irrigation system, the plant tends to eat more and the roots grow… Plants will have lots more ligero and viso this year than seco.” And in a market that increasingly favors flavor over smooth blandness, an abundant harvest of rich tobacco is a great prize.

While not all tobacco farms in the Dominican Republic feature irrigation systems, those growing for premium cigar makers are nearly universally equipped—the risks associated with such valuable crops are too high not to be. So while the total harvest of Dominican tobacco was down last year due to the dry weather—as much as 20 percent, according to Reyes—the impact on the premium cigar segment will actually be negligible, according to members of the Dominican Republic’s cigar manufacturing association Procigar.

**> Nirka Reyes, President of tobacco grower and cigar maker De Los Reyes Cigars, examines leaf curing from the stellar 2016 crop in the barn.**
Procigar

“The good thing is, with the dryness, a lot of diseases don’t get to the plants, so we’re going to have very good tobacco this year,” said Reyes; “…a lot of ligero to make a lot of good, flavorful cigars.” Reyes also reports that there are currently about 20 different tobacco varieties being actively cultivated in the Dominican Republic, a number that fluctuates depending upon the hybrids and proprietary strains pursued by manufacturers.

And throughout the world, cigar smokers seem to be taking a shining to the taste of Dominican cigars, markets where Cuban cigars have long dominated.

A mere two years ago, Dominican Republic cigar maker Litto Gomez of La Flor Dominicana was only selling his hand made cigars in two countries outside of the United States—Germany and Norway, despite having toiled for over two decades in the cigar business. Today, Gomez reports that La Flor Dominicana can be found in 48 countries, from Europe to Asia to Latin America and the Middle East. Gomez isn’t the only one who’s seen a growing global interest in high-quality non-Cuban cigars: so have his colleagues, and it’s all part of a growing industry-wide trend.

“I see a major change in the world markets,” Gomez said at a presentation at this year’s annual Procigar Festival in Santiago in February that included leading figures of Procigar. “It’s not happening in only one part of the world, it’s happening all over… And our company is not the only one.”

Premium cigar brands from the Dominican Republic are enjoying a higher profile than ever, thanks in no small part to the global reach of Davidoff of Geneva, Gomez noted, something that has benefited the entire Dominican cigar industry.

“All these parts of the world have been traditionally smoking Cuban cigars for many, many decades,” Gomez explains, noting that in the past, many international premium cigar consumers didn’t smoke Dominican cigars for no other reason than they didn’t taste like Cuban cigars.

“They are coming to realize that’s not a problem, that’s a good thing. And now they are not only enjoying the flavor profile of Cuban cigars, but also Nicaragua and the Dominican Republic— especially the Dominican Republic, which has much more presence in most of the international markets.”

Gomez compares the growing desire among cigar smokers in international markets to experience new flavors to the trajectory of the wine industry over time. “Traditionally, it used to be [mostly] French wines, but now people are enjoying wines from Italy and Spain and Latin America and all over the world. They are all great wines and they all have different taste profiles—people are having a much richer experience,” Gomez said, adding that the same phenomenon is happening in cigars and the trend is very positive for consumers who are having a “much broader, richer experience and a lot more choices of flavors to enjoy cigars.”

In addition to the high level of consistency and quality among Dominican cigars, Gomez says the other characteristic that defines them is the great variety of flavors. “There’s multiple choices of great Dominican blends,” he points out. “The great difference of flavors from manufacturer to manufacturer, from brand to brand, I think is one of the great assets here in the Dominican Republic.”

Hans-Kristian Hoejsgaard, c.e.o. of Oettinger Davidoff AG, also noted an encouraging gain for Dominican cigars in the global market, while acknowledging that overall last year was challenging.

“I think it’s fair to say 2015 turned out to be a lot tougher than we anticipated just one year ago. The overall American market was probably the only market that lived up to expectations with a growth in sales of about two percent, but in Europe the overall market clearly declined further.”

> Litto Gomez, founder and president of La Flor Dominicana, started as an outsider to the cigar industry over 20 years ago, but the talentedvisionary has become as impassioned a force in the Dominican cigarindustry as many of his multi-generational cigar making colleagues.

“In general, Cuban cigars had a tough year,” said Hoejsgaard. “They have had a very bad harvest the last couple of years and they have out-of-stocks in many areas.” Hoejsgaard notes that 55 percent of Cuba’s cigar exports went to Europe in 2015, “so one can just sort of reflect on the fact of what [will happen] when and if the American market is opening up.”

