The Stogie Guys

What may be the strangest cigar news in recent weeks came from California. The state with the most anti-smoking laws in the country and a staggering budget shortfall estimated at more than $26 billion is actually lowering its tax on cigars.

It’s not a huge cut—41.11% to 33.02%, to be exact. And, since its paid by distributors, the reduction may not even be noticeable by the time the retail price is set. But, hey, in this economy anything helps, right? Of course, it’s hard not to wonder why: Why would the state cut cigar smokers and users of tobacco products other than cigarettes a break?

Well, it turns out there was no choice. “The formula demands it,” said Anita Gore, spokeswoman for California’s five-member Board of Equalization tax panel that approved the change without discussion at a May meeting for July 1 implementation.

Gore explained to me that the rather arcane requirements of state tax law are based on the cigarette tax. (For tax purposes, she said, California recognizes only two categories: cigarettes and other tobacco products.)

The state law requires that the tax percentages on other tobacco products match that levied on the wholesale price of a single cigarette. So, with cigarette prices going up and the per-pack tax remaining the same, the percentage drops. And that means the percentage applied to other tobacco products must be lowered as well. Necessary adjustments are made annually.

Gore said that the tax for other tobacco products is levied on the value of whatever amount the distributor buys, whether it’s a truckload or a single stick. Remember, at that point cigar prices are often half or less than retail.

I’m not sure it’s fair that cigar smokers are paying less simply because cigarette smokers are paying more. But that’s the way it is, at least in the Golden State.

–George E

photo credit: Stogie Guys

It’s hard to appreciate the cigar making process unless you’ve seen it firsthand. This past weekend I had the opportunity to visit La Aurora’s factory in Santiago, Dominican Republic.

After a tasting seminar with José Blanco, La Aurora’s marketing director, he gave Patrick M, a handful of other cigar writers, and me a tour of La Aurora’s operation. Hopefully the following photos give you some idea of just how much care and attention goes into every premium handmade cigar that we often take for granted:

Tobacco from all around the world arrives at the La Aurora factory where it is aged until it is ready.

José Blanco examines Ecuadorian Sumatra leaf in the fermentation room, where tobacco is exposed to 120-degree temperatures for days at a time to bring out the flavors we’ve come to appreciate in cigars.

Before being sorted for rolling, tobacco goes into a special room where moisture is added to the leaf. La Aurora uses this special machine (which is also used in Cuba) to moisten tobacco in just over an hour. In most factories this process takes two days.

In preparation for being rolled into cigars, tobacco is sorted. Note the rum barrels in the background where tobacco for La Aurora Barrel Aged cigars are aging.

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La Aurora made a splash recently with its new La Aurora 107, celebrating the oldest Dominican cigar company’s 107th anniversary. But that cigar, which will be expanding beyond the initial three to include a corona, won’t be the only new cigar from La Aurora in 2010.

During my recent visit to La Aurora’s Dominican factory, José Blanco, sales director and our gracious host, handed me an unbanded smoke. Later he let those of us smoking it know that the cigar would be released at the upcoming International Premium Cigar & Pipe Retailers (IPCPR)  Association Trade Show in New Orleans.

Blanco disclosed that the cigar will be mostly of Dominican tobacco and would be medium- to full-bodied. The corona gorda-shaped sample I smoked, which I was warned was freshly rolled and not fully aged, featured a lovely, veinless, milk chocolate wrapper. My quick notes (taken, mind you, after four cigars earlier that day) revealed a medium-bodied smoke with dry chocolate notes, a bit of cedary spice, excellent balance, and a clean finish.

I’ve heard rumors the cigar will be named after Guillermo León, La Aurora’s president and fourth generation cigarmaker. However, neither León nor Blanco would confirm the name (but didn’t deny it, either).

Four sizes are expected for the new blend including a corona and a corona gorda. Pricing is also not yet released, but having tried the smoke I think it could be a big hit at the show.

Meanwhile, Blanco also confirmed for me that La Aurora was ceasing production of the La Aurora Barrel Aged. The process of aging the tobacco in rum barrels is extremely complicated and time consuming, he told me, and so they’ll be focusing their resources elsewhere.

