CCP 063 | Gurkha Cellar Reserve

Aside from having cigars that’s great with Bourbon and Scotch in the evening, Gurkha cellar reserve cigars have a unique consistency that is great in the morning with a cup of coffee. Gurkha has been working hard on its Brick and Mortar cigar line which resulted to the discontinuation of the non perfecto shapes. Along with these updates come the company’s involvement with local cigar state associations that stretches from Atlanta to Nashville. Learn about the new rules from the FDA and how medium sized companies and shops can go forward with it.

Listen to the podcast here:

Ken from Gurkha | Gurkha Cellar Reserve 21 | Atlanta Cigar Spots | Cigar Cafe Podcast

It’s been a while since we’ve had a guest on the show. Ken from Gurkha is hanging out with us. How are you doing?

I’m doing good. Gurkha Cigars is one of your better customers in Birmingham. We’ve got a lot of great people that love our brand. I’m thankful that you’re letting me join you on the radio.

I feel like I haven’t seen you since Vegas.

I try to avoid Birmingham. I have been here for this. We haven’t seen each other in a little bit. The last time I was in town I graced by Harris’ father. I got to see him in two different stores as I walked in which is nice. Great guy, great people, good family. If you haven’t been to Cigars & More in Birmingham, you’re missing out on the best shops. This shop, you’ve got Gary as your front house manager. Megan, she’s got great personality. For those of you who haven’t been here and haven’t seen the new bar, you can come out and check the bar.

I got to work at the bar a couple of times.

You can always call me. While I’m not a licensed mixologist, I do try to be one at home and I know how to pour bourbon and I know how to pour a beer.

That’s basically what I told the guys. If I wasn’t behind the bar, I would still be pouring bourbon and ice at the house. One cube and then you add wine from cedar oak cask and we’re smoking Gurkha’s Cellar Reserve 21 Year. They go really well together.

Which size is this? Is this the perfecto or gordo?

We call it solara. It’s a 5×58. All of the seller reserves are now done in a perfecto shape. We had two that were open-ended in the beginning, the Churchill Prisoner and the Kraken’s 6×60. We found the flavors of those changed along the way from first to third cigar. Cigars have consistent flavor all the way through in all those sizes. Solara is our number one best-selling size and then the 6×58 which is the Hedonism size for the Cellar Reserves.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: With Cellar Reserve line, the flavor profiles across the board are the same in level.

That is pretty unique because a lot of the cigar makers tend to blend their cigars for an exclusive size and then make the others as they always do. You are straight blendingfor Perfecto and that’s great.

There are cigars that you want the cigar to have different flavor. A lot of companies out there have a barber pole of some type. We’ve only done one, it’s in our Trinity 3-Pack, and that’s the only place you’re going to find it. We like to have something that looks more consistent. The Cellar Reserve line, whether you’re smoking the 12- year Nicaragua, the15 Maduro, the 18 with the Corojo or the 21 which has the Connecticut shade wrap, the flavor profiles across the board are the same in level. Whether you like the original, the 15 or the 21 or the 12, as a personal reference, you’ll find everybody’s got one preference.

It’s a nice easy medium body. This is the first cigar I’m having and I couldn’t drink this with my morning cup of coffee. I could hit it in the afternoon with a glass of bourbon or scotch.

I’ll just go through the flavor profiles. For the structure, you’ve got a 21-year old Dominican filler, you’ve got Dominican and Nicaraguan in the binder, and you’ve got the Connecticut shade wrapper. It’sa great morning cigar. I just had it with a cup of coffee that Gary and Harris offered me. For the first cigar of the day, you can’t beat it. I do like though the Limitada and Maduro in the evening with my bourbon or scotch or in your case at 2 PM. This is a great product and we’re thankful. We have a pretty extensive line of brick and mortar only. This is the first line of brick and mortar only. The other ones that Harris have which are doing really well in the world challenge, the Connecticut Vanilla on the cigar that they can fill. The Heritage and Heritage Maduro which is unique. The Heritage itself is in Ecuadorian Habano wrap. It’s got Dominican and Pennsylvanian Dutch in the filler and Nicaraguan in the binder. The Pennsylvania has some spice and smaller wrapper. It’s a smaller leaf so it has a lot of flavor and a lot of punch. We did a great job manufacturing that product. Harris has, for those people that are on the lighter side, we’ve got the rum, the bourbon and the cognac.

