The Stogie Guys

Despite the fact the FDA could rule before the end of the year that cigars introduced now cannot be sold or marketed without the FDA’s approval, cigar companies continue to churn out new cigars.

And with the annual IPCPR Trade Show less than two months out, more and more new cigars are being announced. (As we have seven out of the past eight years, StogieGuys.com will be covering the IPCPR from the show floor, which this year is in humid New Orleans in late July.)

Melillo Announces Foundation Cigar Co.

In addition to the many new cigars, two former key figures at Drew Estate are expected to announce their next phase in the cigar industry. Nicholas Melillo, who left Drew Estate roughly 13 months ago, was the first to announce his future plans.

On Tuesday Melillo, who had been executive vice president of international operations at Drew Estate before his departure, announced the formation of Foundation Cigar Company. The company, which will be headquartered in Connecticut, is preparing to introduce its first blend at the IPCPR Trade Show.

While exact details of the blend are not yet known, in a press release Melillo, who goes by “Nick R. Agua” online, said he will be making his first cigar at the TABSA (Tobaccos Valle de Jalapa) factory in Nicaragua, using Aganorsa tobacco, which is also extensively used in Drew Estate blends. The first cigars are scheduled to arrive in cigar shops in September, and reportedly will retail for around $10.

Melillo described his new partnership in a distributed statement: “I have known and been purchasing tobacco from Eduardo Fernandez and his team since 2003. It’s great to work with guys who really know their tobacco. They have welcomed me in with open arms and have given me access to their special cuartos anejamiento, or ‘aging rooms.’ I have personally selected some very special vintage tobaccos which possess some amazing flavors and complex characteristics. The variety of Nicaraguan tobaccos they have in the warehouse is incredible and some of the blends I have worked up are, well, let’s just say we are all very excited about them. The tough part in working up a few nice blends is deciding which cigar you like the best.”

Steve Saka Non-Compete Ending Soon; Announcement to Follow?

Melillo’s new cigar is certainly highly anticipated, but maybe not as much as an expected announcement from former Drew Estate president and CEO Steve Saka. During the time when Saka and Melillo were at Drew Estate, the two played a critical role in growing the company from an operation known mostly for its unorthodox infused cigars to a Nicaraguan juggernaut that made some of the most sought-after non-infused cigars, including Liga Privada.

Saka left Drew Estate in July 2013 and reportedly has a two-year non-compete agreement that will expire only a week prior to the IPCPR Trade Show. In a series of recent Facebook posts, Saka has been sharing photos from Nicaragua where he has been spending time sampling tobacco in Nicaragua, which many have interpreted as preparation for his next cigar venture.

If, as many expect, an announcement about his future plans in the cigar industry comes soon, Saka would be one of many who has “retired” from one company only to reemerge in the industry after a contractually obligated hiatus. The cycle of cigar makers gaining expertise, experience, and capital at one company only to strike out on their own later is one of the aspects of the industry that drives innovation and competition to the great benefit of consumers.

–Patrick S

photo credits: Foundation Cigar Company

February 15, 2007 could turn out to be the most important date in the history of the premium cigar industry. Why, you ask? Because every cigar introduced after that date could soon be made illegal by the Food & Drug Administration (FDA).

While the so-called Family Smoking Prevention and Tobacco Control Act (FSPTC)—the bill giving the FDA the power to regulate cigars—didn’t pass until June 2009, the legislation sets February 15, 2007 as the cutoff date for tobacco products to be grandfathered in as exempt from needing FDA approval before being sold or marketed in the United States.

Tobacco products introduced after that date (which comes from the text of the legislation and probably cannot be altered by the FDA, even if the agency wanted to) must receive the FDA’s approval before they can be marketed for sale. For a period from passage of the FSPTC until March 22, 2011, new tobacco products could be marketed while an application was pending but, as the FDA reiterated recently, any new product that didn’t have an application submitted by that date cannot be marketed until the FDA takes action to approve it. This would apply to cigars when they are subject to FDA regulation, despite the fact the FDA hadn’t even taken the first step towards regulating cigars in March 2011, and so no cigar applications would have been submitted.

