Tobacco International - December 2018 | Tobacco Products International - Quarter 4, 2018

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The authority on the tobacco industry since 1886 December 2018

Universal’s Second 100 Years Begin PLUS:

• THE NEWEST JUUL IN ALTRIA’S CROWN? • TOBACCO CONTROL LAW FOR MALAWI • EU WON’T BACK DOWN ON SNUS BAN

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DECEMBER 2018

TI TABLE OF CONTENTS

A LOCKWOOD PUBLICATION

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tobaccointernational.com

The authority on the tobacco industry since 1886 December 2018

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Universal’s Second 100 Years Begin PLUS:

• THE NEWEST JUUL IN ALTRIA’S CROWN? • TOBACCO CONTROL LAW FOR MALAWI

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• EU WON’T BACK DOWN ON SNUS BAN

ON THE COVER FEATURES 10 EU won’t back down on banning snus. Also, news from Canada and the United States. Staff Report

Leaf is processed in volume in Universal’s thresher in Turkey. The Oriental-producing region plays a big part in UC’s future.

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Universal Leaf: The second 100 years begins. Since starting in 1918, Universal Leaf has been a leader among leaf merchants. Now it is making plans for its next 100 years. Staff Report

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Altria: Could Juul be the newest jewel in Altria’s crown? Vaping will have a new industry leader if a much-talkedabout acquisition takes place. Bob Crew, London Correspondent. Bob Crew.

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A tobacco control law for Malawi, and additional leaf news from the United States and Zimbabwe.

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Future fades for growers: The outlook for the major U.S. tobacco types is growing dim.

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DEPARTMENTS 6

Contents

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Editorial

10 TI Digest 24 Leaf News 28 Calendar, Advertiser Index

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TI EDITORIAL

PUBLISHER & PRESIDENT

Robert M. Lockwood EDITOR-IN-CHIEF

Just as we go to press: Altria buys 35% of Juul

Christopher Bickers

The shoe finally dropped on December 20 when Altria Group announced it had signed and closed a $12.8 billion investment in Juul Labs, the U.S. e-vapor leader.

The purchase brings Altria a 35 percent interest in the company, whose value it set at $38 billion.

Juul will remain fully independent.

The transaction involves a service agreement that will contribute to Juul’s mission to switch adult smokers to e-vapor products.

What benefits will Juul enjoy from this transaction, besides lots of money? Altria says it will have access to its best-in-class infrastructure and services, among them: • Altria will provide Juul access to its tobacco products retail shelf space which will allow Juul’s products to appear alongside combustible cigarettes.

• Altria will enable Juul to deliver smokers directly through cigarette pack inserts and mailings to adult smokers via Altria companies’ databases.

• Altria will help Juul expand its reach and efficiency, and Juul will have the option to be supported by Altria’s sales organization, which covers approximately 230,000 retail locations.

What should we derive from all this? Well, here is what the parties involved want us to derive. “[Our] investment sends a very clear message that Juul’s technology has given us a truly historic opportunity to improve the lives of the world’s one billion adult cigarette smokers,” said Kevin Burns, Chief Executive Officer of Juul Labs. “This investment and the service agreements will accelerate our mission to increase the number of adult smokers who switch from combustible cigarettes to Juul devices.”

The message I derive is a metaphorical one, symbolizing that for the major players in this industry, cigarettes are beginning to look like a part, and a diminishing one, of their history.

Will the Altria-Juul partnership last 100 years? I don’t know, but I think it is fairly safe to assume that it will last beyond the six year minimum specified in the agreement. For the whole story, see “Could Juul be the Newest Jewel in Altria’s Crown?”

You will be interested also in reading how Altria has discontinued several of its reduced-risk products (see page 14) so that Altria will participate in the e-vapor category only through Juul. Altria, by the way, has purchased nearly half of a leading cannabinoid company in Canada (see page 12).

Elsewhere in this issue: Universal Leaf is coming to the end of its centennial year, but when I asked for information about the event, what I mostly got was a list of the principles that the company has learned on how to conduct business in the future. That tells me that UL is already planning its next 100 years. See for yourself— the story begins on page 16.

PRODUCTION COORDINATOR

— Chris Bickers, Editor-In-Chief

Melinda Ayala DIRECTOR OF EXHIBITIONS

Frank B. Schuetze ACCOUNTANT

Roxanne Cordova Melendez accounting@lockwoodpublications.com

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Mumtaz Ahmad (ISLAMABAD, PAKISTAN) Diamantis Chras (PIRAEUS, GREECE) Bob Crew (LONDON, ENGLAND) Eugene Gerden (MOSCOW, RUSSIA) Guido Jungbluth (SANTA CRUZ DO SUL, BRAZIL) Manfred Körner (HAMBURG, GERMANY) M. Rifaat Naguib (CAIRO, EGYPT) Vladislav Vorotnikov (MOSCOW, RUSSIA)

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Volume 18, No. 9 TOBACCO INTERNATIONAL (ISSN 0049-3945 print; ISSN 2331-8481 online), established in 1886, is published six times a year, with two monthly issues (September & December) and four combined issues (Jan/Feb/Mar, April/May/June, DECEMBER, Oct/Nov) plus a directory issue published in January of each year by Lockwood Trade Journal Co., Inc., 3743 Crescent Street, Second Floor, Long Island City, NY 11101, USA. Officers: Robert M. Lockwood, president and treasurer. Subscription rates: USA—US$49 per year, US$74 for two years; US$109 for three years. Canada—US$59 per year, US$89 for two years, US$134 for three years. All other countries: International Surface Mail—US$89 per year; US$139 for two years; US$199 for three years. International AirMail—US$129 per year; US$199 for two years; US$289 for three years. Single copy price: US$15. Annual Buyers’ Guide & Directory: US$45, plus shipping. Copyright ©2018

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8 TOBACCO INTERNATIONAL DECEMBER 2018

we think as one to achieve the best results.

TI DIGEST Snus production at Swedish Match’s factory in Gothenburg, Sweden.

of the ECJ cannot be appealed which leaves a future removal of the ban essentially a political issue, complained Swedish Match, the leading producer of snus.

Sweden is not covered by the ban, but all other European Union countries are.

Not surprisingly, the announcement attracted considerable opposition.

“Snus is one of the viable harm-reducing products, which can actually give tobacco users a viable alternative for smoking cigarettes,” wrote Bill Wirtz, policy analyst for the Consumer Choice Center. “Yes, consumers do not always choose the healthiest option for themselves.

“But if presented with choices offered on the market, they might actually reduce the health hazards posed to their bodies. The ruling displays a political public health motivation.”

JAPAN Winston Products Get Rejuvenated TOKYO—Japan

LUXEMBOURG European Union Won’t Back Down on Snus Ban KIRCHBERG , LUXEMBOURG CITY —The

European Court of Justice (ECJ) recently published its judgment concerning the prohibition of sales of Swedish snus to other European Union Member States.

The court ruled that Swedish snus will continue to be excluded from the EU’s internal market.

In its judgment, the court states that EU legislature has broad discretion within the area at issue and that this implies that judicial review is limited.

These limitations apply both to measures decided by the EU legislature and to the basic facts on which these measures have been based.

Based on such limited review, the court didn’t find that the ban on snus is manifestly inappropriate. The judgment

10 TOBACCO INTERNATIONAL DECEMBER 2018

Tobacco (JT) announced that it will “renew” several of its Winston products in late January 2019.

According to a December statement from the company, the renewal seems to concentrate primarily on packaging.

“To convey the main features of Winston brand—taste and flavor— more clearly, 17 products will be provided with new designs,” the statement said. “This will include: • Six products from the Winston Caster White line; • Five products from the Winston Cabin Red line; • Three products from the Winston Inazma Menthol line, and • Three products from Winston Sparkling Menthol line.

The packaging has a simple, bold and modern design: the Winston logo,

joint spirit We support each other in all of our business endeavors.

Throughout all of our companies and with all of our suppliers.

We empower creative collaboration.

delfortgroup.com

TI DIGEST an icon of quality and taste satisfaction, is set against a background color corresponding to each product to visually express taste character of each Winston line.

The taste and aroma of the products will remain the same.