Sean, our producer, he’s about to move to Amish country in Pennsylvania.

He’s going to have some free-range chickens and some tobacco fields in his backyard.

Do you think his beard is going to thicken up a little bit?

He’s trying to commit to a life growing chickens. He kept saying that.

Did you say that you can do that in Mountain Brook? That it’s not specifically promoting?

There is a big article about how you can’t. I’m in the county. You can do anything in the county. There are no rules.

I’m in Marietta County or Cobb County. Two houses outside of Marietta City limits. My next-door neighbor, she just got a horse.

She just flung her nose at the other next door neighbor.

Is it a neighborhood?

This is an old neighborhood from 1960s.

She has a horse.

She has a six-foot fence and put a stable, stall or a barn in her backyard. I was thinking about getting a couple of goats and a couple of chickens in the backyard.

The chicken laid eggs.

The goats aren’t too bad either.

You get them to cut the grass.

The goat though can cut your grass.

Who’s going to clean up after the chicken?

I lived in Fayetteville, Arkansas for a little bit and they’ve got chicken coop store because Perdue has big facility there. Those farmers with chicken coops add a little bit. Thank God they aren’t because they make an aroma.

Fayetteville, Arkansas is one of those places on the map that is deceptively far from here, especially now that we’ve got that direct shop to Memphis on I-22 now. I’ve got some family that live here. You make a little off and Fayetteville is still far.

You’re talking to a guy who travels a lot. For me, I’m going, “All right.” A couple more Matco gas stations away. You’re right. It seems like you’d want to make a quick flight. That is the nice thing about it. They do quick flights in and out. In Birmingham, you are lucky because you’ve got a great airport. Fayetteville airport is hysterical because when you fly in, there are only four or five terminals. All these Fortune 500 companies there and then the second and third tier people there. It’s countrified on one side and then for the other people are purely business-oriented. You are lucky that your tobacco tax here is fairly reasonable. Their tobacco tax is incredibly high, 60%. Just the last year, they got a 25% cap. Now there are twelve cigar stores that are true tobacconist in Arkansas and they’re doing really well.

That’s a big deal. You can’t survive on 65%.

Especially when you’re right next to Memphis and get it at a lower price. That’s the same thing with any state that has high taxes and they’re surrounded by lower taxes. You have one of the lowest in the country.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: If you’re a store owner, make your stores aware and keep your stores active in processing whatever needs to happen to keep the taxes down.

A nickel for $0.60, $0.40.

On top of that, there’s an active group, the Alabama Tobacco Association. Harris is on the board. Are you the president, Harris?

No. We don’t officially have a president. It’s more of a board.

It’s one of those active groups who stayed off two increases in tobacco taxes for your customers.

Some smoking bans and other things.

That’s key. The world is asking for your support for a consumer base that is unaware of what’s going on. You can’t fix theproblem. Here, the stores are active. The consumers want to get involved.

We’ve been very fortunate that probably the majority of the cigar shops in Alabama have gotten involved. Still a few out there that haven’t.

If there’s one or two of you that aren’t involved, you shouldget involved because these other stores are working for you as well as for yourconsumers. That’s the key, working together. I know in Atlanta, there’s an overabundance of tobacco shops on top of each other. The same thing in Tennessee. They can’t seem to get together on a regular basis to work together. They have associations but they’re not truly active as a group. It would be nice to see that same profile happening here if that happens there.

Did the tax increase go through in Tennessee?

Not yet. With the change in all of the politicians, that really did go by the wayside. Paul who runs Savoy Cigars is the current president of the association, though it’s not really active. If you’re a consumer, get to your stores and find out what’s going on. If you’re a store owner, make your stores aware and keep your stores active in processing whatever needs to happen to keep the taxes down. That’s our biggest challenge.

If you’re looking at the state of Georgia, they’ve lifted 27% tobacco tax. If they were able to get a cap like Arkansas, that would be a huge deal.