Theoretically, new cigars should get approved as “substantially equivalent” to products that were already on the market in 2007 since the basic components of handmade cigars haven’t changed in at least a century. But the process is surprisingly complicated, likely very expensive, and includes an “Environmental Assessment” and a “Health Information Summary” along with a requirement for scientific studies about how the product would be used in comparison to the product it is being claimed as substantially equivalent to. In other words, you’d probably need deep pockets, lawyers, and scientists to have a chance.

Plus, so far the FDA hasn’t shown any ability to handle existing applications. As we observed when the Deeming Rule was first proposed, only a few dozen of the 4,000 pending applications were ruled on as of April last year, with just 17 being approved over the period of multiple years. As of now, the FDA site says it has approved only 132 products as “Substantially Equivalent” since 2011, while an untold amount remain waiting for a ruling.

The FDA did propose in its rules one option for an exemption for premium cigars with a retail price of $10 or more, but even if the agency adopts that option it would leave the vast majority of cigars (85%, according to one analysis) to be banished from the market and forced to wait for an approval that may be nearly impossible to get.

February 15, 2007 is a long time ago, so allow me to set the stage: On that date we published a Quick Smoke of the Gispert Lonsdale (remember that cigar?), and you couldn’t yet buy an Apple iPhone because the first one didn’t go on sale until later that summer.

As far as cigars go, here are just a few introduced in 2007, but after the February cutoff date: Oliva Serie V, San Cristobal, Padrón Serie 1926 80 Years, CAO America, Te-Amo World Selection Series, Santa Rosa (an Altadis cigar I forgot ever existed), Rocky Patel Sumatra Edge, Cabaiguan Guapo, La Aurora Corojo Oscuro Barrel Aged, and the Cuban Cohiba Maduro (which, if the embargo ever ends, would also be subject to the regulations).

To say the industry has changed since then would be a gross understatement, as evidenced by the fact that multiple cigars listed above are no longer being made. For most cigar smokers I talk with, the vast majority of cigars they smoke were introduced well after 2007.

Cigar rights groups are now looking to push legislation that would amend the date for new cigars to be grandfathered in. This seems extremely reasonable. After all, how can cigars have complied with a regulation two years before passage of the bill authorizing the FDA to regulate cigars, and five years before the agency took any steps towards exercising its power to regulate cigars?

The problem is that reasonable doesn’t buy you much when it comes to passing federal laws. And considering the difficulty in getting support for the Traditional Cigar Manufacturing and Small Business Jobs Preservation Act in Congress, there isn’t much indication that there are majorities in Congress that want to treat cigars reasonably, nor that President Obama would sign such legislation if it somehow made it to his desk.

–Patrick S

photo credits: Stogie Guys

Lately the book Bourbon Empire has been cited by more than a few articles I’ve read as debunking some of the bourbon mystique. “By the year 2000 you have 8 companies, 13 plants, and they make about 99 percent of all the whiskey in America,” the author Reid Mitenbuler told an astonished public radio reporter.

That may be true (today the number is slightly less at around 95%) but it’s hardly new information to many informed drinkers that the overwhelming amount of bourbon is distilled by a handful of companies. In fact, with full knowledge of that, Willett Family Estate Bourbon is very sought-after by many extremely knowledgeable whiskey drinkers.

Willett doesn’t currently sell any bourbon it distilled itself, but instead picks barrels distilled elsewhere which it then resells. Some are blended together in bourbons like Rowan’s Creek, Noah’s Mill, and Willett Pot Still Bourbon; others are selected for the Willett Family Estate Bottled Single Barrel program. (Willett recently restarted its stills but, as of this writing, only a very young rye is for sale.)

The Family Estate bourbons are all single-barrel and bottled at barrel-proof. Ages vary from 7 to 20+ years (along with price). For this write-up I tasted an 11 year bourbon purchased by a friend at the Willett Gift Shop for $110. (My barrel is number 8308 and is bottled at 119.9-proof.)

The nose features vanilla and caramel, with a hint of clove spice. On the palate this bourbon is rich and complex with oak, dried fruit, toffee, buttery pie crust, banana, and fudge. The finish is surprisingly short with caramel and clove spice, although a tiny splash of water smooths out the dry spice. Willett Estate Bottled Single Barrel Bourbon is a testament to the fact that barrel management and selection are often more important than who distilled the whiskey. It’s an exceptionally rich and complex bourbon, which lets it live up to its expensive price.

Still, the price leads me to recommend getting acquainted with better value bourbons before jumping up to this one.