Winston is the world’s second largest cigarette brand in the world by sales volume, the statement noted.

CANADA Altria to Buy 45% of Cannabinoid Company Cronos TORONTO—Altria

Group has entered into an agreement to acquire newly issued shares in Cronos Group Inc., a leading global cannabinoid company headquartered in Toronto, Canada, according to a company statement.

The transaction represents a 45 percent equity stake in Cronos Group, at a price of CAD $16.25 per share, for an aggregate investment by Altria of approximately USD $1.8 billion (approximately CAD $2.4 billion).

As part of the agreement, Altria will have the right to nominate four directors, including one independent director, to serve on Cronos Group’s Board of Directors, which will be expanded from five to seven directors. The agreement includes a warrant to acquire an

additional ownership interest in Cronos Group at a price of CAD $19 per share exercisable over four years from the closing date. If exercised in full, the warrant would increase Altria’s ownership in Cronos Group by 10% to approximately 55%.

“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” said Howard Willard, Altria’s chairman and chief executive officer. “We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential.”

“Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Mike Gorenstein, Cronos Group’s chairman, president and chief executive officer. “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers. Altria shares our vision of driving long-term value through innovation, and we look forward to continuing to differentiate Cronos Group in this area.”

This investment positions Altria to participate in the emerging global cannabis sector, which it believes is poised for

In May 2017, Cronos Group Inc. broke ground on a 315,000 sq. ft. expansion of its wholly-owned licensed producer, the Peace Naturals Project Inc., in Toronto. The expansion includes a state-of-the-art 286,000 sq. ft. production facility, a 28,000 sq. ft. greenhouse, and an additional 1,200 sq. ft. extraction laboratory. Upon completion, the new facility is expected to be the largest purpose-built indoor cannabis production facility in the world.

12 TOBACCO INTERNATIONAL DECEMBER 2018

rapid growth over the next decade. It also creates a new growth opportunity in an adjacent category that is complementary to Altria’s core tobacco businesses.

Altria expects its investment to help Cronos Group accelerate its growth strategies and its R&D and intellectual property development. Additionally, Altria will provide expertise to help Cronos Group thrive in the growing global cannabis market. These services may include regulatory affairs, regulatory science, compliance, government affairs and brand management.

Cronos Group has no U.S. operations, where cannabis remains illegal at the federal level. Through Cronos Group, Altria is better positioned should cannabis become federally permitted. The transaction is expected to close in the first half of 2019.

UNITED STATES A New Winston Line from ITG GREENSBORO, N.C.—Winston Black, a new

premium cigarette in the tradition of the legendary Winston brand, debuted in August from ITG Brands.

Combined with a smooth, balanced, full-flavor taste, Winston Black is a product that will “turn a lot of heads,” said Michael Graves, ITG Brands cigarette brand director.

“Winston Black creates a new point of entry for competitive adult smokers to discover, or rediscover, the brand,” Graves said.

Winston was introduced in 1954 and named after the city where R.J. Reynolds was located. It became the first nationally popular filtered cigarette. From the mid-60s to the mid-70s, Winston was the best-selling cigarette in the nation until it was supplanted by Marlboro.

ITG Brands expects positive momentum for Winston Black as con-

www.universalcorp.com

TI DIGEST sumer awareness rises due to retail signage, direct mail, website information and emails.

Winston Black will be available in king size and 100s in a cork filter tip.

Packaging features an embossed texture and a sleek honeycomb pattern that should stand out on shelves, with a striking black-and-red color scheme.

Since ITG began selling it in 2015, the Winston brand has grown across the United States, the company says. It introduced another new member to the brand family in April of 2017, when it introduced Winston Select.

Altria Discontinues Several Reduced Risk Products RICHMOND, VA.—Altria

Group, Inc. announced in early December that it would discontinue production and distribution of all MarkTen and Green Smoke e-vapor products along with Verve oral nicotine-containing products.

The decision was based upon the current and expected financial performance of these products, coupled with new regulatory restrictions that burden Altria’s ability to quickly improve these products, the company said in a statement. The first of several MarkTen varieties was rolled out nationally in the U.S. in 2014. The company said it will refocus its resources on more compelling reduced-risk tobacco product opportunities.

“We remain committed to being the leader in providing adult smokers inno-

Altria Group announced the abrupt discontinuation of its entire MarkTen and Green Smoke e-vapor products, as well as its Verve oral nicotine-containing products.

vative alternative products that reduce risk, including e-vapor,” said Howard Willard, chairman and c.e.o. of Altria Group, Inc. “We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources. We recognize the impact this decision has on our employees and business partners, which we do not take lightly.”

Altria’s subsidiaries will begin working with their retailers, wholesalers, contract manufacturers and suppliers to ensure an orderly process. MarkTen cig-a-likes are currently in distribution at retail and through e-commerce.

Green Smoke is primarily available on e-commerce with limited retail presence. Verve is in limited distribution at retail and e-commerce.

As a result of this decision, Altria expects to record one-time pre-tax charges of approximately $200 million in the fourth quarter of 2018, the majority of which would be non-cash asset impairment charges. These charges will be excluded from Altria’s adjusted results.

Menthol Ban Proposal Draws Industry Fire WASHINGTON, D.C.—When

the American Food and Drug Administration announced in November that it will seek a ban on menthol tobacco products, it elicited a host of responses.

“When the FDA first examined menthol in 2013, the published science did not support regulating menthol and non-menthol cigarettes differently and the published science since then has not changed this situation,” said Imperial Brands in a statement.

“While some consumers may prefer menthol cigarettes, the science has not demonstrated that menthol leads to higher levels of initiation, greater dependence, reduced ability to quit or increased health risk.

“Any regulation of menthol in cigarettes must be done through the estab-

14 TOBACCO INTERNATIONAL DECEMBER 2018

lished comprehensive rule-making process and must be based on a thorough review of the science while considering the unintended consequences of any rule.

Failing to do so would mean any such action would not withstand judicial review.”

Worse yet, if menthol cigarettes are regulated any differently than non-menthol cigarettes, the illegal market will increase, fueling more criminal activity [and] adding further challenges to criminal and social justice issues. Further, if an illegal market in menthol cigarettes increases, youth smoking access will also.

Imperial Brands questioned the apparent haste in FDA’s announcement.

“The FDA’s proposals regarding menthol cigarettes and flavored cigars… would need to be supported by the relevant science and other evidence,” it said in a statement. “Such proposals are likely to require a multi-year process, in which we will be fully engaged.”

Altria believes that a total ban on menthol cigarettes or flavored cigars would be an extreme measure not supported by the science and evidence, said Murray Garnick, executive vice president and general counsel. “We expect that establishing product standards on menthol cigarettes and flavored cigars will be a multi-year, deliberative process, and we will be fully engaged throughout.

The senior Senator from North Carolina, Richard Burr also weighed in November, commenting that FDA’s proposal seemed to favor states that ignore federal drug laws.

“This is not the first time the FDA has tried to ban menthol, but these efforts have been unsuccessful in the past,” said Burr, a Republican.

“It is troubling, however, that an Administration that pledges to put America first is targeting legal, American-made products instead of focusing its attention on states that flout federal drug laws.

“If the United States continues down this path, we will be following in Canada’s footsteps, banning menthol

UNITED STATES Santa Fe Helps Provide Funding for Hurricane-stricken Farmers OXFORD, N.C.—Santa Fe Natural Tobacco Company, Inc. (SFNTC) donated $100,000 in November to the Carolina Farm Stewardship Association for the creation of the Hurricane Relief Partnership for Carolina Sustainable Farms.

SFNTC, a member of the non-profit Carolina Farm Stewardship Association (CFSA), said that the new Hurricane Relief Partnership has two key purposes: • To provide access to low-cost capital and financial planning to between 30 and 50 small sustainable farms in North and South Carolina that suffered damage due to the impact of Hurricanes Florence and Michael; and • To create an endowment fund to guarantee availability of low-cost financing for small sustainable Carolina farms in the event of future catastrophic weather events.

“The Hurricane Relief Partnership for Carolina Sustainable Farms marks the beginning of a new strategy in building the financial resilience of our region’s sustainable agriculture community,” said Roland McReynolds, CFSA’s executive director.