We’ve got to fight off twice towards increase. If they get a dozen owners of shops, we have five senators tobacco bill but unfortunately, the last time it went through, you’ll get tax through a different bill. I killed it. There are people out there who are fighting to keep one of the longest production processes which are a basic cigar out of the hands of the people that just want to relax and enjoy for now. That’s a shame because cigar shops aren’t a place that is out there focused on the children. They’re a place for people to come who are older and more mature. They sit down. They smoke their cigars. They take it easy for a little bit. Doctors have proven that they lower your blood pressure by seven or eight when you inhale it in semi-regular basis. Just like a glass of wine, it slows you down and gets your heart rate normalized. It’s not a place where, in most cases, you’re going to hit on women or pick up women like a downtown bar scene. It’s a place to draw, relax, do business and slow down and unwind. That’s always a good sign. I’m very lucky and very blessed to be in this industry. I’m also happy that I could be involved with stores like Harris’, which is a second generation and a good, focused group of consumers and great owner. We have that all through the states of Georgia, Tennessee, Kentucky and Alabama which is the territory. Gurkha loves to take care of consumers and take care of the military. The history of Gurkha is Gurkha warriors in Malta were appreciative that all of that comes back. As a matter of fact, they do know back down in both or one of the other shops, you can go and find cigars which is a military base community. The last time I did an event down there, the camp commander was a Major General came in and gave me a challenge form. I’ve got that with me in my car in case he asks if I still have it. I am bringing that with me. Don’t bring out your challenge form because I’ll be buying in New York.

Talking about retail and solving your territory, they’ve got a couple of new shops in the house. Cigar City Club just has opened up. Cutters opened up a new lounge in your area.

A second lounge but it’s on Wade Green two miles away from the original shop in Alpharetta.

Are they moving over to that?

No, they’re just opening a second store.

Lance has been talking about it all over social media.

The Cigaros of Georgia, which is based in College Park which is a huge cigar bar. They procured a second spot and bought a piece of property. It looks like they’re planning to open up and having a free market. Rocky Patel has been negotiating in Auburn by the new Atlanta Auburn Stadium, in that entertainment section.

That’s huge. It’s going to be up 1,000 square feet. All these stores are getting bigger like Cigar City Club, Julius is opening up a second location. It’s Cigar City Sports. It’s a little different feel, it’s a more sports bar feels with Buffalo Wild cigars. It’s still going to have cigars and it’s got private lounge. It’s 5,000 square feet. It’s huge. It’s got a 1,000-squarefoot humidor. It’s unbelievably big. It’s deceptive because the front like your store in Birmingham, it’s about the same frontage but then it goes back into the left. It’s a huge store which they have some in-store retails and it’s going to be serving food with that sports bar, high-quality food.

Like an international club or something like that?

Definitely more high-end. They’ve maintained Cigar City Club next door, which is high end.

They’ll be next door to each other?

There’s a Cigar City Club and then there’s a building next door. It has a Mexican restaurant. There used to be a lamp shop. They took over the whole lamp shop. There’s plenty of food to eat there and a lot of Martini drink. Inside and outside, there’s plenty of parking so that’s cool. There are rumors of another shop on Wade Green, Scottish tobacco, the 617 Club along with Manny who used to be in La Flor Dominicana. He’s now managing that Scottish shop. They’ve been building out a 5,000-square foot store. They still have their traditional shops. Tobacco World and each one of these. They’ve got large humidors. The cigars’ blend is phenomenal. It’s a great place. One of the people that has been out of the industry for two years is coming back, the guy who owns The Leaf in Midtown. He has a nice shop. He’s procured a city block in. He’s building a cigar bar on one end of the bar lounge. There’s literally five bars all in one space, three levels.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: Gurkha loves to take care of consumers and take care of the military.

What are the laws for cigar bars in City of Atlanta? Are there any restrictions on that? I know around here, most of the cities have restrictions if you’re at bar, you can’t smoke around them.

You must serve food. Most people, I can’t tell you the exact percentage but it’s somewhere between 25% and 35% of their revenue. You’re not allowed to have anybody under the age of eighteen or nineteen, I forget which it is, allowed in shops. I’ve been in this industry since 1982. I’ve seen the industry morph and change over and over again from The Original Tinder Boxes and Churchills where they had cabinets lying around outside of the store then built into malls so dad would go and grab his cigars.

No lounge or anything?