As for cigars, strangely, I don’t have any specific recommendations. This bourbon has complexity and strength, and also enough subtleties to go well with any good balanced cigar.

–Patrick S

photo credit: Stogie Guys

As a whole, cigar smokers are an amiable bunch that, with the exception of a few curmudgeons, tend to assume good intentions of others. That’s a good way to deal with most people, and exactly how you’d have most people treat you.

But when it comes to politics, it can be very dangerous to underestimate you opponents. This is very much true with the opponents of cigar freedoms.

There are lots of people with various views on how our laws should deal with tobacco products. When it comes to where smoking is banned or permitted, at what level cigars should be taxed, and to what extent cigars should be treated the same as other tobacco products, there a wide variety of views. A proud, freedom-loving cigar smoker should welcome informed debate.

That said, we shouldn’t lose sight of the fact there is a well-funded group of professional anti-tobacco activists for whom any adult choosing to use any tobacco product anywhere is a problem that needs to be solved by a law. Attempts to reason or negotiate with these people are not only a useless; any energy expended on them is counterproductive.

These “tobacco control” activists, as they call themselves, are funded to the tune of billions of dollars a year (much of it by our taxes) and extremely politically connected. Look no further than the U.S. Senate, where a small group of anti-tobacco senators continue to push for more aggressive anti-smoking measures, no matter how hypocritical or illogical.

Earlier this month, Senator Blumenthal of Connecticut called for the FDA to accelerate the rulemaking process to, among other things, regulate cigars. The senator even said if the FDA doesn’t issue a final rule soon enough, he would introduce a law demanding that it rush the final rule. Never mind that anti-smoking activists have called for the FDA process to proceed uninterrupted and without the influence of legislation like the Traditional Cigar Manufacturing and Small Business Jobs Preservation Act. Suddenly, when the supposedly independent rulemaking process isn’t proceeding fast enough, here is a senator moving to intervene.

Similarly, Blumenthal is one of four senators who recently introduced a bill to increase taxes on most tobacco products, including almost doubling most tobacco taxes. That may be unsurprising, but their reasoning strains reality. According to a press release issued by Senator Dick Durbin, the bill is necessary to stop smuggling and black market tobacco products. Of course, anyone with a basic understanding of how taxes create black markets realizes this bill would be counterproductive to its supposed goal.

But pointing out to Senator Blumenthal and his ilk that it is hypocritical for them to interfere with the FDA process, or that excessive taxes only encourage smuggling, would be a waste of time because their real goal is removing tobacco as a choice that informed adults can make for themselves.

So I’d like to suggest the following: Instead of just focusing narrowly on the text of whatever legislation the anti-tobacco forces are championing next, lets also remind Americans (who I still think are mostly reasonable on these issues) that every time they cast their lot with politicians and professional activists who just want one more tobacco tax or regulation or smoking ban, they are siding with folks who reject the basic American premise that adults can make choices for themselves.

Cigar smokers, and all adults who choose to use tobacco, don’t want children smoking, nor do we demand the right to smoke everywhere whenever we want. Mostly, we just want to be left alone and not picked on for our choices by a powerful special interest group that seeks to control a centuries-old behavior by consenting adults.

Maybe I’m too optimistic about Americans. But I think enough people agree with those basic principles for the underdog (and that’s exactly what we are) to ultimately prevail.

–Patrick S

photo credits: Stogie Guys

Each Saturday and Sunday we’ll post a Quick Smoke: not quite a full review, just our brief verdict on a single cigar of “buy,” “hold,” or “sell.”

Habano leaf has a very distinctive flavor, and perhaps the purest Habano-tasting cigar I’ve come across is the AF2 made by A.J. Fernandez for Emilio Cigars. It’s not a flavor I want all the time, but sometimes it really hits the spot. The BMF (I’ll let you guess what that stands for) is the large gordo (6 x 58) version of the blend. It features dry bready flavors, mild coffee, and very light wood spice. While the size makes it an over two-hour cigar (I was driving to visit family while I smoked it; I lit it in Washington and didn’t finish it until New Jersey) it also loses a lot of the finesse in the massive size.

Verdict = Hold.

–Patrick S

photo credit: Stogie Guys

J. Grotto, a Rhode Island-based cigar brand, makes two lanceros. Two years ago I wrote about the J. Grotto Reserve Lancero. Today I examine the newer J. Grotto Silk Lancero. (The company has four lines, oldest to newest: J. Grotto, J. Grotto Reserve, J. Grotto Silk, and J. Grotto Anniversary Maduro.)