To Reyes’s point, Cuba has had too much rain in recent seasons, and crops have suffered, but it comes at a terrible time as it relies more heavily on notoriously scant inventories of properly aged leaf as it struggles to meet current global demand for its cigars. The thought of a surge of U.S. demand in a post-embargo world spells potential chaos for the global Cuban cigar market.

Given the recent, unprecedented developments by the Obama administration to normalize relations with Cuba and ease more and more of the travel and commerce restrictions that have been in place for over 50 years, the question of what will happen to the premium cigar industry once the trade embargo falls and Cuban cigars are freely available on the U.S. market is more timely than ever. The thaw has been moving quickly since President Obama’s announcement in July 2015 that U.S. would end the diplomatic isolation of Cuba and reopen the nation’s respective embassies.

But the truth is the cigar industry doesn’t foresee Cuban cigars reaching U.S. retail stores any time in the immediate future as the potential hurdles are still formidable.

“I think we all realize that it will happen,” says Hoejsgaard, “and depending on who wins the U.S. presidential election this year, it can be shorter or longer, but I don’t think anybody thinks…the actual lifting of the embargo, which is the key [barrier]…is going to happen before three to five years.”

When it does, the premium cigar industries in the Dominican Republic, Nicaragua, and Honduras will all face a new “big competitor,” Hoejsgaard admits, “but it’s a competitor we know from the rest of the world. It will bring new excitement around the entire cigar market. I think that’s just positive. The issue, of course, is supplies, because as we all know the Cubans need a bit of help and their production has basically declined over the past couple of years. So, if they have to supply and provide product for the U.S. market, other markets around the world will suffer.”

As far as cigar companies returning to Cuba, either buying tobacco there or helping to grow tobacco in Cuba, Gomez stresses “that all depends.” If only the embargo falls, but not the communist system, there would be lots of limitations still in place.

Davidoff, which used to have all its cigars produced in Cuba up until 1989 when quality issues compelled it to establish its own production in the Dominican Republic, sees plenty of potential should the opportunity to go back to Cuba arise. “Yes, we are certainly one of those companies that would be delighted to return,” says Hoejsgaard. “We would not go there to replace what we have because Dominican Republic, Davidoff Nicaragua are extremely important. So it’s not about replacing what we have, but obviously adding an additional pillar to the brand when that opportunity may arise.”

Hoejsgaard agrees it’s not likely to happen in the very short term, but says it’s an exciting prospect. “The train has left the station definitely, but it needs a lot more than Obama going to Cuba or opening an embassy. We need really that lifting of the embargo before anything is going to happen.”

Manuel Quesada—whose family company owns the rights to the Cuban-born Fonseca brand outside of Cuba—is pessimistic that the fall of the embargo would signal a return to pre-revolutionary free-enterprise, where foreign cigar companies, large or small, could return to the island to farm tobacco or buy premium Cuban tobacco to blend in their cigars. He cites a February 2016 Cigar Aficionado interview with Habanos S.A. co-president Nuñez Blanco, who said, “No. That will never happen. That is not part of our strategy, nor part of our thinking.”

As if the U.S. embargo on the importation of Cuban goods and the need to first solve complicated trademark ownership issues weren’t problems enough for Cuba’s dream of someday making huge inroads in the U.S. market, the newly enacted FDA deeming regulations toss in yet another wrench, one of costly applications, premarket reviews and, ultimately, unknown delays even after all the other hurdles have been cleared.

Procigar and cigar associations from other cigar producing countries worked with the various U.S. trade associations over the past two years in an effort to oppose the FDA’s deeming regulations, but ultimately the efforts fell short, and the FDA made no special concessions for premium cigars, treating them the same as cigarettes under their regulatory approach.

“Tough regulations have always been part of our life, part of our industry,” stressed Hoejsgaard back in February, before the regulations were unveiled, “and we have always managed in the premium cigar industry, and we will also overcome this next round. But it’s important that we all stand together, not only in the Dominican Republic but Honduras, Nicaragua, and Cuba, to make sure we speak with one voice and we stand together and we are not being lumped together with mass machine-made product.” Cuba, he noted, has been entirely absent from the efforts to combat the FDA regulations.

If the U.S. government and its various agencies failed to understand the traditions and artistry that surround the crafting of hand made cigars before they unveiled their crushing regulations, rest assured the industry won’t stop its efforts to defend its rights to continue their livelihoods just as wine makers, spirit makers, and culinary artisans pursue theirs. “Let the populations of the world decide where to draw the lines,” is the industry’s desire—a distinct irony as the U.S. works to encourage freedoms and free market principles in Cuba while severely limiting business at home. [S]