A Conversation With Rocky Patel
Rocky Patel, 61, has cemented his legacy as a winning cigarmaker. He began selling cigars in the most modest of ways back in 1995, in the middle of the 1990s cigar boom. Now, nearly 27 years later, his company ranks as one of the most successful in the handmade cigar industry. He sells nearly 30 million cigars a year, most in the United States, but also in some 90 countries. He operates five luxurious cigar lounges—Burn by Rocky Patel—and the line to shake his hand at Big Smokes always stretches far around the venue. Cigar smokers clearly love Rocky Patel and the cigars he makes.
Cigar Aficionado executive editor David Savona met with Patel in his Naples, Florida, headquarters over Rocky Patel Disciple cigars for a discussion about the state of the cigar industry and a look at how Patel built his enviable company.
David Savona: You’ve been in the cigar business for more than 26 years now, you’ve sold millions and millions of cigars, and you’ve met so many cigar smokers. Compare the cigar smoker of today to the cigar smoker of 1995, when you got into the business.
Rocky Patel: I think the cigar smoker now is much more sophisticated, much more knowledgeable about brands and about blends and consistency. I think they have had the opportunity to smoke a lot of different brands. I think cigars made now are made with a higher degree of quality, higher consistency and a lot more character and flavor. I think the cigar smoker now is a lot more educated, and they have a greater appreciation for how labor intensive this little cottage industry is. It’s a whole different world. It used to be cool to smoke a cigar in the early ’90s, it was something they thought was the hip thing to do. Now, it’s truly a passion—it’s something that they enjoy, like their Bourbons, their craft beers, their whiskies. It’s a whole different market, a whole different generation of cigar smokers.
Q: Do you think that makes for a healthier market?
A: I think it’s a more sustainable market. I remember when I went to college, I was riding a bicycle and we were drinking pitchers of beer for $1.50 and we were eating at the local Taco Bell. And now these kids, based on the parents, who are my age—what do they call us, the Baby Boomers?—the Baby Boomers have been quite successful, and now their kids drive Mercedes and they’re drinking craft beers and they’re eating at restaurants where the average check is $75. They appreciate the finer things. They’re not just going out there and smoking cigars with plastic tips.
Q: Is it a younger market than in the ’90s?
A: Absolutely. I think the market in the ’90s was one dimensional. I think you had cigar smokers who had a much older demographic, they were loyal to one brand and one brand only. The new generation wants to try different things, they want to explore. Their palate is much more diverse and open ended. They want to try new stuff, and that’s why we’re always coming out with new blends. Of course, they’ll go back to the cigar they enjoy, but they’re looking to challenge their palate and discover.
Q: You’ve made a big business coming out with new brands. Do you have any idea of how many Rocky Patel varieties you have come out with over the years?
A: It’s got to be at least 40, 50 brands that we’ve come out with. We’re always looking for unique types of tobacco. We’ll make 75 blends, 100 blends, 120 different blends, and just smoke them, and maybe one or two out of those just wows you. Then you play around with the wrapper, with the binder, sometimes it gets worse, sometimes it gets better. It’s a process that takes a year and a half to two years. Many times we take a project and we sit on it for three or four years before we can release it. This project with the Aged Limited and Rare, we didn’t have enough of the San Andrés wrapper, we didn’t have enough of the fillers from our farms and we had to put aside tobacco every year, just sit on it—it’s time and patience. We work on it. My favorite part about being a cigarmaker is going down to Honduras and Nicaragua and blending.
Q: And you have blends right here.
A: These are four different blends that I made on my last trip to Honduras. There’s a big shortage of broadleaf tobacco in the marketplace. The machine-made cigar companies are buying up all the tobacco for their machine-made cigars. Well, the secondary part about them buying up all of this wrapper is they are sitting on all this filler that they have no use for—
Q: Wait, you mean broadleaf that doesn’t make the grade as wrapper, so you want to use it as filler?
A: They have no use for it. I was approached by a couple of people. I said let me make some blends with it. It’s fabulous—we made like 26 blends, out of which there are four that I really, really enjoy. I have to secure this filler, I have to put it in pilones [piles of fermenting tobacco] for a year or two, so this is a project that will be out in 2024, 2025. So I took the Edge blend, I played with it and I replaced the Panamanian leaf with broadleaf. So this is a cigar in development. You have to plan far ahead.
Q: Broadleaf is not the most common filler. You mentioned Panamanian, also nontraditional. You came to the cigar business from another industry. How did that help or hurt?
A: I think you have to look at it from both sides. The benefit from coming from an historic family that has been in the business for generations is you have a legacy and it’s easy to get the trust of the consumer. Someone who is an outsider like myself, who is from Indian descent, who happens to be an attorney, nobody gives you credence for really having expertise in making cigars. That’s the negative side of it. The plus side of it is I’m not tied to or bound by principles that were passed down for generations. I had the capability to visit all the factories, see and pick up all the good traits. I had the opportunity to pick and choose and hone those skills and put them into practice. When we started using those diverse tobaccos, during the boom time certain people were just buying tobacco from all over and just substituting it because they needed tobacco. And these are tobaccos that traditionally people would not use in blends. Well, guess what, some of these tobaccos are pretty good.