“The probability of disasters in future years presents a long-term threat to the survival of sustainable family farms serving the markets for local and organic agricultural products in this region.”

These farms, some of which are SFNTC’s grower partners, are not reliably served by the safety net that exists for large-scale conventional commodity production, McReynolds said.

“Yet the contributions they make to their communities—enhanced soil and water quality, biodiversity, healthy food, economic growth—are vital.

When one of these farms is lost, it has long-lasting negative effects.”

Hurricane Florence and Hurricane Michael caused extensive damage in the farming areas of both the Carolinas in September and October of 2018.

NAMES IN THE NEWS Sue Clark has been appointed an independent Non-Executive Director of Imperial Brands PLC. She held a number of senior commercial positions during 13 years with SABMiller and has executive committee and board level experience gained in the FMCG (Fast-Moving Consumer Goods) industry.

Luciano Comin, currently Regional Head of Marketing, Americas and SubSaharan Africa (AMSSA), has been appointed as Regional Director, AMSSA, starting January 1, 2019.

Donna Grier has been appointed to the Board of Directors of Pyxus International (formerly Alliance One International). Grier currently serves as vice president and treasurer of Dupont. but legalizing recreational drug use. I hope the administration will choose a better way to protect our children.”

But will FDA succeed in its campaign against menthol? Bonnie Herzog, researcher with Wells Fargo Securities,

said that a ban is extremely unlikely, for several reasons.

A ban may not be supported by the science, there will probably be unintended consequences and, a legal challenge by the industry is almost certain, she said.

DECEMBER 2018 TOBACCO INTERNATIONAL

15

UNIVERSAL CORPORATION

Virginia tobacco merchant J.P. Taylor.

n 1918, t he Vi rg i n i a tobac c o merchant Jacquelin P. Taylor, along with five other tobacco merchants consolidated to form Universal Leaf Tobacco Company.

The company celebrated its 100th anniversary on January 25, 2018. “A centennial is an important milestone for any company,” said George Freeman, President, chairman, and chief executive officer of Universal. “It is a testament to the long-running and continued support and importance of our vital communities—investors, customers, growers and employees.

For a century, Universal Corporation has been finding innovative solutions to serve our customers and meet their leaf tobacco needs.

“We built a global presence, solidified long-term relationships with customers and suppliers, adapted to changing agricultural practices, embraced state of the art technology and emerged as the recognized industry leader,” Freeman continued.

Today, Universal conducts business in over 30 countries on five continents, employs over 20,000 permanent and seasonal workers, and is the leading global leaf supplier.

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Building on the Past to Grow a Bright Future Universal has celebrated its centennial for 12 months.

Now it is looking to its next 100 years. Staff report 16 TOBACCO INTERNATIONAL DECEMBER 2018

What Universal Means to the Industry “Universal has a long history of operating with integrity, honesty, and a focus on quality,” Freeman adds.

It is a vital link in the leaf tobacco supply chain, providing expertise in working with large numbers of farmers, efficiently selling various qualities of leaf to a broad global customer base, and adapting to meet evolving customer needs and delivering products that meet stringent quality and regulatory specifications.

As Universal moves into its second 100 years, it will build on history by seeking opportunities to leverage both its assets and expertise.

“We will continue our commitment to leadership in setting industry standards, operating with transparency, providing products that are responsibly sourced, and investing in and strengthening the communities where we operate.

Throughout our 100-year history, we have been finding innovative solutions to serve our customers and meet their leaf tobacco needs,” he said.

The strategies that have been learned Freeman listed the key operating strategies that have permitted Universal to thrive for its first century:

Above: It was big news when Universal Leaf North America opened its manufacturing facility near Nashville, N.C., in 2003. Below, left: Workers at ULNA’s factory in N.C. pick and sort leaf as it goes through processing. Below, right: Universal Leaf’s Nashville, N.C., leaf processing plant features state of the art equipment.

Strategic Market Position—We work closely with both our customers and suppliers to ensure that we deliver a product that meets our customers’ needs while cultivating a strong sustainable supplier base. We balance purchases of leaf tobacco against customer demand and maintain global procurement and production operations to maximize supply chain efficiencies.

Strong Local Management—Having strong local management in all of our key supply origins allows us to idenDECEMBER 2018 TOBACCO INTERNATIONAL

17

UNIVERSAL

Universal Corporation is involved in leaf production around the world. Above: A field of Chinese tobacco blooms in the sunshine. Below, right: Time to review his burley crop for a farmer in Mozambique. Left: Ripeness is the selling point for flue-cured tobacco in Virginia, where modern tobacco production began.

tify constantly shifting market conditions. Empowered local management coupled with global coordination is critical to affording the necessary flexibility to quickly adjust our decision processes in order to continually deliver high quality, competitively-priced products and services.

Compliant Product— Customers expect a sustainable supply of fully-compliant, traceable, competitively-priced product, and Universal leads in delivering these products. Among other initiatives, Universal invests in training farmers in good agricultural practices that encompass crop quality, en-

18 TOBACCO INTERNATIONAL DECEMBER 2018

vironmental stewardship and agricultural labor standards.

Diversified Sources —Universal operates on five continents and maintains a presence in all major flue-cured, burley, oriental and dark air-cured origin markets. This global presence allows us

to meet our customers’ diverse leaf requirements while minimizing the effects adverse crop conditions and other localized supply interruptions.

Financial Strength—Financial strength is critical and enables us to fund our global operations efficiently and to facilitate investment when suitable opportunities arise. Managing interest expense and capital costs provides a competitive advantage, affording us flexibility when responding to customer requirements and market changes.

The next 100 years “We are proud to be the leading global leaf supplier, the recognized industry leader and a vital link in the leaf tobacco supply chain,” said Freeman. “I believe that we got here because of our long history of operating with integrity, honesty, and a focus on quality.

“We are looking forward to our next 100 years and seek to build on the many lessons that we’ve learned on our journey thus far. We will continue our commitment to leadership in setting industry standards, operating with transparency, providing products that are responsibly-sourced, and investing in and strengthening the communities where we operate.”

Leaf moves down the line at Universal’s Nashville, N.C., processing plant.

Lessons Learned in the Past 100 Years Universal Leaf management has charted a course through economic depression, wars and geo-political upheavals. Here as it enters the next chapter of the company’s continuing story are some of the principles that have made that journey a successful one.

Relationships last. They are the very fabric of what Universal does. Over the years, handshakes have signaled relationships built upon trust and loyalty. And, although today’s legal environment requires written agreements, those sealed with handshakes still signal the kind of relationships that will last, not just for a while but for decades to come.

Do the right thing the right way. Universal has become known for doing what it says it will do. “When we take a position or make a promise or guarantee a result, you can count on us to deliver,” said Universal management. “Our fundamental promise is to do business in the future in the very same way—the right way.”

Every action affects others. It is called “The Universal Effect.” It is manifest in every decision we make. Every action gives rise to another….and another….and another….and so on.

A company is known for what it values. Consider core beliefs, and you’ll understand the values that define a company. “They underpin the actions we take every day to cultivate and strengthen the various communities we depend on—growers, investors, employees and, most importantly, our customers. In short, we practice what we preach—that’s just what leaders do.”

George Freeman, President, chairman, and chief executive officer of Universal.

Consider this example. “Say we provide a grower with training and crop analytics technology that results in better yields. In return, we get a more prosperous farmer, one who is better equipped to help improve the quality of life in his community,” said Universal. “We work every day to take such actions, mindful of the rippling impacts they will have on the lives of people, the needs of our investors, the requirements of our customers, the sustainability of our practices and the health of our planet.”

DECEMBER 2018 TOBACCO INTERNATIONAL

19

ALTRIA

The basic Juul device, which is rechargeable on a USB charging dock, shown with replaceable Juul pods.

Photo: Juul Labs

Could Juul be the Newest Jewel in Altria’s Crown?

An influx of cash for Christmas for the e-vapor startup.

By Bob Crew, London Correspondent See TI Editorial on page 20 for the latest news on this topic.—Editor. t looks like there will be a $4- to $7-billion Christmas present for the Juul e-cigarette vaping company, probably at the beginning of 2019.