No lounge. Free standing stores and kiosks in location they have in Vegas, in all the casinos. Harris has built here in Birmingham the free-standing cigar stores now, a cigar store with a small bar, so that you can maintain and keep the laws where they’re allowing him to bring in alcohol as an owner but not as a consumer and maintaining that proper process.

It seems like around the country the trend is neither full-blown cigar bar or like what we’re doing in cigar shop with a small bar. It seems like there’s so many people in Alabama that have known that and the rest in the country in the last few years.

I was up in Nashville. You’ve got three new stores in Nashville. You’ve got the BLEND which is a Davidoff Lounge which is basically small portion food. They got cheese on platters. They got small sandwiches and small salads. But then they’ve got their bar, you’ve got Primings and great guys off of 4th Avenue.

Everything’s moved to them. They do some of the coolest bar drinks I’ve ever seen. They smoke some of their alcohol. You have smokers bringing in the idea of a smoke shop. They’ve got some great club food as well but high end. They’ve got a private lounge and a public lounge. It’s more of a relaxation. You’ve got a Casa de Montecristo which has plenty of stores around the country. I met the manager, John, great guy.

Are they open yet?

The humidor’s full. The bar is finished. Everything’s built. The bar is getting its liquor. They were supposed to have a soft opening. When I was up there, they did not do their soft opening because they ran into something with the liquor ban and liquor license. Definitely soon, they’re getting done on processes. They are good people. One of my favorite spots up there is in Franklin, in Cool Springs, it’s Crown Cigars. Austin, he was an employee some of these too and has converted it into Crown Cigars bar and lounge. He’s got that. It’s really a lot of fun. Good stores, great people. It’s much like here. One of the keys is you got to feel comfortable. It’s got to be a great setting. You’ve got to feel like you’re at home and yet you’re in somebody’s business, and you get that.

I was hanging out with a couple of the guys that really hang out in all of the stores. We got to talking about how the crowd in most of your shops tends to be largely the same group of guys. In Buffalo to Trussville, one day to Patton Creek and here and another. Vitola has its own crowd.

You can see some of these guys are over there too.

Yeah, but the rest of them, it’s the same guys that are here, some of them five, six days a week even. How do I get that guy’s job?

It’s interesting how, over the years, to me, the crowd changes and we have some people that come and go, and you get new people, big crowd and certain guys for a while, and it just totally changes. It’s interesting how they change.

Gurkha is doing this scavenger’s hunt in Atlanta where you start on one store and go to a bunch of different stores. You buy two cigars, you go on Instagram and you do a snapshot of the two cigars and you can swag it at every location or whatever.I started sending out to all the people that I’ve met. I didn’t realize how many true cigar and wine stores there are that I’ve become friends with. Thank you all for associating with me and Gurkha. I sent one to Chef Tim and he sent me back a, “Sounds like a lot of fun but I’ve moved to Miami.” You never realize where your consumers go, one day they kick it up and they go, and you see them somewhere else. I met this great guy in Atlanta. His name was Eddie. He’s a Southern gentleman. I’m at Primings in Nashville. All of a sudden, I see him and I go, “Eddie, what are you doing here? He goes, “I moved to Nashville because of my daughter and my grandkids.” I go, “That’s awesome.” Sometimes you get to see them in other markets. Sometimes you lose touch. In general, they’re still in the cigar shops. Sometimes it changes. One of the cool things that I wish we could do this is keep tabs of where everybody’s going so we can keep that friendship going. I hate to lose everybody. Facebook is a good idea.

I was reading interesting sets in any city, big or small, 5% or 10% of the population changes every year. People moving, dying. It’s a huge amount of people coming in and out.

What’s interesting about that, if we go back to who have been in this business for such a long time, it used to not be that way. People live in a community forever. Now, you go where the job is.

Lane is going to move to Florida.

What part of Florida do you go to?

Somewhere in the panhandle. Somewhere real close to beach. It’s not going to be this year or next year or anything like that. Basically, my wife one day will divorce me if I don’t move her to the beach. I’d like to be wherever the call is. Her mother is from Florida. Her mom lives here, but she’s grown a little bit of a beach bum. She has fostered the beach bum in me. I understand that one of these days, I will have to make a choice to either move to the beach or be single again. I suppose I will jump off a grenade with the beach.

