Nat Sherman International Closing

August 3, 2020

By David Savona I Cigar Aficionado

Ninety years after it opened its doors for the first time, Nat Sherman is closing down. Nat Sherman International Inc., which has been owned by cigarette giant Altria Group Inc. since 2017, will cease operations by the end of September, shutting down not only its midtown Manhattan cigar store but also its entire wholesale business.

The decision comes several months after Altria began looking for a potential buyer for the cigar subsidiary; the company announced it was considering the sale of Nat Sherman International Inc. in October.

“We worked hard to successfully transition Nat Sherman International to a new home. The Covid-19 pandemic created new challenges that were unfortunately too big to overcome,” said Jessica Pierucki, general manager, managing director for Nat Sherman.

Premium cigars were never a part of the Altria story. While the company had cigars in its portfolio prior to the acquisition of Nat Sherman, it is a machine-made cigar operation (Black & Mild) that is far closer to its core cigarette business than to handmade cigars. Back in October, Pierucki told Cigar Aficionado: “While we recognize the strength and value of the premium cigar business, it’s not core to Altria’s tobacco portfolio.”

Altria is one of the largest tobacco concerns in the world, with annual revenues of $25 billion. It acquired Nat Sherman in January 2017, buying it from the Sherman family for undisclosed terms. Altria’s major interest in Nat Sherman was the company’s cigarette business, which began in the 1940s.

The Nat Sherman cigarette division, which Altria separated from the cigar division after the acquisition, will remain in business.

The Nat Sherman story dates back to 1930, when the first version of the store opened in Manhattan at 1400 Broadway. The current location, at 12 East 42nd Street, marks the fourth location of the shop.
 
Nat Sherman International has 24 employees. The cigar store (now known as the Townhouse) is not owned by the company, and is leased. All of the company’s cigars (such as Timeless) are made under contract, so the company does not own a cigar factory.
 
Before the sale to Altria, Nat Sherman had embarked on an ambitious rebranding of its cigar line, spearheaded by Michael Herklots, who is now vice president of Nat Sherman International. The new cigars earned several 90-point-and-higher scores, and made appearances on Cigar Aficionado’s Top 25.

“Leading what has become Nat Sherman International’s final chapter these last nine years has been the honor of a lifetime,” said Herklots. “Hopefully, our premium cigars will live on in the humidors of our greatest fans and be appreciated with fond memories for many years to come.”

Gene Tipton, 74, Longtime Altadis U.S.A. Employee Passes Away

Gene Tipton was a friend and source of valuable information to JMG for many years prior to his retirement from Altadis.

We are sorry to learn of his passing. He will always be remembered as a champion of the cigar industry and a trusted colleague.

Our prayers go out to his wife and family.

Gene, your smile and powerful handshake will be missed.


July 8, 2020

By Charlie Minato - Halfwheel 

Gene Tipton, who spent five decades working at Altadis U.S.A. and its predecessors, has passed away due to complications from cancer.

Tipton’s career began in 1964 at a company called Hav-A-Tampa Cigar, which made machine-made cigars in Tampa until 2009. That company was one of the predecessors to Altadis U.S.A., the modern-day premium cigar company behind the U.S. sales of Montecristo, Romeo y Julieta and others. Tipton worked for the company until 2014, when he retired as the vice-president of premium cigars after spending 50 years at the combined companies.

A year later he would find himself back in the cigar business, this time working for Sindicato Cigar Group, which was being led by Jim Colucci, with whom Tipton worked with during their tenures at Altadis U.S.A.

“We are very saddened to learn that Gene Tipton has passed away,” said Javier Estades, president and ceo of Tabacalera USA, the parent of Altadis U.S.A., in a statement. “I met Gene when I came to the USA to work at AUSA more than nine years ago. He was truly a gentleman who loved this industry so much as well as our customers and clients. He had a rare combination of a deep knowledge of our market and was a great leader for our sales team. He was definitely an outstanding VP of Sales for so many years and from whom I learned so much.”

Update — This post originally indicated that Tipton was 75-years-old, he was 74.

US Court of Appeals Unanimously Strikes Down Warning Labels

July 7, 2020

Washington, DC —The Premium Cigar Association (PCA) and Cigar Rights of America (CRA) are pleased that a unanimous panel of the United States Court of Appeals for the District of Columbia Circuit found flaws in the FDA’s Deeming Rule regulating cigars and held that the Food & Drug Administration (FDA) did not do necessary work to show an effect of large cigar warning labels on reducing smoking rates.