This prospect has excited the media, both trade and general audience. From late November, there has been an avalanche of stories on the Internet describing the negotiations. And whether rightly or wrongly, almost all assumed that a successful acquisition is a foregone conclusion.

One way or another, Altria/Philip Morris is in no-nonsense talks to take a stake in Juul Labs, the $16-billion e-cigarette U.S. startup that has swiftly

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and spectacularly grabbed three-quarters of the U.S. vaping market since its launch in 2015 (the company was called Pax Labs then).

This news has to be the biggest “breaking-new-ground” tobacco industry story of the year, not only in the United States, but also globally.

A stake in Juul by Altria is a big takeaway indeed. What a gift-wrapped present this is going to be for Juul if the deal is all set and ready to go in time for the festive season!

Interestingly, these talks came hot on the heels of the U.S. Food and Drug Administration’s (FDA) recommendation of “sweeping measures” to crack down on what it has referred to as an “epidemic” of underage vaping.

20 TOBACCO INTERNATIONAL DECEMBER 2018

A Clear Path to Control But it really does need to be clearly understood that “a deal will only happen if Altria has a path to control,” according to a mystery person who has spoken to “several large investors in the Altria tobacco company.”

Financial analysts at Wells Fargo have estimated that U.S. e-cigarette sales have risen from $2.5 billion in 2012 to $5.5 billion this year.

Meanwhile, the traditional tobacco companies have, predictably, been pouring millions and/or billions of dollars into the carefully planned development of alternatives to combustible cigarettes.

They have also had to watch their share of this new market dwindle as Juul has grown rapidly and been on a roll to become the jewel in the crown of the U.S. alternative e-cig vaping market.

It’s not rocket science to deduce that, with a staggering a $2.5 to $5.5 billion leap in the market, it was only a matter of time before, sooner or later, a big tobacco company would set its sights.

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ALTRIA Since its founding in 2007 by two business partners who met as Stanford design program grad students, Juul Labs’ mission has been to eliminate cigarettes by offering existing adult smokers a true alternative to combustible cigarettes. Based on their research, the partners learned that smokers who want to switch are looking for a device that does not look or feel like a cigarette. Photo: Juul Labs

Trends for the Marlboro brand looked like they were stabilizing at that point, she reckoned—but she is also on record for “welcoming” the prospect of a deal with Juul, which was able to claim a very-Christmas-like 76 percent share of its U.S. market.

So, what could Altria afford to finally bid, let us say, for an initial stake and take of at least 30 to 40 per cent in Juul at this stage? Herzog has estimated “$4 to $7 billion” in line with Altria’s “reduced risk strategy” and also in view of the prospect of “exposure to markets outside the U.S.” Wells Fargo Welcomes the Deal Of course, financial analysts are still looking as closely as they can at sales data for blips, slips and shifts in the market.

Bonnie Herzog—an analyst at Wells Fargo—has reportedly noted that she has been “disappointed and somewhat mystified” by the magnitude of the 8.7 per cent decline in the cigarette volumes reported in her latest weekly data from Nielsen (in November 2018).

FENIX

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With FENIX systems installed worldwide on a variety of cigar makers, Isatec continues to be the right choice for on-machine control and information systems.

FENIX Support Services Isatec Ltd. are renowned for excellent support of its products. For the new generation of Fenix systems, our team of experienced software and hardware engineers will continue to enhance our reputation.

—Kevin Burns, Juul Labs C.E.O. Whilst underage vaping is a ‘serious’ problem, one venture capital company in New York has pointed out that there’s one billion the world’s smokers out there who can “more effectively” switch to healthier e-cigarettes than carry on with combustible tobacco products.

Cigar Manufacturers

Measure

We want to be part of the solution in preventing underage use, and we believe it will take industry and regulators working together to restrict youth access.”

Contact Us Tel: +44 (0) 1494 792602 Fax: +44 (0) 1494 792608 Email: info@isatec.co.uk www.isatec.co.uk/fenix

Isatec Ltd, Watermeadow House, Watermeadow, Chesham, Buckinghamshire, HP5 1LF, UK

22 TOBACCO INTERNATIONAL DECEMBER 2018

Clean Regulatory Bill of Health Juul appears to have moved swiftly—though maybe not instantly—to get ahead of the aforementioned FDA crackdown on e-cigarettes. They did it by ditching the sale of flavors from its nicotine liquids from more than 90,000 convenience stores. It was equally swift in shutting down its social media accounts and bringing in Bluetooth-based technology to help track where its devices are sold.

So, it has done what would seem to be all the right things and ought to have gotten itself a clean bill of health, though this is a federal agency Juul is dealing with so who knows?

Also, it remains to be seen if the Altria takeover effort may run into roadblocks, although conventional wisdom does that. So, watch this space in the months ahead: There are important lessons to be learned here about the future shape of the market and how best to adjust to it.

Finally, a Happy New Year to you all, and especially to Altria and Juul!

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LEAF NEWS Fields like this that are well suited to the production of burley have made Malawi the world’s major participant in the world burley export market.

MALAWI A new tobacco control law for Malawi growers

lenges during the signing of contracts for selling their tobacco,” said Mwanamvekha.

BLANTYRE —The

Malawian Parliament p a s s e d a Tob a c c o A c t i n e a r l y December that is expected to improve the status of growers in this poverty-stricken country Minister of Agriculture Joseph Mwanamvekha said the act will protect tobacco growers at the markets and also enable them to be informed of the price attached to the contracts they sign. Apparently this had been a problem with some buyers. The act also forbids the planting of tobacco by buyers, as well as preventing buyers from grading or transporting the crop.

“I am excited that the tobacco control bill has passed, since our tobacco farmers have been facing chal-

ZIMBABWE Chinese company takes a Zimbabwean partner HARARE—The

Chinese tobacco company China Tobacco Shaanxi Industrial Corporation (CTSIC) has partnered with the Zimbabwean manufacturer Pacific Cigarette Company (PCC), formerly Savana Tobacco. CTSIC is a regional subsidiary of the Xi’an-based Chinese National Tobacco Company, and the deal represents the first and only cooperation agreement ever signed by a state-owned Chinese tobacco company and an African manufacturer.

The first order of business for the partnership is to gear up production of a

24 TOBACCO INTERNATIONAL DECEMBER 2018

new line of cigarettes called Acacia Series.

A blend of Zimbabwean tobacco and Chinese flavors, it will be targeted to the large Chinese community in Zimbabwe.

If all goes well, it will eventually be marketed to a million or more Chinese nationals living in Africa. Acacia Fantasy, the first variant to be released, will be in the market soon and was launched in a ceremony at the PCC factory in Savanna on December 7.

In welcoming remarks at the event, PCC Chairman Adam Molai said in a statement that the agreement had been 10 years in the making, and was a testament to the shared vision and entrepreneurial culture shared by the two companies. He also spoke of the opportunities in Zimbabwe and Africa that the Chinese had recognized and exhorted the guests to adopt a perspective of seeking oppor-

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LEAF NEWS tunities to solve problems in the pursuit of economic and national development.

CTSIC executive Bai Gang said in The Standard newspaper of Harare that the introduction of the Acacia line of cigarettes is an attempt to widen their base and reach the consumers of their highly ranked products. Acting Chinese Ambassador to Zimbabwe Zhao Baogang said

that local production of cigarettes would help the Zimbabwean Chinese community, which has been spending millions to import tobacco products.

“Now we can get a finished product, and that means more value addition that will create jobs for Zimbabwe’s people,” said Baogang.

This year Zimbabwe country pro-

duced in excess of 200 kgs of tobacco, most of which was exported to China.

Molai founded Savanna Tobacco Company in 2002, and the company re-branded as Pacific Cigarette Co. in 2017. It is the manufacturer of the Pacific brand of cigarettes, which includes Pacific Storm, one of the country’s and region’s leading cigarette brands.

UNITED STATES Future not bright for growers SPRINGFIELD, TN.—As

the year came to an end, the outlook for the major U.S. tobacco types was growing dim.