Are you not a beach guy?

No. I met her when I was 26 and I had probably not been to the beach since I was nineteen or twenty at that point, not even the gulf shores. I may get daily emails from Zillow with houses and condos and a little bit of everything. It is deceptively affordable to live there. I can’t move to Elmwood for what I could pay to move to the beach.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: One of the keys is you’ve got to feel comfortable. It’s got to be a great setting.

If you’re thinking about going to Elmwood, I’d like to know that. I’ve got a realtor in a Panama City Beach.

Is he a cigar smoker?

No. He’s a great guy though. When I went down this last time to Sta. Rosa, I went looking at places with duplexes. I found a great duplex and I’m working on getting it. One side is rented, one side I get to have a month to month. I’m figuring, ”That’s just a great place to have the best of both worlds, a duplex where I could be there when I want to and have some guy pay for most of the mortgage. I’m all in.” Eventually, when I’m ready to retired, not that I’m ever going to retire from Gurkha, I’m hoping that’s clear. I’ve been in the company for eight years and I’m not planning on going anywhere, but that would be awesome.

There was a place that we found down there. It’s a two-bedroom, one-bath house but has a secondary building that’s basically a mother-in-law’s. It has its own little kitchen and has its own one bedroom and one bathroom. It was under $250,000. My buddy is a realtor down there. He’s a realtor in Alabama. He and his wife would mostly sit down there. He’s basically telling me. I feel like there’s going to be a cigar smoking ban or joke made as soon I say something. You can keep your mortgage under $400,000 down there but the mortgage is right themselves.

If you and I both have places that we could go temporarily, Harris should open up a shop so that he can have you there to pour the liquor and I can go there and work on weekends to sell cigars. You’ll always have somebody to cheat, eat and trust.

Last year in IPCPR, a conversation may have occurred.

There’s not much down there.

There are a few good stores.

They’re spread out. They’re really far apart.

I could think of two in Panama City that we can go to.

When we all go to PCB, let’s talk like it is. He’s a great customer of Gurkha’s. Peter has everything in stock.The other place that I’m probably most familiar with, because there’s this shop that’s on the beach where they’ve got some H Upmann and some Montecristo. There’s much but it’s fairly limited.

There’s also Florida Cigar & Tobacco also on that beach. It’s a little further east on either shop. They have some in-house dip cigars that they do. My wife is nuts about one of their rum dipped cigars. They call it Maharaja rum. She walked in and she’s like, “We must have that cigar on the shelf.” I walked back in the humidor and I was wandering around. I don’t remember what I got. I ended picking up a couple of cigars. I usually don’t when I’m down there. I usually just bring or buy what I have from here. I picked up a My Father or something else. I have Garcia & Garcia on the band because it’s $13 and then I realized it was just the number for Toro.

We’re going to make sure that you have one of our Gurkha Private Select rum-infused cigar so you can bring it home to your wife, so Mrs. Lane can smoke one of our cigars.

The rum-infused one is very nice. I sold a lot of it.

It’s a great cigar. It’s got great flavor. If you smoke the Connecticut wrap, you’re getting all the flavor of the rum. If you’re smoking the Maduro, you’re getting the rum on the backside and the tobacco on the front side. Same thing with the Bourbon, Hartfield & Co. bourbon, the only bourbon made in Bourbon County, Kentucky. Bourbon County’s a dry county. They are the only location to make bourbon in Bourbon County and they’re only yards to Trillium. Then we’ve got our cognac-infused cigars.

They fly off the shelves on Sundays.

Harris has the lower-priced version of the cognac, which is Louis XIII.

When are you getting the expensive one? I need a sample of that cigar.

Are they $800 each?

$1,250. By the way at PCB, Peter did sell two boxes of that thing. His consumers are your consumers. Anytime you want to bring a box in, Harris, wrap me the cigar.

$1,250 per cigar?

Yes, which is not the most expensive cigar that we sell. The most expensive is the Maharaja, which has only ten boxes ever made. That’s a limited edition, eighteen-year aged tobacco. Individually coffined and in a locked seal box. The retail of those are $40,000 a box.

How many in the box?

