The Dominican Republic on the rise, stogie-wise

There’s no other scent like it in the world: that unmistakable chocolate-and-earth mélange wafting through the air from the nondescript cinderblock building across the road, the one that comes from tobacco being aged, treated, cut and hand-rolled by rows of busy workers. The scent is enough to make a cigar smoker start salivating like a puppy at the door of a butcher shop.

Behind gates and barbed wire fences separating them from Santiago’s bright, gritty bustle, the cigar manufacturers of the Dominican Republic operate with the seemingly effortless precision of finely calibrated machines, producing millions of sticks a year — feeding a demand still strong more than a decade after the much-touted cigar boom of the mid-1990s. Forget Cuba. Until the day Castro’s ant farm breaks some sort of speed record in its inevitable march to capitalism once El Líder Máximo is among el muerte, this island on the Caribbean’s eastern edge will continue to dominate the smoking world.

But a cigar business, like the tobacco leaf it’s based on, is subject to twists of fate and nature. The cigar jefes here think the Dominican Republic could remain on top for quite some time — if the crops stay good and proposed U.S. cigar taxes don’t beat their customers’ wallets into submission. They’ll tell you it all comes down to luck — a commodity that at times in this nation’s history has been in short supply.

For the moment, though, the island’s outlook is positively sunny. “The market is challenging, but it’s also growing,” says Jose Seijas, vice president and master cigar blender for Altadis, sitting in his office in Tabacalera de Garcia, the world’s largest handmade cigar factory in La Romana. “Last year was a very good year.

THE BOOM AND EVERYTHING AFTER
The last two decades, however, weren’t so great. The “up” was huge — during the cigar boom of late 1992 through 1998, millions of Americans took to the pastime, and the number of cigar factories in Santiago exploded from a few dozen to more than 120, with all manner of hustlers rushing in to exploit the demand.

Those hundred-odd fly-by-night operations, with their substandard tobacco and dubious quality, no longer exist. The long-established players, doubtlessly tempted after the lean years of the ’70s and ’80s to ramp up their supply, were careful to keep their standards high — which is why their factories are still producing cigars.

“A lot of cigars came onto the market not ready to be smoked; a lot weren’t worthy of the market. A lot of people made miserable cigars and charged outrageous prices,” recalls Manuel Quesada of Manufactura de Tabacos S.A. (MATASA ), lighting up in his wood-paneled Santiago office a few yards from his factory floor. “A year after the boom died, people went back to their usual production process, but now they were faced with cigar smokers who knew more about cigars and their own tastes.”

The MATASA factory is long way from the tiny operation founded in 1974 with one phone and three cigar rollers. Today, the factory bustles with dozens of employees working a process at once high-tech and artisanal, a mix of industrial machines and human attention to small detail. They sit at tables slicing and rolling leaves into cigars; in other rooms, they examine the finished sticks for knots, or sort leaves into 50-count bales. Digital readouts abound, along with pictures of the Virgin Mary taped to workers’ desks. Salsa booms from radios, replacing the old-time lectors in suits who read great works aloud.

The factory even has a carpenter’s shop to make boxes — a concession to vertical integration. “It’s a pain in the ass, but a necessary pain in the ass,” Quesada says with customary candor over the clattering din.

Litto Gomez, who started up his La Flor Dominicana factory in 1994, traces the rise, fall and resurrection of the cigar industry here in simple terms. “Before the cigar boom started, the profile of Dominican cigars was very mild; it was very traditional. Then the boom came, and a lot of things happened with quality — things got complicated,” he says. “There were consequences to that.”

Some lessons from that period must have stayed with him. Although he has the capacity to make some 4 million cigars per year, he has little incentive to expand beyond that: “The priority is maintaining quality.” This sentiment was echoed by other manufacturers on the island — it is, indeed, the secret of their longevity.

ROOTS IN THE LAND
Much of the Dominican Republic’s tobacco renown is due to its soil, including the rich layer within the Cibao Valley, through which runs the life-giving vein of the Yaque River. North of the river, within the shade of the mountains, the tobacco is noted for its mildness. The southern portion is sandier and hotter, birthing a stronger-tasting plant.

“The quality of a cigar is the quality of the leaf,” says Daniel Nuñez, president and COO of General Cigar, in his factory just a stone’s throw from Quesada’s. Both men operate in one of Santiago’s free zones, a duty-free area lined with warehouses and industrial structures, packed daily with enough workers to populate a respectable-sized town. “It’s not how many cigars we make; it’s how much tobacco we can actually produce, and then develop the tobacco and people on time so you can expand and grow.”

His factory is epic in scope, processing some 5 million pounds of tobacco per year. Close to 2,000 uniformed rollers work in shifts under its roof, transforming their bundles into a plethora of General Cigar brands. In a warren of back rooms, giant machines roll entire fields’ worth of brown tobacco leaves on huge wheels, conditioning them with moisture sprays. All this rapid-fire production could be Exhibit A that the cigar boom never died — it merely leveled off in a plateau of dedicated (and adventurous) smokers.

Those smokers give Nuñez the room he needs to experiment. A few decades ago, he says, cigar brands were limited in number. People often bought a certain size of a certain brand and stuck with it for life. “But during the boom, people tried different things, different flavors, that opened up huge opportunities to develop different strains, different seeds, and produce flavors” that would have never been accepted by the general public before the early ’90s.

Trained by legendary Cuban cigar maker Ramón Cifuentes, a dapper man whose photograph hangs in the boardroom down the hallway from his office, Nuñez grew up in the Dominican Republic and lives here as often as his hectic travel schedule permits. Tobacco, in many ways, is in his blood — and these days, with the business well in hand, he’s been casting an eye toward his legacy: “If I can get at least 12 people who I can pass the passion on to within the next five years, I will be realized as an individual, as a person.”