Estimates of the volume of the American burley crop that is just now being marketed vary widely, but all estimates indicate that this is the smallest burley crop since records have been kept. has been projected at 90 million pounds.

Daniel Green, chief operating officer of the Burley Stabilization Corporation in Springfield, Tenn., says the shortfall resulted in part from the substantial cutbacks in plantings made by growers last spring—20 percent according to USDA—but late-season rains were the major factor.

But the quality of this burley crop is decent, says Green, as the last two crops were. “You could call this crop ‘low in volume but acceptable in quality’,” he says. “But much of the leaf is thin. There isn’t a lot of the good-bodied redder styles that buyers are looking for.”

There was plenty of dark red leaf in the 2018 flue-cured crop, but for this type, red is undesirable. A reduction in contract offerings for this type is considered all but certain by market observers, and the Executive Vice President of the N.C tobacco growers association, Graham Boyd, predicted outright that the 2019 crop would be the smallest American flue-cured crop since records were kept.

Workers on an eastern North Carolina farm sort good leaf from bad on a conveyor belt.

26 TOBACCO INTERNATIONAL DECEMBER 2018

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CALENDAR OF EVENTS February 11–13, 2019 TPE 2019 International (Tobacco Plus Expo) Las Vegas Convention Center, Las Vegas, Nev. Contact: Trade Show Logic, (Attendees) Caroline O’Carroll, Tel: (617) 680-2554, Email: cocarroll@ tradeshowlogic.com; (Exhibitors) Hilary Manning, Tel: (805) 744-4216, Email: hilarymanning@tobaccoplusexpo. com, Web: tobaccoplusexpo.com.

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The Murky Future of Vaping and Cannabis AUSTRIA SCRAPS ITS BAN ON SMOKING IN BARS & RESTAURANTS

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February 17–22, 2019 12th Annual ProCigar Festival La Romana and Santiago de los Caballeros, Dominican Republic. Premium cigar festival.

Contact: ProCigar, Web: procigar.org.

February 18–22, 2019 21st Festival del Habano Havana, Cuba. Contact: Habanos S.A., Web: festivaldelhabano.com, habanos.com.

March 17–21, 2019 TAA 51st Annual Convention Casa de Campo, La Romana, Dominican Republic. Contact: Tobacconists’ Association of America, Tel: (770) 597-6264 Email: info@thetaa.org, Web: thetaa.org.

• WHICH WAY ALLIANCE ONE?

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ADVERTISER INDEX Boegli-Gravures SA .................................................... C2

Star Agritech International ........................................... 3

BMJ.......................................................................... 4,5

SWM International ...................................................... 21

delfort Group ...................................................... 7, 9, 11

TSAL Ltd. (Tobacco Solutions Asia Limited) ............... 25

Isatec Ltd. ................................................................. 22

U.S. Tobacco Cooperative, Inc. .................................. 23

Micro Laser Technology GmbH (MLT) ........................ 15

Universal Leaf ............................................................ 13

28 TOBACCO INTERNATIONAL DECEMBER 2018

THE AUTHORITY ON TOBACCO DISTRIBUTION AND RETAILING

Quarter 4, 2018

JOYA DE NICARAGUA AT 50

Nicaragua’s first cigar factory marked its fifth decade of operations this year.

It’s weathered tough times in the past, but is stronger than ever today with a global reach.

#RFEFRPPXQLW\

www.ocb.net

#RFERIÃ¥FLDO

{Contents}

TOBACCO PRODUCTS INTERNATIONAL » Q4 2018

6

{ EDITORIAL } E. EDWARD “TED” HOYT III Editor ROBERT M. LOCKWOOD Publisher & President { ART & PRODUCTION } MELINDA AYALA Production Coordinator ROXANNE CORDOVA MELENDEZ Accountant

FEATURES

DEPARTMENTS

{ SPOTLIGHT }

Industry News .......................................4 Brand News .......................................... 10 Showcase............................................. 12

12

10

6 Joya de Nicaragua on its 50th Anniversary The history of Joya de Nicaragua—Nicaragua’s first cigar factory—parallels the birth and growth of Nicaragua’s flourishing cigar industry, a journey achieved largely against the odds of multiple adversities. » STAFF REPORT

{ ADVERTISING REPRESENTATIVES } ALL REGIONS

Robert M. Lockwood TEL: + 1-212-391-2060, x109 FAX: + 1-212-827-0945 EMAIL: robert@lockwoodpublications.com SPECIAL SALES REPRESENTATIVE

George E. Lockwood TEL: + 1-413-775-0005 FAX: + 1-413-775-9010 EMAIL: lockwood.george@gmail.com Tobacco Products International Lockwood Trade Journal Co. Inc., 3743 Crescent Street, Second Floor Long Island City, New York 11101 U.S.A. Tel: +1 (212) 391-2060 Fax: +1 (212) 827-0945

{Editor’s Letter} UK Divulges Tobacco Contingencies in the event of a “No-Deal” Brexit Pundits continue to say that the odds of a “no-deal” Brexit remain low, but the possib-

SUBSCRIPTION SERVICES:

info@lockwoodpublications.com EDITORIAL SUBMISSIONS/INQUIRIES:

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lity is real enough to have prompted numerous UK government departments to issue “technical notices” that began months ago, addressing the myriad of ways a “no-deal” Brexit would affect industries.

Regulations have forced tobacco manufacturers to print images highlighting the dangers of smoking on all tobacco products sold in the UK since 2009. But copyright of the

AD INDEX Republic Technologies ................. C2

current graphic tabacco warnings is owned by the European Commission, and those warnings would have to be replaced in the even of a “no-deal” Brexit.

The latest UK gpvernment update on the matter revels that the graphic warnings on cigarette packets would be replaced by Australian versions. In addition, changes to the way manufacturers must notify UK health and other regulatory bodies about the sale of both e-cigarettes and tobacco products would also be necessary.

» Ted Hoyt, Editor

Tobacco Products INTERNATIONAL

Tobacco Products International

TPI 3

{Industry News} A Second La Casa del Habano Opens in St. Petersburg The newest La Casa del Habano international cigar franchise, located on Kuznechny Alley in St. d Petersburg, Russia, celebrated its grand opening on December 14, 2018. The new retail shop joins over 140 premium boutiques in the global La Casa del Habano network, and is the second store in the so-called “Capital of the North” and the third in Russia. Dimitir Sovolev, a great lover and admirer of Cuba, its culture and its Habanos, is

Max Zechbauer Tabakwaren Named Germany’s Habanos Specialist of the Year 2018 MÜNCHEN, GERMAN—At

the franchisee of the new location.

The event gathered more than 60 guests, including the Ambassador of

the InterTabac 2018 Trade Fair in Dortmund, Max Zechbauer

Tabakwaren GmbH was named “Habanos Specialist of the Year 2018” for Germany by 5th Avenue Products Trading Gmbh, Habanos’ exclusive German distributor. The award was presented by Heinrich Villiger, 5th Avenue president, to Mirko Pettene, manager of Max Zechbauer Tabakwaren shop in Munich.

Max Zechbauer Tabakwaren was founded in 1830 by Max Zechbauer as the first tobacconist to import cigars from Havana to Germany, transforming a small family business that began in 1795 with the grocery store whose products included chewing tobacco and snuff, developed into Germany’s first specialty shop for cigars.

The flourishing family business subsequently opened a grocery store in the

the Republic of Cuba to the Russian Federation; Gerardo Peñalver Portal,

arcades of the Munich Hofgarten and was appointed official purveyor to the royal court

Cuban Ambassador in the Russian

in 1886, supplying the Vatican, the Russian Tsar court, and Europe’s royal houses.

Federation; Odalis Seijó García,

In 1911, Zechbauer acquired the house on Residenzstraße, which has since

vice president of the Chamber of

become known as the Zechbauer-Haus and which still houses the original shop. The

Commerce of Cuba; as well as the

company is still owned by the Zechbauer family, who continue the founder’s leg-

executives of Top Cigars Corporation—

acy with a keen sense of enjoyment and tradition. In 1998, Zechbauer Tabakwaren

exclusive distributor of Habanos for

became one of the first tobacconists to conduct retail sales on the Internet, and now

the Russian domestic market—Mikhail

offers over 500 tobacco products through its online store.