Ten, which means that it’s $4,000 a cigar. Somebody out there that smokes every level, whether it’s $3 Gurkha Prize Fighter, which is a Cuban sandwich in a nice stick, all the way up to the Maharaja and every level in between, our brand and all other varies.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: There are all levels of economics in every industry. We are in a consumable product.

For a long time, we didn’t have any more expensive cigars. We got some Davidoffs here that are $80 or $100 a cigar. We’ve had a hard time keeping them in. We can’t get anymore now. They’re all sold and I’m just blown away at how many people are like, “Yeah, I’ll get one,” and they’re a great sell.

I don’t smoke them often but there are absolutely $40 and $60 smokes that I’ll sit back and if it’s a birthday or some special occasion, I’d be like, “Okay.”

I was in a shop and we’re talking to the owner about bringing in His Majesty’s Reserve, the Louis XIII-infused cigar. He’s like, “I don’t think I have a customer base for it,” as opposed to what you say, “I’ll try.”As I was sitting there, a guy comes in in a tuxedo and asked for five. He says, “I don’t have any, but I’ve got these other cigars, Opus X and things like that that are higher-priced, high-quality cigars.” The guy goes, “No. I’m a best man at a wedding. This is what the guy wants. It’swhat he asked me to bring for his wedding gift.” He could’ve sold five.

He just lost around $6,000.

I’ve seen this exact phenomenon in Patton Creek. A guy comes in and he hits the top shelf case, starts looking at Padron 1964, talked to his buddy who has no idea what he’s about to smoke and starts talking up this Padron. I sneaked over there and I said, “Do you have the hammer?” “What’s the hammer?” “We’ve got the 50th anniversary of that cigar over here, individually numbered.” I was like, “They are more expensive.” He went from going and buying $18, $20 Padron 1964s to buying two $60 50th Anniversary.

It doesn’t matter what the industry you’re for. If a guy who was just here, one of the very well-known, respected rep for a different company and he was driving a Porsche and I drive a very comfortable car. There are all levels of economics in every industry. We are in a consumable product. It’s clearly not an inexpensive product though there are inexpensive cigars in every place for it, whether you’re a janitor or a police officer or an attorney. There are those people who just collect. I was in a littlest shop you can imagine buta great little shop. I’m on my way over here to Birmingham, brought twelve boxes of cigars. As I walked in, there was this great truck, huge truck, out front with all these big tires on it. I walk in and there was this gentleman. It turns out he owns a farm. He’s not a lawyer, he’s not a doctor. He’s a farmer. On the counter, he had two boxes of Opus X and a box of Andre Garcias. He was talking about his collection of cigars. He’s got a humidor built in at his farm. When his friends come over and they eat and they drink, he wants them to have the best of the best in everything; food, wine, and cigars. You just never know who the consumer’s going to be that’sgoing to pick up a few $100 boxes and walk out the door because he wants to give the best.

A lot of times, it’s not who you think it would be.

I’m thankful that we have everybody across the country in all aspect enjoying tobacco.

I’d like to talk about how cigar smoking is an affordable luxury and everything. It doesn’t have to be. There really is something out there for everybody. That guy that I showed the more expensive 1964 to, I didn’t need to twist his arm. He was trying to impress his buddy and he did. He did exactly what he was there to do.

Ex-senator Bob Barr enjoyed it. When I first met him, I didn’t know who he was. I was sitting at a table in a cigar shop. He was at a table next to me. He asked me what I was smoking. I told him I was smoking a Black Dragon. He goes, “That’s my favorite cigar.” I took one out and handed it to him and I told him to enjoy the experience. He immediately said to me, “I want two boxes. Would you tell the owner of the shop to order them in for me and I’ll pick them up in two days?” When we talk about affordable luxury, here’s theguy. They’re $880 a box. Here’s a guy who just said, “I’ll take two.” To him, that’s an affordable luxury. He’s not buying a $4,000 box. He’s buying an $800 box. For me, I went into a shop and I saw some really old cigars that I love that are $5 a stick and so $100 a box. I was like, “Thank you,” and I walk out the door. I don’t have a problem anywhere from $80 a box to $250 every day as my every day cigar. There are great cigars in that market. Nicaraguan tobacco is at a peak. Ecuadorian tobacco is at a peak. We’ve got great people at our factory. We just bought a factory in Nicaragua.