Q: I think the average cigar smoker doesn’t realize the difficulty in securing tobaccos that you need to make cigars—and you make a lot of cigars.
A: When I started, the biggest challenge was getting the trust to get good, consistent tobacco, and one of the reasons I partnered with the Plasencia family is they’re one of the biggest growers of Cuban-seed tobacco in the world. The challenge then was people were beating down the door to get tobacco. I was the small guy—and they were coming down buying semis full of tobacco. Luckily, I was blessed enough that they took a chance on me. I said, I don’t have the money right now to buy $5 million worth of tobacco or $9 million worth of tobacco, but I certainly want that tobacco and I want it aged. And they looked at me like I was nuts. But they saw that I was so determined and so driven to build a brand. It was a struggle at first to implement these strict quality control standards I wanted, but it was instant credibility. It’s been a win/win for both of us.
Q: How many cigars do you make?
A: Our growth wasn’t instant. It was gradual over 26 years. We started making 100,000 cigars a year, and then slowly went to about 150,000, and then it went to 300, then it went to one [million], 1.5, two, three. It was a gradual growth. This year [2021] I think we’re going to probably sell anywhere from 28 to 30 million cigars. It’s a process that takes time. We have people watching every single leaf of every single blend. We stop production if the materials aren’t ready. And it’s planned and forecast. At any one time we’re sitting at $25 to $30 million inventory of just raw materials.
Q: Raw materials—not cigars—just tobacco?
A: Just tobacco. You can’t make chicken salad out of chicken shit. You have to have those raw materials to have those brands. Every year we leave two to three million cigars that we do not ship, because we just don’t have the raw materials to make them. And that’s been going on for at least 10 years.
Q: You’re saying you could sell considerably more.
A: We just don’t have the raw materials. And now, during Covid, the biggest problem is labor. In six months, we lost almost 36 people who are trying to migrate to the United States. It’s happening to all the factories.
Q: In addition to having trouble getting enough tobacco, you are now also having trouble filling seats?
A: Yes, there’s a big problem with people fleeing to the United States. They think it’s very easy to cross the border. I’ve talked to all of my fellow cigarmakers—they are losing rollers, bunchers. That’s been a big challenge. You feel the pain more on the rolling side. Certainly, when you invest all of this time training these rollers. Between 2020 and 2021, I think we actually trained 450 different people. Out of which we probably kept about 70 or 80.
Q: These are problems that are starting to sound a little bit like the cigar boom in the ’90s, which is of course when you entered the business. Looking at imports, we’re seeing numbers reminiscent of the cigar boom. Cigar sales are going up. [Premium cigar imports for 2021 were 461 million cigars; the last time they exceeded 400 million was in 1997, the final year of the cigar boom.] Are we in another cigar boom now?
A: We are absolutely in another cigar boom. In the ’90s we had hundreds and hundreds of people trying to launch their own brands. I think this boom is a little bit different. You have a younger generation, you have females, I think this is going to be a more sustainable boom. Certainly, Covid had a lot to do with it, as people had the time to enjoy cigars at home. I think this is unique and different.
Q: Covid at first seemed like it would hurt the business. Factories had to close, you certainly had shops that were shut down, at least early on in some parts of the country. Then all of a sudden people were smoking.
A: When Covid hit, we were all scared. We thought we were going to have a terrible year. We thought this industry would be paralyzed—but in fact, it was the opposite. The retail shops were shut down, lounges were shut down, our factories were shut down for months. Luckily, I always believed in stocking and carrying a lot of inventory, so we had almost a year and a half, two years of inventory. I don’t like to sell from an empty wagon. Everything we thought Covid would bring, the exact opposite has happened.
Q: How did your production process change during the worst of Covid?
A: We were very concerned about the supply chain. We thought we wouldn’t be able to fill up containers, we wouldn’t have truckers. It was a challenge at the beginning. I think we were closed in Honduras for three months, in Nicaragua for about two and a half, three months. We shut down our private-label program, making cigars for other people, retailers, catalogs. We focused on our core brands. The supply chain is still a problem. You don’t think about it, but little things like cigar bands, the ink, the paper, for example, on the White Label, we were supposed to get our bands in early June [of 2021], we just got them in November. We have containers from China, they are four months behind, we were paying $3,500 a container, the last two containers we paid $24,000 per container. You’re looking at escalating costs throughout the industry, and there’s just a shortage of everything you can imagine.
Q: So Rocky Patel White Label, a cigar that was supposed to be out in June ends up coming out . . .
A: In November. Remember, these projects have been planned out two years in advance. In the early years, we weren’t so organized, and you could understand when things were delayed two or three months. But now we take pride in being organized and thorough and forecasting. Unfortunately, now, due to Covid, all that’s gone out the window.