Judge Gregory G. Katsas notes in the opinion, “The Tobacco Control Act permits the Food and Drug Administration to regulate tobacco products for the public health, but only after considering whether the regulation would likely increase or decrease the number of smokers. Under this authority, the FDA promulgated regulations requiring extensive health warnings on packaging and in advertising for cigars and pipe tobacco. The FDA concluded that these warnings would help communicate the health risks of smoking, but it failed to consider how the warnings would likely affect the number of smokers. We hold that this failure violated the Tobacco Control Act and the Administrative Procedure Act.”

On February 3, U.S. Federal District Court Judge Amit Mehta issued a ruling overturning the FDA regulation that required six new health warning statements for premium cigars to be printed on premium cigar packaging/cigar boxes and premium cigar advertisements. The court found that “the FDA’s subjecting of premium cigars to warnings requirements to be arbitrary and capricious in violation of the Administrative Procedures Act (APA), insofar as the agency failed to provide a reasoned explanation for this action.”

Both of these decisions further affirm the message of the PCA and CRA: That the FDA’s regulation of premium cigars is flawed and exceeds its statutory authority without justification. PCA Executive Director Scott Pearce notes, “We commend the work of our legal team on this case and providing a win for the industry. We believe that similar flaws infect the substantial equivalence requirements, which we continue to fight in the courts and with the administration”. Glynn Loope, executive director at Cigar Rights of America, stated upon the release of the court's decision, "This pronouncement by the court ratifies what the courts and members of congress have been saying for years: A reflexive, unstudied, “one-size-fits-all“ approach to regulation simply doesn’t work. For all too long, that h as been the approach of the agency, and the courts continuously tell them they’re wrong. It’s time for court decisions like today, and messages from hundreds of members of congress from both sides of the aisle to be heard: Exempt premium cigars from the most onerous elements of these regulations, and reform the most economically threatening rules that have already been implemented.”

Read the full opinion here.

Cigar Factories Around The World Reopen After Closing For Pandemic

June 5, 2020

By Cigar Aficionado

Many of the world’s handmade cigar factories were forced to shut down during the height of the Coronavirus pandemic. Today, most have reopened their doors, and cigars are once again flowing into distribution channels. The factories aren’t the same as they were before, however, and many have instituted changes to keep their workers safe as the virus continues to be felt around the globe, having claimed hundreds of thousands of lives. To find out what’s going on around the cigar-producing world, we spoke to a host of cigarmakers, covering factories from Santiago to Estelí, from Havana to Miami.

Dominican Republic

Arturo Fuente
After roughly two months of closure, Arturo Fuente—one of the world’s largest makers of handmade cigars—resumed production on May 11. “Everybody’s wearing masks, everybody is far from each other,” said Ciro Cascella, chief executive officer of Fuente. “When they come in, we take the temperature. When they go out, we take the temperature.”

Carlos Fuente Jr., who owns and runs Fuente, has been expanding all of his operations for the past few years. That expansion means the company has plenty of presently unused space, allowing the cigar company to spread out its workforce and put empty rows between workers who would typically sit close together.

Tabacalera de Garcia
Tabacalera de Garcia Ltd., one of the world’s largest cigar factories, was shut down from March 20 to April 6. “We started on a small scale when we reopened,” said Rafael Nodal, head of product capability for Tabacalera USA. He said the company has been ramping up production gradually since that time, but it’s still not operating at full capacity. “We have a phased plan to get back to our original capacity following the local protocol and requirements,” said Nodal.

The factory, which is located in La Romana, near the southeastern end of the Dominican Republic, is operating with new measures aimed at keeping workers safe, including distancing, additional cleaning and personal protective equipment. “Therefore the general appearance and procedures in the factory have changed,” said Nodal, “and are now part of our current business as usual.”

EPC Cigar Co.
Tabacalera La Alianza, the Santiago facility where EncoreInch and many other cigars are made, reopened on June 1 at “50 percent capacity,” said Lissette Perez-Carrillo. The company has instituted major changes, including distancing as people walk in, extensive sanitizing and temperature checks for all workers upon arrival. The company has also made all of its aisles one-way. “No one walks at each other,” she said. Face masks are mandatory when entering the building.

General Cigar
General, one of the cigar world’s largest producers, also makes cigars in Nicaragua and Honduras, but its largest factory is in Santiago, Dominican Republic. All are operating at capacity, as they did before the outbreak. “The wide range of health, hygiene and safety measures that were implemented across the factories in the course of February and March to ensure a safe and healthy environment for all employees remain in place,” said a General Cigar spokesperson. The Dominican Republic operation was closed for roughly two weeks (from late March to early April). “In Honduras, a government-mandated shutdown and curfew closed our factories for close to five weeks. And in Nicaragua, production has continued as normal throughout the past couple of months,” said the spokesperson.