–Patrick S

photo credit: La Aurora

As a cigar enthusiast and resident of Northern Virginia, I would be remiss not to write about a luxurious new cigar lounge opening in my backyard this spring. Called CXIII Rex, it will be an expansion of the Landini Brothers restaurant in Alexandria. And, from what I saw on a recent behind-the-scenes tour, it promises to be one of the best cigar venues in the country.

CXIII Rex is the brainchild of Noe and Franco Landini (pictured above), hosts of Landini Brothers and avid cigar fans. Their restaurant—which, I can attest from more than a few visits, offers outstanding Italian cuisine—has been a haven for Washington-area cigar smokers for 30 years. But when it became clear that Virginia lawmakers would pass a statewide ban, they started to lay plans for a benchmark cigar club with unique benefits and members-only offerings.

Sure, CXIII Rex will have all the amenities of traditional cigar lounges, including a well-stocked walk-in humidor, a selection of top libations and small-batch wines, ample seating, wireless internet, private humidor lockers, and the like. But this club, slated to open in late March, will also feature more luxurious accommodations. Included will be a state-of-the-art air ventilation system, an access-only elevator, an all-female wait staff, and a private cigar blend crafted by none other than Rocky Patel.

While all these amenities are fantastic, the club’s finest asset will be the 19th century building in which it resides. Franco and Noe gave me a first-hand look at the future site of CXIII Rex on Monday. Currently under construction in a building adjacent to Landini Brothers, it is an impressive space with ample character and charm. It was only on this behind-the-scenes tour that I got a sense of the size and scope of the future multi-level club, which is complete with a dramatic staircase and a layout built for privacy, comfort, and flow.

Individual memberships, as you might expect from a club of this caliber, are not inexpensive. The cost is $5,000 to join CXIII Rex and $100 each month thereafter. Franco and Noe tell me that 200 slots are available, 160 of which are already claimed for. If, like me, this is above your price range, or if you reside outside the Washington metro area, you still have to appreciate the high attention to detail and passion that’s going in to creating a premier cigar lounge. I haven’t seen anything like it before.

And for those of you who plan to invest in a CXIII Rex membership, please feel free to invite me as your occasional guest. I’ll even throw in a few cigars.

–Patrick A

photo credit: Stogie Guys

A major deal between Stockholm-based Swedish Match, parent company of General Cigar (Macanudo, Punch, La Gloria Cubana, Hoyo de Monterrey, Partagas, Cohiba), and the Denmark-based Scandinavian Tobacco Group (CAO, Toraño, Henri Wintermans) will merge their many well-known brands under one entity.

The two companies have signed a letter of intent to create a joint venture combining their handmade cigar operations with STG’s entire tobacco operations. Swedish Match’s machine-made cigars (which include White Owl and Garcia y Vega) are not part of the deal, but the companys’s online and mail-order retailer Cigars International reportedly is. The joint venture will be controlled by STG, with Swedish Match owning 49 percent. The deal could be finalized as early as this summer.

What the Merger Means for the Industry

As we’ve written before, consolidation is an ongoing theme in the industry and this deal continues the trend. Among other things, consolidation helps cigar companies overcome the increasingly challenging tax and regulatory burdens through economies of scale.

The key part of this mega-merger is that it sets up the newly created joint venture to challenge Altadis. The deal means Altadis finally has a rival in the premium cigar category that can  match it for size, volume, and marketing budget.

The new combined operations may also lead to some cost savings, as the sales representatives and distribution channels will likely be dovetailed. Since the companies were already major tobacco buyers, their access to the best tobacco is unlikely to change significantly.

Fans of cigars made by both groups will be pleased to know that the blends and brands are also unlikely to change anytime soon. General Cigar recently closed its Villazon factory in Honduras (shifting production to Danlí) so it’s doubtful that STG will be shifting any of its production to those facilities. But the fact that CAO and Toraño now will have access to General Cigar’s Dominican factories could be important going forward.

–Patrick S

photo credit: General Cigar

So-called “health care reform” isn’t usually a topic for a cigar publication to tackle. But the more research one does on the proposal now being debated in the U.S. Senate, the more it becomes clear that it’s grossly unfair to smokers.