Smirnov and Alejandra Romero.

Zechbauer Tabakwaren regularly organizes tastings, promotions and other cigar

The evening also brought

enjoyment events. For a few weeks there is another cigar business operated by

together representatives of cigar

Zechbauer in the Munich Hotel Vier Jahreszeiten featuring a beautiful cigar lounge,

shops and clubs not only from St.

no small achievement in Bavaria, a state with a total ban on smoking.

Petersburg, but also from other cities in Russia. Guest were able to

> Top: 5th Avenue Marketing Manager Christoph Puszkar (left) and Sales Manager Ino Mühlmann (right) present the award “Habanos Specialist of the Year 2018” to Mirko Pettene, Managing Director of Max Zechbauer Tabakwaren, Munich. (Photo: Ina Fassbender)

TPI 4

Q4 2018

enjoy complimentary Romeo and Julieta Petit Royales.

STG to Rename Cafe Creme Cigarillos to Signature in U.K., Key European Markets BOREHAMWOOD, UK—Scandinavian

Tobacco Group UK announced a name change for

Personnel Changes » Corporación Habanos, S.A. has

the UK’s leading cigar brand from Café Crème to Signature, “aligning the name fur-

promoted Alberto Donar Cruz Rojas

ther to the positive consumer perceptions of the brand as authentic, premium and a

to Control and Sales Management

contemporary high-quality product.” STG faced the possi-

Director. Previously, Rojas served

bility the brand could be banned in France in 2017 due to

as Commercial

its flavor reference.

Specialist in the

Cafe Creme was launched in 1963 as the first-ever

same division,

miniature cigar in a tin and has achieved steady growth for

and brings more

over 50 years. It leads the UK market with 35.9% share

than three years

overall, and 67.8% share in the miniatures segment.

experience in the

The new Signature brand name will be rolling out in UK stores from February 2019

tobacco sector to

with a phased transition to ensure high awareness amongst retailers and consumers

his new position.

Rojas

alike. This will include the launch of new transition packs from October which will feature an on-pack flash highlighting that the name will soon be changing to Signature.

Each pack will also include an inlay inside the tin with additional details informing consumers of the name change and reassuring them the cigars will remain the same.

New tins, featuring the same pack design used currently and showcasing the

Study: Fine Cut Buffers Market

Signature name, will then be brought to market in February, to allow ample time for

BRUSSELS— The

the transition to take place.

Tobacco Association (ESTA) announced

European Smoking

the release of a study commissioned

Oettinger Davidoff Tapped by Ventura Cigar to Distribute Psyko Seven in Switzerland BASEL—Ventura

Cigar Company announced that its Psyko Seven premium hand rolled

from London Economics on the fine-cut tobacco (FCT) excise taxation in the European Union. This study illustrates the key economic mechanisms of

cigars began arriving on European shores in October, making their European debut

fine-cut tobacco taxation by using the

at the Oettinger Davidoff Expo in Lucerne, Switzerland. The medium-bodied Psyko

examples of 4 meaningful FCT markets:

Seven series is produced at Oettinger Davidoff’s

Belgium, Germany, the Netherlands

Occidental Cigar Factory in the Dominican

and the United Kingdom.

Republic utilizing a complex blend of seven

The study is based on data com-

tobaccos, and Oettinger Davidoff will now distrib-

ing from publicly available sources

ute the product in Switzerland as it seeks to build

including national statistical agencies

additional growth into other European countries.

and the European Commission. The

“We think the European market is more than ready for the disruptive nature

2018 London Economics study reaf-

of the Psyko brand, and that it will do well here,” said Rick Charles, International

firms the key findings of the initial

Markets Manager of Ventura Cigars.

2015 study, underlining the buffer

Gerhard Anderlohr, General Manager, Davidoff of Geneva Switzerland, Oettinger

function of fine-cut tobacco. By pro-

Davidoff AG, added that, “There’s something really unique about the Psyko Seven

viding an affordable legal alternative

cigars. We’ve been impressed with their longstanding quality and success and are

to price-sensitive consumers when

pleased to work with Ventura Cigars to bring this brand into Swiss retailers.”

faced with prohibitive tobacco excise

The branding is notably attention-getting, with clean, white packaging that share

increases, fine-cut tobacco miti-

detailed product criteria. The Psyko Seven cigars include Psyko Seven Natural,

gates losses in government revenue

Psyko Seven Maduro, and Psyko Seven Connecticut, a relatively recent release, and

resulting from rises in illicit trade and

Maduro Psykorillos, conveniently sized for time-limited enjoyment.

non-domestic consumption.

Tobacco Products International

TPI 5

{ Manufacturer Spotlight}

Monumental Milestones:

Joya de Nicaragua on its 50th Anniversary The history of Joya de Nicaragua—Nicaragua’s first cigar factory—parallels the birth and growth of Nicaragua’s flourishing cigar industry itself, a journey largely achieved against the odds of multiple adversities. » STAFF REPORT TPI 6

Q4 2018

I

n an industry that loves to celebrate anniversaries, legacy brands tend to earn the spotlight, some dating back

over a century. It’s much rarer, though, for a company itself to hit the half-century mark—especially in Central America where cigar making is a much newer endeavor than in well-established origins.

Add in the tremendous impact of the country’s civil war in the late 1980s and the U.S. economic embargo which closed off the company’s largest market, and it’s no understatement to say Joya de Nicara-

PHOTO: JOYO DE NICARAUGA

of robust, unique puro blends of locally

Joya starts its next half a century

grown black tobaccos, but has greatly

with a diverse, yet solidified portfolio

diversified its portfolio.

accompanied by a packaging update for

As for the company’s survival, its

most of its brands. While in 1968 Joya de

employees can take well-deserved cred-

Nicaragua was the first and only brand of

it for that, as it was the shear will of the

the factory, Joya’s offerings have dramat-

owner-employees during and following

ically evolved. Its portfolio now includes

the country’s civil war that kept Joya de

the Joya line, Antaño family, Cuatro Cin-

Nicaragua afloat. It’s been said that Joya

co, and more, representing a wide vari-

de Nicaragua isn’t just a cigar company;

ety of brands and blends for all type of

it is lifeline, it is struggle, it is will to forge

smokers and at different price points.

ahead and renew—a mirror of Estelí and Nicaragua itself.

“We don’t just want to celebrate our 50th anniversary, but rather put all our

In its 50 year history, Joya de Nicara-

acquired life experience and cigar knowl-

gua has evolved to become Nicaragua’s

edge to set the groundwork for the next

most international brand, with presence

50 years to come,” Cuenca continued.

in over 50 markets, and counting. This

Indeed, Joya de Nicaragua has been

success is unprecedented and attributed

celebrating its anniversary all throughout

to its skillful and resilient people.

2018 by sharing the history, secrets, and

The history of Joya de Nicaragua is

anecdotes that have shaped the brand

intertwined with the history of Nicaragua

and its products. Events have been held

itself. From being the official cigar of the

all over the world and audiences have

White House, and at one point being part-

had the chance to participate in special

ly owned by dictator Anastasio Somoza,

giveaways. Not surprisingly, the compa-

to having the factory bombed and burned

ny also set out early to develop an exclu-

down during the revolution only to be re-

sive 50th anniversary cigar to celebrate

constructed by the workers later, Joya de

the achievement, resulting in the release

Nicaragua’s history is rich and complex, a

of Cinco Decadas this summer. It’s made

one of perseverance and resilience.

from an exclusive selection of all-Nicara-

“At the end of the day, Joya de Nic-

guan tobaccos, coaxed by 50 years of

aragua is a brand that sells cigars,” said

accumulated knowledge, experience,

Dr. Alejandro Martínez Cuenca, chairman

and resilience.

“It is our most memorable milestone

company since 1994. “But what matters

yet, and the most memorable of cele-

to me is that this brand has been the

brations always require that you rise to

force through which the people of the

the occasion. That’s what Cinco Decadas

gua’s resurgence today, much less surviv-

factory have helped shape the history of

represents,” said Cuenca. “We want con-

al at all, defied the odds.