Where in Nicaragua?

In Estelí, not only the merchants selling cigars but we control our own destiny by building the factory that makes our Nicaraguan tobacco and even Dominican Republic. We’ve got a long-term relationship and partnership with a farming family that has the facility, and they make that 95% of the factory is all there. In essence, it’s really a Gurkha factory now. We’re controlling our destiny. We’ve grown. Thank you to all the consumers out there that buy Gurkha cigars, whether they’re smoking the Ghost, the Red Witch, the Cellar Reserve line, the Royal Challenge. Last year, we almost sold about 8.5 million cigars.

You have a customer base that’s really passionate about your sticks. I have a friend who lives three or four miles further down away from here. We will have a poker night and Gurkha is all he’d smoke.

I’m thankful about that because in Patton Creek out the door, there are the Bourbon cigars, the Ghost, the Cellar Reserve on a regular basis. I’ve done many events there. We’ve had huge success with our events there. A shout-out to Ruben, thank you for smoking Gurkha cigars.

Ruben smokes your stuff and he smokes Rocky Patel. That’s about it.

I’ve met a couple of other gentlemen and I apologize but one is a loaner and he’s also a coach for a team. He gave me his watch last time when I was there. I was like, “Thank you for smoking Gurkha.” I can’t believe that the generosity from the consumers go that high and there’s that relationship. I appreciate that.

At the end of the day, this isn’t just about consumers and retailers. There’s a relationship going on. We get along great. We have a lot of fun. In the case of Harris and Cigars & More along with so many other stores like Belicoso at Birmingham, we do an event called the Ducks Unlimited where we raise money that’s charity oriented. I’ll be doing an event in Memphis at Sid’s Tobacco where the money goes to St. Jude’s Hospital. A humidor pipe shop in Huntsville, Chuck’s Wounded Warrior Event every year. 100% of the revenue, the gross sales, not net, goes to the Wounded Warriors Foundation. They fly them in. Harley Motorcycles do a motorcycle rally, bring these warriors around town and give 100%. The charity piece is there. You don’t get that in a lot of industries. I don’t know about you, Harris, but the last time I worked at ice cream stores, I haven’t seen a lot of the ice cream stores going out and raising a lot of money by selling ice creams.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: We control our own destiny by building the factory that makes our Nicaraguan tobacco and even Dominican Republic.

That is a unique thing about the cigar industry, all the fund raisers going on and money raised for all kinds of charities. You always have a lot of event’s going on, big ones and small ones all throughout the year. It’s a great thing.

We just had one at Patton Creek for a local homeless shelter at Jimmie Hale Mission.

I did one up in Nashville. Same thing, homeless charity house. We’re going to do help better with kids who don’t have a place to go. There are 150 guys who got on the General Jackson boat. One of my companies, the General Cigar and Drew Estates along with Gurkha, we all did that. We raised about $18,000.

We’re weeks until IPCPR. What are you expecting different this year from last year? We’ve got a stay of execution from the FDA for eighteen months. Do you have anything to holler?

I’m going to give you a few things but I’d really love to hear Harris’ side. From the manufacturing side, I talked to a lot of manufacturers. We’ll move IPCPR to different venue and different weekend. That’s going to be interesting in itself. With all the FDA rules that are put in place, we, as manufacturers, have to send information. We have to file with the FDA. There are all these rules about packaging. We’ve had people working on the packaging since that point. That expense hasn’t gone away. Those rules haven’t changed. While the people are currently changing, it’s going to be after IPCPR that those people in charge really do change. We’re all going forward with the rules that outline. You’ll see boxes have changed, marketing materials has changed.

That’s something that people forget. You aren’t in a rush. You are a company and you operate within a framework that you’re given. You are already beginning to alter course.