Paul Joyal, the man behind J. Grotto and Ocean State Cigars, says he came up with the name Silk after seeing the wrapper, and its hard not to see why. The Ecuadorian Connecticut wrapper, reportedly aged three years, is smooth, almost vein-free, and medium brown with a lot of sheen.

Beneath the wrapper are double binders—Indonesian and Criollo ’98 tobaccos—that surround filler sourced from Trojes in Honduras and Jalapa in Nicaragua. I smoked four of the Lanceros (7.5 x 40), which come in boxes of 10 and have a suggested retail price of $7.99.

Off the bat, the J. Grotto Silk Lancero features a mild- to medium-bodied combination of cream and cedar, along with hints of wood and pepper spice. As it develops, the flavors intensify, but the basic formula (cedar and cream with a slight spice) remains dominant.

I waited a while to smoke these because they seemed very soft to the touch when hey first arrived. Ultimately, that didn’t change much after a few months, but it didn’t impact the construction, which was flawless with a razor-straight burn—an impressive achievement given the notably finicky lancero size.

I’ve never seen the J. Grotto Silk Lancero, or even any J. Grotto cigars for sale at a cigar shop I’ve visited, and I suspect that’s true for many readers of this review, too. That’s a shame. The J. Grotto Silk Lancero is an impressive, well-constructed smoke that sells for a reasonable price. Those characteristics earn it a rating of four stogies out of five.

[To read more StogieGuys.com cigar reviews, please click here.]

–Patrick S

photo credit: Stogie Guys

Pennsylvania holds unique influence in the premium cigar industry. Not because cigar tobacco is grown in the state; a small amount is, but not nearly as much as Connecticut. Nor is it because some cigar makers are there; there are many more based in Florida.

What makes Pennsylvania such an important state in the American cigar industry is taxes. Or, more specifically, the lack of cigar taxes.

Along with Florida, Pennsylvania is the only state with no state excise tax on cigars (PDF). But in the budget submitted by Democratic Governor Tom Wolf for fiscal year 2015-2016, cigars would be taxed at a rate of 40% of wholesale value.

This would be a huge hit to the Pennsylvania cigar industry that has grown because of the lack of cigar-specific taxes. (The companies, its employees, and owners, of course, pay plenty of other taxes to the state because of the jobs cigar retailers provide.) Many of the largest online and catalog retailers, including Cigars International (including Cigar.com and Cigarbid.com), Famous Smoke Shop (including its Cigar Auctioneer site), Holt’s, and Atlantic Cigar, have grown in the state for that reason.

While the Republican-controlled state legislature makes adoption of the proposed budget in its entirety unlikely, there is still a chance the tax, or perhaps a lower “compromise” tax, on cigars and other tobacco products could be included in the budget. That threat is significant enough that the IPCPR issued an Action Alert on the issue late last week.

Cigar smokers in the state can contact their state legislators using the IPCPR form.

Analysis

Pennsylvania’s zero tax rate on handmade cigars has made it a magnet for cigar retailers. This has in turn impacted the way cigars are sold and taxed in other states in ways that benefit both retailers and consumers.

The low prices often charged by Pennsylvania (and Florida) retailers who don’t have to pay taxes benefit consumers everywhere by creating pressure on all retailers to keep their prices as competitive as possible. Of course, buying a cigar online means losing out on the personal touch and sense of community that only a brick-and-mortar store can provide. Even so, the competition can make cigars bought in shops more affordable (they don’t want to lose your business to an online operation) even if the prices don’t line up exactly with the sometimes lower price a high-volume online operation can charge.

While local retailers may sometimes resent the competition from online discounters, the truth is they too benefit greatly from lower tax rates elsewhere. Far too often legislators turn to tobacco as an easy target for raising revenue. The simple economics of higher taxes driving purchases to untaxed retailers in other states, however, can undermine the revenue-raising potential of higher taxes on cigars.

In other words, even if you only purchase your cigars from your local cigar shops, increased tax rates in Pennsylvania will, over time, make your cigars more expensive. For that reason, all American cigar smokers should be worried about efforts to raise cigar tax rates in the Keystone State.

–Patrick S

photo credit: Flickr