Nicaragua itself.”

sumers to know that in Cinco Decadas,

STAFF PHOTO

of Joya de Nicaragua and owner of the

In Estelí, Nicaragua 50 years ago, Joya de Nicaragua literally pioneered the Nicaraguan cigar industry. In 1968, it became the first tobacco factory to craft premium handmade cigars in the Central American nation. Since its inception, Joya has been committed to achieving the highest levels of excellence, and establishing itself as the standard for Nicaraguan cigar quality. The company is widely regarded as the patriarch crafter

> The Joya de Nicaragua factory team gathers on the production floor to proudly memorialize 50 years.

Tobacco Products International

TPI 7

{Manufacturer Spotlight} embossed leaves and a special 50th Anniversary security seal that guarantees its origin from the Joya de Nicaragua factory. Cinco Decadas has a limited but on-going production of 5,000 boxes in the first year, and is available only in selected markets worldwide.

Another project corresponding to this year’s anniversary was the release of the book “Cinco Décadas: The Rise of the Nicaraguan Cigar,” backed by more than two years of research by British journalist Nick Hammond and beautiful photographs and designs from several top Nicaraguan talents. The 204-page book journeys through Nicaragua, the city of Estelí, the post-colonial era, the social struggles of the 1900’s, up until the evolution of the Joya brand today. It also touches on the exceptional aspects > Top: Cinco Décadas honors Joya de Nicaragua’s 50th anniversary in the two original shapes rolled by the factory when it opened in 1968. Bottom: Joya Silver, with an oscuro upper-priming wrapper from Ecuador, is a more complex blend the company’s price-friendly “modern” series.

of the cigar-making process and the social impact of the industry. It closes with a depiction of how Joya de Nicaragua has

they will find a cigar so premium that the

special moment in our company’s history

evolved to become one of the world’s

fact that there’s one in the humidor, will

and offer an opportunity to pause, reflect,

most renowned premium cigar brands.

be enough to celebrate.”

give thanks— and look to the future.”

The book also documents how Joya

The special release is made exclu-

At this time, the cigar is available

de Nicaragua’s longtime employees are

sively with prime extra-vintage leaves,

only two vitolas, meant as a tribute to

not mere collaborators, but rather are

“immaculately balanced,” and accompa-

the very first formats ever rolled at the

“the force that has driven Joya de Nica-

nied by sweet and spicy notes—a silky

Joya de Nicaragua production floor back

ragua and at times literally kept it on its

smooth smoke that delivers a rich and

in 1968: Diadema (6 x 54), retailing for

feet.” That is the case of Alberto Martínez,

fulfilling experience, explains Cuenca.

$19.99, and El General (7 × 50), retail-

head of the factory’s production floor,

“Cinco Decadas is a Nicaraguan cigar

ing for $18.99. The cigars are present-

who in the book recalled his own journey,

of unparalleled elegance,” Cuenca gush-

ed in a finely crafted ivory-white and

from his start at Joya de Nicaragua, to his

es. “This cigar is intended to celebrate a

gold-lacquered box of 10, featuring gold

key role in the survival of the factory, and the pleasure of contributing to company’s resurgence in recent years.

Hammond writes that Alberto was a long-haired, denim-jacketed 13-year-old when he literally knocked on the factory door and asked for work. At the time, Cubans effectively ran the factory on behalf of General Somoza, yet despite his appearance, Alberto somehow convinced them to give him a job. “I went straight into bonchero training,” he recalls, and to this day believes that the lady who interviewed him had mistakenly thought his

> This undated photo of the rolling gallery is the earliest known photo of the Joya de Nicaragua factory.

TPI 8

Q4 2018

name was Cuban.

> Dr. Alejandro Martínez Cuenca, chairman (left), and son Juan Martínez, executive president (right), inside the Joya factory in Estelí, Nicaragua.

But Alberto was fortunate to learn everything about the factory’s operations,

kept going back, week after week,” Al-

leaf since the early 1970s and arrived at

berto recalls.

Joya de Nicaragua just in time to help lay

not just bunching. Like many of his peers,

Cuenca ultimately agreed to buy the

down foundations for the chaotic years

he became a revolutionary during the war

factory with the help of investors, and

of the cigar boom. But soon after Cuen-

and could have continued as a soldier, but

as part of the deal, he promised that no

ca bought the factory, Raudez struggled

yearned to return to the cigar factory, even

one would be unnecessarily fired for

with the pressure and missed a lot of

as it struggled to survive.

five years. For their part, the workers

work. Summoned to Managua to see

Alberto recalls the desperate trips to

pledged to use their skills to the best of

Cuenca, Raudez assumed his time was

Managua that the senior factory work-

their ability for the same period of time.

up. But to his surprise, Cuenca extended

ers made as they tried to persuade Dr.

That included Leonel “Don Leo”

even more trust in him, telling him they

Cuenca—an economist and academ-

Raudez, general manager at the Joya

were on a journey, and Cuenca couldn’t

ic who dabbled in politics—to buy the

de Nicaragua factory, who is something

do it without Raudez. It was a life-chang-

company in the early 1990s. The effort

of a legend in the Nicaraguan tobacco

ing moment for Raudez, who immediate-

wasn’t immediately fruitful, “But we

industry. He’s been working with the

ly doubled-down and assured his position as a crucial member of the team, and today is a teetotaler, yoga-practicing vegan.

Today, Joya de Nicaragua is not only the producer of the powerful puro blends of locally grown black tobaccos that it pioneered, also a growing range of multi-nation blends and strengths that have extended its reach to a wider range of cigar enthusiasts.

“At the end of the day, Joya de Nicaragua is a brand that sells cigars,” says Dr. Cuenca, “But what matters to me is that this brand has been the force through which the people of the factory have helped shape the history of Nica-

> Alberto Martínez (left), head of production, and Leonel “Don Leo” Raudez (right), general manager.

ragua itself.”

Tobacco Products International

TPI TPI 9

{Brand News} Romeo y Julieta Tacos Edición Limitada 2018 Launches in Spain

OCB Rolling Papers 100th Anniversary

Habanos, S.A., in conjunction with its dis-

In recognition of

tributer in Spain—Tabacalera S.L.U.—kicked

its 100th anni-

off the release of the Romeo y Julieta Tacos

versary this year,

Edición Limitada 2018 on Sept. 8 at launch

OCB has intro-

event at Club Pasión Habanos in Madrid.

duced a number

The 49 ring gauge by 168 mm vitola was

of initiatives pro-

“reclaimed” from the 1970s when it was

moting the brand.

Paper Sessions is an original

available as a regular production vitola, Tacos Imperiales. Like all Edición Limitadas, in addi-

musical project featuring musicians

tion to their unique vitola that’s not available

and composers at the leading edge

under the brand’s regular production formats,

of contemporary pop that OCB hopes

these Habanos a made with specially selected

will become an international reference.

leaves which have been aged for not less than

Since March, it has become an inspir-

two years. The cigars are presented in a 25-unit regular box. The event include a cock-

ing “virtual concert venue” where visi-

tail dinner, a selection of gourmet products from several premium brands, and music.

tors can enjoy monthly mini-concerts at

Habanos S.A., Havana, Cuba, Web: habanos.com.

OCBpaperSessions.com from different well-known artists and up-and-coming

La Aurora Releases 115 Anniversary Edition In commemoration of La Aurora Cigar’s founding in 1903, La Aurora has introduced

bands representing a wide variety of musical styles.

Rolling Shorts by OCB is the

La Aurora 115 Anniversary in three different editions: 115 Anniversary Edition, 115

brand’s first international short film com-

Anniversary Limited Edition, and 115 Anniversary Jar Edition.

petition, designed for students from the

The Aurora 115 Anniversary Edition comes in four formats: Belicoso, Robusto, Gran

most prestigious film schools in Europe.

