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uct makes all the difference here,” he says. He guessti-
mates that if he tried to produce them today—meaning
if they weren’t grandfathered products—“the lab costs
[alone] would be around $7.5 million for testing.”
While these predicate products are deemed safe, Pa-
dilla expects that 40-50 percent of the industry’s cigars
will be gone, including, of course, some Padilla cigars
that are not grandfathered in.
“I think the key now is to try to get as educated as
possible as to what’s coming,” he says. “There are no
stupid questions and there are no limits on questions.
The first thing I did when we heard about the deeming
regulations was spend $4,000 on a three-hour conver-
sation with an attorney, and it really opened my eyes.”
With a company headquartered in Florida, Padilla
compares what he sees coming to the very scary weather
patterns that sometimes hit the Sunshine State. “I live
in Miami, and you've got to prepare for the hurricane,”
he tells TBI. “You watch the tracking, you listen to the
probability and you start going to Home Depot at least
five days before. People who go at the last minute have
no experience, they don’t realize that there will be noth-
ing left at that point. When that hurricane hits our in-
dustry in three years, there will be panic; it will be inter-
esting to see it in a sad way.”
Padilla is speaking not only about boutique cigar
manufacturers, but also the numerous mom- and-pop re-
tailers that sell a large majority of their cigars. “So many
of my retailers are optimistic, and that’s because some
are naïve and some are just ignorant,” he says candidly.
“They are small business owners who really don’t know
what’s going on. They’re not asking the right questions;
they’re not asking anything.”
With 14 rocky years under his boutique cigar belt, Pa-
dilla has some additional points of industry wisdom and
vision he shared with Tobacco Business International:
Cigars are still a craft business. It’s also a ro-
mantic business, says Padilla. “A lot of people pour a lot
of heart and soul into it, and even if the government
doesn’t care, it’s still a business run with a lot of pas-
sion. The government can’t take that away if we don’t
let them.”
Forget the new—focus on consistency. The
key to the romance of the industry will be to transfer the
passion for newness to one of consistency, says Padilla.
“I don’t like to hear that it’s not going to be exciting
anymore. Look, ultimately, cigars are about consistency.
Unlike wine, which has this vintage or that, we don’t
specify the year because we try to make a certain cigar
consistent forever, and even though it’s very challeng-
ing, with a tremendous amount of work going into it,
that will be the name of the game. Consistency is the
foundation of what we try to do and that’s exciting in
its own way.”
Limited e ditions will undoubtedly go away under the
new regulations, and Padilla is fine with that as a mea-
sure of discipline. The way he sees it, the oversaturated
industry got a little lazy with limited editions—manu-
facturers, retailers and even consumers. “I would go into
a cigar store with my father in the ’80s in Princeton,
N ew Jersey, where we were living at the time, and he
would walk in, get his cigar, and move on. Now it seems
like we’re all bored with our lives and looking for that
‘new fix.’ Cigars are an accompaniment to life; they’re
not your whole purpose in life. And retailers need to sell
cigars, not a lifestyle. I don’t buy all that. We need to get
back to consistency.”
Streamlining is inevitable. “If you ask Jonathan
Drew why he sold his popular cigar brand, it really comes
down to three letters—F, D, A,” says Padilla. “There are
some companies like Drew Estate that saw the handwrit-
ing on the wall three years ago. Nobody was really talking
about it then, but it was out there. ‟I think we’re going
to see consolidation and a lot more streamlining. Cigar
prices might go up a bit, and this will shrink the industry,
but it will be a more professional one.”
He also recognizes that the weeding out will be a nec-
essary industry evil because “we’re extremely saturated
right now.”
Padilla Cigar Company itself had the opportunity to
be purchased in 2009; the two brothers talked and decid-
ed to roll the dice, believing the family name and eight
grandfathered products would prove to be beneficial.
The next incarnation is now. Padilla posits that
the cigar industry is on the verge of its next incarnation.
“It will become apparent that those that want to be in
this industry will get serious.”
This will have a strong (negative) impact on big online
retailers, he adds. “They’re going to have to get rid of a
lot of their inventory because of warning label regula-
tions. It’s not going to be worth it to take apart all their
cigar inventory, they’re going to have to liquidate.”
It’s going to be a great time for the cigar consumer, he
continues, but not so great for cigar brands.
Nevertheless, “it will be a totally different industry in
a few years, and I plan to be around,” Padilla states on
the record. “I’ve been through worse—namely, SCHIP
followed by the Great Recession. So this is a bureaucrat-
ic slowdown, but not the end of cigars.” TBI
I think we’re
going to see
consolidation
and a lot more
streamlining.
Cigar prices
might go up a
bit, and this
will shrink
the industry,
but it will be a
more profes-
sional one.
CIGAR SENSE
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