Q: Imports are up. Cigars are selling at robust numbers. Some would question is it people loading up, in anticipation of future problems, or are people really selling that many more cigars?
A: Cigars are selling through at high levels. Talking to our retailers, talking to catalog companies. It’s a combination of people having more time and new smokers, a younger generation. I think people are enjoying the finer things in life, and I think cigars happen to be one of them.
Q: What do you think happens at the end of this pandemic? Do you think there will be a pullback? Or is this sustainable?
A: I don’t think you will see a drastic pullback, like you saw in the ’90s, when overnight basically the boom ended. The phenomenon is different now. It’s a bigger cross-section of the culture that smokes cigars. The age dynamic is different, the gender dynamic is different, the race dynamic is different. And this boom is not just for the United States. We are in 90 different countries. This boom is across the world. The boom that we had in the ’90s was more in the U.S. This is different now. I think this is a new phenomenon that’s going to last a little longer. Also, most good retailers have added lounges to their stores. Many have a full bar or beer and wine. Ten, 11 years ago I opened the first Burn in Naples. I don’t look at Burn as a cigar lounge. I look at Burn as a fun lounge where you have the opportunity to smoke a cigar.
Q: What does Burn mean to you?
A: Every time you go into a Burn, it’s a different experience. Each one is designed completely differently. We wanted to go into these middle tier cities and be the big fish, being the coolest lounge in that city. People who never smoke cigars come in and try a cigar. It’s bringing new customers into the market, so we take a lot of pride in that. Of course, we get a lot of market research, because we carry other companies’ products besides our own. We see the age dynamic, we get to do events, and introduce new products, and it also helps for brand building. We’re a fun, dynamic, hip company.
Q: You have five Burns now. [In Naples, Pittsburgh, Atlanta, Oklahoma City and Indianapolis.] Do you want more?
A: Yeah, I’d like to do Houston, Dallas and Nashville, and then I’m probably done.
Q: What’s the split of the company? You sell cigars, you have Burn, is it a noticeable part of the revenue stream?
A: So Burn takes up more time [laughs] just because you’re dealing with waiters and waitresses and staffing the humidor and security, there are a lot of moving parts to Burn. It’s not an easy business. There’s a lot of work that goes into Burn. It makes up 15 percent of our revenue.
Q: What percent of your cigar sales come from outside the United States?
A: I would say, it’s still less than five percent. We have a lot of room for growth.
Q: You got your start making cigars in Honduras via the Plasencia factory. You later formed your own factory in Nicaragua called Tavicusa. You showed me some plans for an even grander version of that factory—tell me what that means for your brand now and in the future.
A: When we started with the factory in Nicaragua, we wanted to have this little boutique factory, we wanted to make sure we started farming a lot of tobacco in Nicaragua, and slowly start launching some brands. We decided to use the old, traditional Cuban way, how cigars are bunched, made in a rolero fashion, not the accordion bunch we use in Honduras. We used two binders, we triple cap the cigars, our fermentation is a little different. So we just started launching some brands that had richer, distinct characteristics. A little more full-flavored, but at the same time very balanced. We’ve been making about 13,000 cigars a day there, and the demand for those cigars has risen. Unfortunately, we’re limited in space as to how many cigars we can make, so we’ve decided to build a factory there. We have blueprints ready for a 450,000-square-foot factory. The factory floor itself will be 90,000 square feet, where the gallery is. We’re spread amongst six or seven buildings now in Estelí and we want to bring it all together under one roof, where we actually have the pilones and we have the sorting and the fermentation and everything else. Our goal is to take that factory and slowly build up on the demand of the brands in Nicaragua. Certainly, we’re going to keep making cigars in Honduras. We have a very good relationship with the Plasencia family, the brands do very, very well. One of the main reasons we’re in [both] Honduras and Nicaragua, in Central America the political situation is so unstable. There could be a problem in Honduras or a problem in Nicaragua and we could shift our focus. At least the supply chain won’t be completely cut off. We’re cognizant that things can change. These are things that are beyond our control, so we wanted to diversify and keep our feet on both sides of the border. We’re growing a lot of tobacco in Nicaragua, we’re planning on growing in Jamastran [Honduras]. We’re walking before we run—but we’ve been walking very fast.
Q: When you started this business, did you ever think you would sell nearly 30 million cigars in a year and be sold in close to 100 countries?
A: No, my main goal was to be recognized by my peers as a cigarmaker, only because I was not born into a cigar family, I didn’t come from a cigar family. I really believe that when I started that 99.9 percent of people never thought I’d make it in the industry. And that’s what drove me every morning when I got out of bed. Everyone asked me why don’t you take your foot off the gas? And it was fear of failure. I still get nightmares that I never made it in business. That’s why I never let off the gas. That’s what drives me every day. I want to make sure this is a sustainable brand.
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