Toro, and Churchill. For collectors and lovers of the brand, the company has also pro-

“With this competition, we want to

duced a limited edition Belicoso with

help the best creators with the first

only 3,000 boxes, and 115 Anniversary

steps of their promising future,” said

Jar Edition, a special commemorative

the company in a statement. A panel

jar in Gran Toro format, with only 800

of judges will feature an international

jars worldwide.

personality from the world of cinema to

“La Aurora 115 anniversary is the

match the project’s expectations, with

culmination of a meticulous selec-

prizes both for students as well as for

tion process that pays homage to

the film schools where they study.

our centennial values of quality and perfection,” the company

Finally, OCB unveiled an edgy campaign aimed at its “stylish customers,”

announced. “With an oily wrapper grown in the Dominican Republic, the

in its goal to maintain its position as

cigar offers spicy notes such as cinnamon, peppers, rich notes of wood

the leading rolling paper brand for the

such as cedar and nuts are evident throughout the smoke.”

next 100 years. “To reach that land-

The anniversary cigar celebrates the 115 years that have passed

mark, we must always be aware and

since Eduardo León Jimenes founded the oldest and most globally

continue to find ways to reach out to

renowned cigar factory in the Dominican Republic, capturing the val-

our target through new communication

ues of “quality, dedication, effort, and perfection” that have character-

channels,” said the company.

ized the company since its founding.

Republic Technologies Intl.,

La Aurora S.A., Santiago, Dominican Republic, Web: laaurora.do.

Perpignan, France, Web: ocb.net.

TPI 10

Q4 2018

Royal Agio Cigars Named La Flor Dominicana Distributor for Germany, Netherlands Royal Agio Cigars announced that they are now distributing La Flor Dominicana brands in Germany and The Netherlands. This partnership between two “passionate premium cigar makers from the Dominican Republic” kicked off at InterTabac 2018 trade show. With the addition of the prestigious La Flor Dominicana line-up, Royal Agio expands its Dominican premium cigar portfolio in Europe, complementing its own Balmoral Anejo XO and San Pedro de Macoris handde Macoris, Dominican Republic. Royal Agio also currently

Klaus Kleinlagel to Distribute Fratello

has a strategic distribution partnership with Drew Estate, the

Omar de Frias, founder of Fratello

Nicaraguan based cigar manufacturer for brands such as Liga

Cigars, announced that Klaus

Privada and Undercrown, in select European markets.

Kleinlagel has been named the com-

made lines produced at their boutique factory in San Pedro

Since Litto Gomez and his wife, Ines, started La Flor Dominicana in 1996, they

pany’s newest distribution partner,

have had an enduring focus on quality, creativity, and innovation, which has laid the

covering Germany. “Their history

foundation for the company’s successful growth into on of the most sought-after

in the tobacco industry, their family

premium cigar brands in the world. The basis for all unique La Flor Dominican cigar

owned operation, and passion for pre-

blends is the use of premium tobaccos from their own plantations, combined with

mium cigars was a perfect match for

select top tobaccos from all over the world, resulting in renowned blends such as

our growing brand.” said de Frias.

Ligero, La Nox, Double Ligero, and top-rated Andalusian Bull.

Royal Agio Cigars, Duizel, Eersel, The Netherlands, Web: agiocigars.com.

The Kleinlagel family has been in the cigar industry since 1916 and headquartered in Bruchsal Germany since 1946. “We are very happy to

Maya Selva Cigars Releases Limited Edition Year of the Pig Toro

get to work with Omar and bring his

Maya Selva Cigars is celebrating the Year of the Pig

added: “Our business is truly a family

with a new limited edition cigar. It’s the second con-

business. As the name Fratello, which

secutive year that the company has prepared a special

means ‘brother,’ already says, Omar

edition release celebrating the Chinese New Year.

belongs to our small family.”

The filler blend is a selection of the “best to-

outstanding cigars to Germany,” Klaus Kleinlagel said. Martina, his sister

Fratello Cigars, which are produced

baccos” from Honduras and Nicaragua, paired with

in Nicaragua, currently has distribu-

a binder from Jalapa, Nicaragua and a Habano Ja-

tion in the Netherlands, Dominican

mastrán wrapper from Honduras, crafted “to please

Republic, Thailand, Czech Republic,

the most discerning of palates.“

Slovakia, and Switzerland. This partner-

The cigar is available in a single toro (6 x 52) format, present-

ship will open new doors and continue

ed in 19-count wooden cabinet boxes. The line’s design combines traditional

to expand on Fratello Cigars acceler-

Chinese patterns with Mayan hieroglyphics. The pig is the 12th sign of the Chinese

ated international growth.

zodiac, and according to their tradition, there are 12 animals guarding the gates of

Fratello has already hosted a

Heaven. Meanwhile, on a different continent, the Mayas believed that we are all born

series of events from June 16–24

with a Nahual, or spirit animal, that guides us through life.

in Duesseldorf, Koeln, Gevelsberg,

This special limited edition release, which will be available for shipping in Novem-

Wehringen, and Wuerzburg.

ber, joins the three brands of the house—Flor de Selva, Cumpay, and Villa Zamora-

Klaus Kleinlagel, Charles Fairmorn

no—making up the Maya Selva Cigars collection.

Sales Germany, Bruchsal, Germany,

Maya Selva Cigares, Paris, France, Tel: +(33) 40 15 05 65, Web: mayaselvacigars.com.

Web: @kleinlagel.com.

Tobacco Products International

TPI 11

{Showcase} Colibri Adds S-Cut Serrated Cigar Cutter for Precise Clipping Colibri Group has launched the Colibri S-Cut Serrated—an extension of its S-Cut series of double-guillotine pocket cigar cutters that features new blades finished with a serrated edge. “The serrations were developed after several trials to find the best tip-size that would give a precise cut without forfeitance of durability and precision cutting—accommodating up to a 66-ring cigar,”

Xikar Debuts Verano Flat Flame Lighters

explains the manufacturer.

The Verano Flat Flame lighter from Xikar,

ing the longevity and strength of the fine serrations—the result is a perfect bal-

The S-Cut Serrated also features an upgraded body with all new pachmayr-pat-

Inc. provides the power of a double

terned front and back panels, giving the cutter a beautifully rich appearance, bet-

flame with the breadth of a triple flame

ter feel and grip, and increased durability of the finish. Four finishes are available:

for maximum fuel efficiency. Easy to

black, polished chrome+black, polished rose+black, and gunmetal. Suggested

use and elegantly simple, Verano is

retail is US$49. This year Colibri celebrates 90 years since its founding in 1928—

engineered using all-metal construction,

and continues to build upon its legacy of innovation and thoughtful design.

loaded with Xikar’s latest technology,

Colibri, New York, N.Y., U.S.A., Email: sales@colibri.com. Web: colibri.com.

and backed by the company’s lifetime warranty—the perfect “every day carry” for the cigar aficionado “with an appetite for luxury styling and performance.”

In addition to its unique flat flame, Verano features pull-down ignition action with diamond-pattern accents; Xikar’s exclusive EZ-View red fuel window; and an oversized fuel adjustment wheel. It is offered in a choice of four finishes: Black, Vintage Bronze, G2, and Silver.

Xikar, Inc., Kansas City, Mo., Email: ludo@xikar.com, Web: xikar.com.

Brebbia’s Leather Pipe Pouches

Starbuzz Clay Bowls

Pipe Brebbia Srl offers a wide range of leather pipe pouches, ideal accesso-

Starbuzz premium clay water pipe bowls

ries for any pipe enthusiast that include several stylish varieties. The Italian

in small, large, or spiral versions are

company’s water buffalo leather tobacco pouch accommodates a single pipe

made from a superior clay compound for

in a zippered bottom compartment, with a separate surgical rubber pocket for

maximum durability. Unglazed material is

storing loose tobacco accessed under a cleverly designed pipe-shaped-and-

best used for individual flavor retention.

stiched flap (above, left). A more traditionally designed model also in buffalo

Starbuzz, Garden

leather (above center and right) accommodates a single pipe, tobacco, and

Grove, Calif. U.S.A.,

small accessories in a second zippered compartment. Both models are offered

Tel: +1-714-995-

in black, Havana (tan), or brown variations and retail from €24 to €48 each.

4119, Web: shop-

Pipe Brebbia Srl, Brebbia, Varese, Italy, Tel: +39 33 277 0286, Web: brebbiapipe.it.

starbuzz.com.

TPI 12

Q4 2018