The leading proposal from Congress contains many changes to current law, but three aspects of the bill in combination create a system that will increase costs for smokers while subsidizing others that are guaranteed to cost more. This despite the fact that through the punitive SCHIP tax, smokers already pay more than their fair share of health care costs.

The bill would require every individual to buy insurance and simultaneously prohibit insurance companies from refusing to cover individuals. It also mandates that insurance companies can only use three characteristics (and only those characteristics) for charging higher premiums: tobacco use, age, and family composition.

For tobacco users, Congress empowers insurance companies to charge 50% more for insurance. Because smoking is one of a few areas where insurance companies are allowed to charge more, and since every individual must buy insurance, insurance companies will be encouraged to charge even lower-risk tobacco users like cigar smokers the full 50% increase.

Meanwhile, Congress would prohibit insurers from charging more for pre-existing conditions, who are unsurprisingly the most expensive people to insure. This means that those with illnesses like cancer, lung disease, throat cancer, or anything else—including those that may have been caused by smoking—cannot be charged more while smokers can be.

The irony (and absurdity) should be obvious: If you’re already sick from something caused by smoking, you pay less than smokers who likely only have a slight chance of getting the very same disease.

There are, of course, many other reasons for opposing a federal health care overhaul that smokers may or may not agree with. However, all smokers, particularly cigar smokers who will be forced to buy pricier insurance unwarranted by their relative risk ratios, should oppose (once again) being unfairly singled out by the government and forced to subsidize the health care of costs of non-smokers.

–Patrick S

photo credit: Stogie Guys

Tuesday marked the beginning of Virginia’s smoking ban and the end of free choice in the commonwealth’s bars and restaurants. And while we’ve written extensively about the dangers of government-driven regulations on tobacco, this ban hits especially close to home—because we both live in Virginia.

So, as you might expect, Monday night we went out in style. We were lucky enough to attend two of the special “Last Hurrah” cigar dinners, hosted by Morton’s at the steakhouse chain’s three locations in Northern Virginia. These dinners, like last summer’s Paul Garmirian event, featured premium tobacco paired with fine libations and Morton’s signature cuisine.

We thought we’d share our experiences not to gloat, but to inspire you to occasionally treat yourself to a lavish and luxurious cigar dinner. Every brother of the leaf, after all, deserves an expertly paired meal from time to time.

Attended by Patrick A, the Tysons Corner event started with a reception of crab cakes, oysters, and tuna tartare, complemented by a Chateau St. Jean chardonnay and a mild and creamy Davidoff 2000. The second cigar of the evening was the Davidoff Ambassadrice, served with a Duck Pond pinot noir (an exceptional wine for a mild smoke). And finally, after an outstanding filet mignon entrée, a well-balanced and complex Davidoff Special R was paired with a Fonseca Bin 27 port.

Meanwhile, Patrick S, about 15 miles away in Arlington, attended a second Morton’s dinner with Davidoff cigars, which featured a reception with petite lamb chops, poached salmon, and cheeses, paired with a Crossings Sauvignon blanc and a Davidoff Special T. After an palate cleanser of raspberry sorbet, attendees lit the petit corona-sized Davidoff Grand Cru No. 5, followed by a main course of NY Strip with a lively Livernano “Josephine” 2006 Super Tuscan. For a finale, diners were treated to a hot chocolate cake that went well with Taylor Fladgate 10-Year Tawny port and the Davidoff-made Winston Churchill Blenheim—a perfect choice given that the dinner was taking place on Churchill’s birthday.

A third dinner was also held at the Morton’s location in Reston, which included cigars by Paul Garmirian. The highlight of the evening was the world debut of the new PG Symphony 20th Connoisseur. We hope to review this cigar soon.

Before we get to that, though, we’d like to extend our thanks to everyone at Morton’s for recognizing the enormous potential of wine, cuisine, and premium cigar pairings and for executing an outstanding “Last Hurrah” to free choice in the commonwealth. Monday was a memorable night, and we’re sorry we won’t be able to experience anything like it again in Virginia.

–Patrick A & Patrick S

photo credit: Stogie Guys