Quesada Cigars
Quesada Cigars is operational, but working at half the strength as before. “Following the government instructions, the factory is now working under 50 percent of capacity until the end of the month,” said Enrique Tavarez of Quesada, which has a cigar factory in Licey, Dominican Republic. The factory reopened on May 18.

Cuba

At Habanos S.A., the Cuban government has prioritized tobacco and cigar production as essential activities, according to sources at Habanos S.A. The cigar factories are operating, and there has been no disruption in the supply lines.

In response to the pandemic, the factories have adopted sanitary precautions and added additional space. Cigarmakers’ desks are separated by nearly 5 feet, with more space added to accommodate the expanded distance between desks. Each worker is required to wear a mask and the factories have been supplied with hand sanitizers and soap for the workers.

Honduras

Flor de Copán
Tabacalera USA owns the Flor de Copán factory in northern Honduras. The factory was shut on March 15 after the country was declared under quarantine by President Juan Orlando Hernández. It was able to reopen in limited form on April 20 with “a very strict bio-safety protocol and also a plan for the gradual incorporation of our personnel,” said Joel Alvarenga, operations manager of the factory.

Now, the operation is running at nearly full strength. “We were able to incorporate all our personnel with the exception of personnel who have health problems and are considered high risk,” said Alvarenga. “We are running our operation focused on taking care of our staff.”

C.L.E. Cigars
CLE has increased space around workers and painted marks to remind employees about social distancing practices. All employees wear N-95 masks and wash their hands at least once an hour, plus there are daily temperature checks. The factory reopened on May 5.

Alec Bradley
All Alec Bradley cigars are made under contract, and most are made in Honduras at the Raices Cubanas Factory in Danlí. The country has allowed cigar factories to operate at 50 percent of their total capacity. Like most facilities, Raices is built with room for expansion, so the impact on total production has been somewhat limited. What is hampering brand owner Alan Rubin right now is Honduras’ 14-day-quarantine for visitors, making it hard for Rubin to pay a personal visit.

Nicaragua

Plasencia Cigars
“In Nicaragua we were closed for two weeks at the beginning of April…In the factories we are at full capacity but having the health of our people is our main priority,” said Nestor Andrés Plasencia. The company, one of the largest cigar tobacco growers in the world, also makes cigars in Honduras. There, the closing was longer.

“Our operations in Honduras were closed for five weeks and since April 20, they have also been operating at maximum capacity,” said Plasencia.

Oliva Cigar Co.
Oliva has remained open throughout this process, and is now operating with new policies. “We are operating at 100 percent capacity and have put in strict social distancing guidelines, instituted mask wearing policy, extreme sanitation procedures and have limited congregating,” said Cory Bappert, CEO of Oliva Cigar Co. “Also, we take everyone’s temperature as they come into the factory. We haven’t closed our factory outside of normal holidays.”

Aganorsa Leaf
“We shut down, like most of the factories, the week before Semana Santa (April 5) and reopened the week after [Easter],” said Terence Reily. “We have increased space between the employees and require frequent, thorough hand washing as well as shoe disinfectant.” The company’s small Miami operation is also open.

AJ Fernandez
One of the cigar world’s busiest cigarmakers also has some of its biggest accolades: AJ Fernandez is where the Aging Room Quattro Nicaragua Maestro, Cigar of the Year, is made. “The factory closed for two weeks,” says Frankie Santos. But it’s back on line today. “It’s at capacity, and adhering to all safety measures.”

United States

J.C. Newman
“Thankfully, neither our El Reloj factory in Tampa nor our PENSA factory in Estelí closed due to the Coronavirus,” said Drew Newman, general counsel of J.C. Newman Cigar Co. The company’s facility in Ybor City, Florida, is where cigars are crafted on old machines, and are also rolled in very small quantities by hand.

“Both of our factories continue to roll cigars as they always have been,” said Newman. “Because El Reloj has 100,000-square-feet of space, it is pretty easy to socially distance. Everyone at both factories is wearing masks and frequently washing their hands, and both factories are closed to visitors. We’ve stressed to all of our employees that their health and well-being is most important and to please stay home if they are feeling sick.”

“Similarly, our joint Arturo Fuente/J.C. Newman sales team spent April and May calling on their accounts from home and participating in an extensive training program. They are now starting to visit cigar stores again while wearing masks and following CDC guidelines on social distancing," Newman added.

El Titan de Bronze
“Full steam ahead,” said Sandy Cobas, owner of El Titan de Bronze in Miami. The cigar factory/cigar store had to temporarily close, but it’s back in business. Visitors can come inside only with a mask on, but they offer curbside pickup. Everyone at the factory is wearing a mask and they had face shields made, so they are makingHerrera Esteli Miamis and others, as they did before.

Reporting by Chris Esposito, Gregory Mottola, Gordon Mott, Andrew Nagy and David Savona