We have graphic designers to change the way that packaging has looked. We’ve hired marketing people to create new marketing pieces. All of our standardized marketing pieces haveto change. We’ve had expenses. We’ve had manufacturers creating new marketing pieces. All of that have gone into plus we’ve done all these paperwork. We literally had to hire new people to the office who literally just focus on doing the FDA paperwork to fly and supply them with the information. We’re talking documents with a portfolio as big as Gurkha’s, are hundreds of pages. If ever you looked at what the military needs for specs on any item, that’s how the FDA is expecting this information. The cigarette companies went through it when they want packaging changes. For the last three years, there’s only been one packaging approved for any company in the cigarette industry. Smaller companies, some of them have already shut down shop and gone away. Medium and larger companies that could afford it and this is the key. There’s expense that goes along with all this. They have been putting their money into the companies to get prepared. I’m assuming that companies like Altadis and General that are making and putting lounges out there and Rocky, seeing that there’s going to be direction change in retail. All these changes are affecting everything and cost as well. It’s obviously a different cost. We’ve had this packaging cost. We’ve had this manufacturing cost with all the paperwork. There are smaller companies that have gone by the wayside already, and worker carrying tobacco from farmers. The farmers no longer have these same quantities in sales. At the end of the day, they’ve got to make up the revenue somewhere. They’re either going to sell the tobacco to bigger companies if they can produce any tobacco or they’re going to say, “We’re going to hold these tobacco until next year and age it.” The price is going to go up. From manufacturing side, there are a lot of big differences. I’m glad you brought it up. I’d love to hear what Harris’ thoughts are.

 

Definitely, we’ll see prices going up across the board. We’ve already seen price increases sometimes multiple times already. There’s more of that coming as companies realize how much will it really cost to comply. Nobody really knows until you get into it, how many people you have to hire to do paperwork and how many attorneys, it’s just unknown.

The attorneys are very expensive. When you say that the tobacco piece increases, Gurkha didn’t have a price increase for two years until the FDA rulings changed. Much like the other big companies, we have the increase for the FDA tax. You saw that from General. You saw that from Altadis. You saw that from the other companies. We don’t know what tomorrow’s going to bring after all these changes occur.

For IPCPR, we’ll see fewer of the small companies there. It may be the ones that still are going to be around. I could see that it will be very expensive for them to even have a small booth, they can’t make that work. Big guys will be there no matter what. You hear the doomsday people saying, “This is going to be the last IPCPR.” I don’t think it will be the last one, but it might be the last one the way things have been for a while. It might change in the future.

I’m hoping that the retailers out there don’t miss an opportunity to go. All kinds of information at the IPCPR are about what’s going on with the FDA, about what the FDA is doing legally, what IPCPR is doing legally and how manufacturers are seeing the future. This is one of the most important IPCPRs. Don’t skip it. Please go. Please be a part of it even if it’s not something that you planned on. It’s so important that you participate and put your name on any information that you get a hold of.

CCP 063 | Gurkha Cellar Reserve

Gurkha Cellar Reserve: At the end of the day, this isn’t just about consumers and retailers. There’s a relationship going on.

That’s one of the big things that I recognized. It wasn’t just the manufacturer angle of FDA regulations but you’ve got the trade organizations. You got it from other retailers. Everyone was able to come together. There were opportunities to strategize that were not necessarily apparent. We got the keynote type talks where a lot of people attended. We’ve got some of the closed-door talks. They existed but they weren’t really talking about relationships and stuff. There were opportunities for people from all over the industry to sit down and talk about how they believe they were going to be better.

Go to IPCPR. Be a part of it. If you’re not part of it now and if you’re not a part of the CRA, all it takes is $25 a year and you get two cigars.

On top of that, the money goes back to the lobbyist to help support and protect you from tax changes or from law changes. With the group IPCPR, you can sign up and be a part of IPCPR as a retailer, as a vendor, as a wholesaler or a distributor. We need your support.

Ken,thanks for joining us.

I appreciate you letting me be a part of this,first time and hopefully not my last.

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About Ken Mansfield

CCP 061 | Gurkha Cellar ReserveIn 1887, at the height of the British rule, colonial soldiers began to make their own cigars from the local tobacco. The fondness of the British for these legendary Nepalese fighters inspired them to name their cigars ” Gurkhas.”

Steeped in legend and history, the Gurkha cigars, created more than a century ago has been reborn and today is one of the most famous brands of luxury cigars in the world. Having extraordinary quality and premium blends of tobacco, Gurkha is known for limited release and rare tobacco products with outstanding and artistically-oriented packaging.

Gurkha is also known as the ‘Rolls Royce’ of cigars and is enjoyed by many of the world’s elite including members of Royalty, Military, leading government officials, and celebrities.

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