For the island’s cigar makers in general, such prosperity has presented some unique challenges. “Workers here are educated and experienced, and that brings costs. This is a paradise, but it’s expensive to live in paradise,” says Carlito Fuente, whose family’s roots in the cigar business trace back to nineteenth-century Cuba, and whose Fuente Fuente OpusX (which he created alongside his father, Carlos) is one of the most highly rated premium cigars in the world.

Over the next five to 10 years, Fuente adds, production costs in the Dominican Republic will rise against those in Nicaragua or even Cuba. Countering that, though, is a groundswell of encouragement from the island itself. “The government has given us much support. They’ve cracked down on counterfeits. And the people here are recognizing the significance of the industry; it’s earned their pride.”

DANGER AND OPPORTUNITY
Other challenges loom beyond the country’s azure shorelines. “People are producing a more consistent cigar, but the market is very hard, especially in the United States,” says Augusto Reyes, who operates his independent cigar factory in another part of Santiago. “There’s a lot of prohibition out there. And then the tax. . . . ”

Ah, yes, the tax passed by the U.S. Congress, the one meant to fund the State Children’s Health Insurance Program by potentially raising the cost of a cigar by 20,000 percent (in the most modest scenario, the legislation would add at least a dollar to the cost of every cigar sold in the States). Every cigar manufacturer names it their top concern, even as President Bush has already vetoed the measure, but it’s an open question what the next leader of the free world — particularly if it’s a Democrat — will do when the bill is inevitably resubmitted.

The big worry is that the tax will cause regular cigar smokers to cut back on their consumption, and drive more casual ones out of the lifestyle altogether. It would also severely affect the Dominican Republic itself. “If the tax is put into law, we lose a lot of labor — more than 100,000 people could be put in the streets,” Reyes estimates. “This is a poor country, like Nicaragua and Honduras.” Driving through the streets of Santiago, you can picture the effects of such job losses in the people waiting out the day on crates in front of scarred stucco walls, or picking through the debris along the side streets.

By contrast, the workers in Reyes’s two-year-old factory move with poetic grace as they roll, cut and box some 15,000 cigars per day. The activity thrumming in the low-ceilinged rooms here has a decidedly old-time feel, from the wooden molds that press the cigars into shape, to the workers exchanging handwritten cards for their daily bundles. It’s hard to imagine the place’s omnipresent music silent, its concrete rooms empty.

Whether or not the tax passes, the cigar jefes have been eyeing new markets. “We are trying to open — this year — South America, a few islands and also China,” says Guillermo León, vice president of La Aurora, the oldest cigar manufacturer in the Dominican Republic. While the Asian dragon might not have a history of major cigar smoking, its torrid economy is drawing the attention of cigar makers half a world away. With wealth, after all, often comes the urge to puff away on the finest stick one can find.

León’s Dominican factory complex could be mistaken as a free zone unto itself. His family’s interests don’t stop at cigars, as evidenced by the Presidente beer trucks (the country’s brew of choice) rumbling past his office doors. To keep things in perspective, though, a replica of the original cigar factory — founded by León’s grandfather in 1903 — sits on the edge of the campus. Visitors can stop in to watch rollers put together the company’s most premium cigars, while at a podium sits a very old-school lector de tabaqueria reading aloud.

“I’m confident we’re making good product; we have very good tobacco here,” enthuses León, speaking of the Dominican Republic. “And we have a lot of tradition for making good cigars.” Enough hold for the island to hold position in first place? “I could say, ‘Definitely yes,’ but I hope so.”

THE FIDEL FACTOR
On the edge of the wide expanse of lawn surrounding the Davidoff factory on the Tabacos Dominicanos (TabaDom) campus, a 15-minute drive down the highway from Santiago, grows a saman tree whose canopy throws an umbrella of shade over the noonday grass. In 1998, Hendrik Kelner planted its seed there to symbolize the factory opening — and now, like the complex rising around it, the tree has grown tough and huge.

His friends in the tobacco industry refer to Kelner, with affection, as “Henke.” And no wonder: His distinctive blends have made him famous. “From the beginning, I decide to make more consistent cigars,” he says. The key was (and is) control: of the farmers, fields and tobacco, all the way up to the finished product. Eventually, three factories under one roof enabled the number of Davidoff brands to multiply, and Henke could focus on blending “tobacco for different palates.”

Indeed, like Henke, the island manufacturers’ collective obsession with quality has made them generally unafraid, at least publicly, of a free Cuba: Even if their western neighbor opens to the American market, they say, its cigars will need some time — a decade, perhaps — to reach the consistency necessary for them to become a major player on the ultra-quality scene.

Still, some on Dominican side toy with the possibilities. Henke imagines starting a Cuban farm, growing a few generations of tobacco and then “seeing what was what” after three years or so — just as long as he had his trademark control over the process from the start. Overall, though, how would a free Cuba change things for the Dominican Republic’s tobacco industry? He smiles enigmatically. “Who knows?”

In the meantime, “We want to keep our feet on the ground,” says Carlito Fuente. “People expect a certain quality, so we focus on making the best cigars around, and not necessarily the most. It’s like being a chef: You want to focus on making the best possible meal, as opposed to merely trying to fill the restaurant.”

Yet demand — that steady stream of people into the cigar shops of New York, London and Tokyo — must be met. Which is why, throughout Santiago, hundreds of pairs of worn, wise hands move at constant pace cutting and rolling cigars, testing their pull, stacking them in boxes for shipment around the globe. For the moment, things are moving as they should within the Dominican Republic’s cigar industry — and whether for those jefes puffing away in their dark-wood offices a few yards from their factory, or a loyal customer 1,000 miles away cracking open a fresh box of their favorite robusto, that’s a fine way for things to be.

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