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The Secrets Behind a Successful Cigar Business

Oscar BoruchinOscar Boruchin has lived the American Dream. He emigrated to Miami from Cuba to escape Castro's Communist regime. After a stint as a small-time cigar peddler, Oscar's persistence and patience allowed him to buy his own cigar store. But that was only the beginning. His passion for cigars and hard work led to a 20-year career at General Cigar Company. Eventually, he left General to re-enter the retail world, buying into Mike's Cigars in Miami. He quickly incorporated his knowledge of the cigar industry by developing other segments of the business. Today, Mike's Cigars is not only one of the top cigar retailers in the country, it is also the home of a very successful wholesale and mail-order business, and the producer of the celebrated Licenciados, 8-9-8 Collection, and Bauza brands. Oscar recently sat down with SMOKE to discuss cigars, the Cuban embargo, and the future.



SMOKE: When did the romance of cigars strike you?

BORUCHIN: It's funny, in Cuba I never participated in the cigar industry. But I started smoking cigars that cost 25 cents, and then H. Upmann #4 when I was 16 years old. I've loved cigars ever since. I got into the business much later. When I first came to the United States in 1961, I was driving a taxi. I concentrated on picking up Hispanic people, because I didn't speak English too well. One day, I was picking up a couple at the airport. When we arrived at their destination, their family wasn't there to pay for the fare. They didn't have any money, so they gave me a box of cigars, which I took to a tobacco shop in Miami Beach and sold for $10. It dawned on me that if I parked the taxi at the airport, and I bought cigars for $9, and then sold them for $10, I would make more money than I was driving a taxi.

SMOKE: What were you doing in Cuba, and why did you leave?

BORUCHIN: I got married when I was 24, and my father-in-law was big in the leather business. I went into that business with him for three years, until we lost the business in Cuba. Then I came to the U.S. I was 27, had a one-year old baby, and I never looked back.

SMOKE: Did you have any money when you arrived?

BORUCHIN: I had a couple thousand dollars. But my father and mother-in-law were sick. We had no insurance, and the money we had went to medical treatment. But we don't remember being unhappy We were young, we were looking at the future, and we were surviving. Little by little, we got ahead.

SMOKE: How did peddling turn into a life-long career?

BORUCHIN: After the business at the airport, I had a little cash, and I was selling some of my cigars in Miami to Zelick Tobacco, which was owned by an old friend from Cuba. He owed me a little money for cigars that he'd purchased, so he offered me one of the stores, which I took over.

SMOKE: Was your plan to go back to Cuba?

BORUCHIN: When we first arrived, we were thinking that Castro wouldn't be there for more than one or two years. However, after a couple years, we realized that we couldn't go back. We never thought of going back to Cuba after that.

SMOKE: What was the name of the store that you bought?

BORUCHIN: Hotel Pharmacy Tobacco Shop. It was a combination restaurant, drug store, and cigar store. I was strictly on the tobacco counter. There were no imports––the high-grades were Bering and Perfecto Garcia, and I sold them for a quarter.

SMOKE: Did you sell any premium cigars?

BORUCHIN: The only premium cigars at that time were Cuban, and the Cuban embargo had just started when we came over.

SMOKE: Was there a substantial number of U.S. handmade cigars?

BORUCHIN: Just Cuban cigars, which were available at a very high price for around a year after the embargo. They were legal because they came into the United States before the embargo.

SMOKE: So you started to work for General Cigar after you opened up your first store?

BORUCHIN: Earl Casten, a regional manager for General, called me and said, "You're a young guy. You don't deserve to be behind a counter 20 hours a day." He promised that if I came to work with General, did a good job, and worked hard, he would reward me. He offered me a job for $85 a week, including a car and insurance, and I jumped at it.

SMOKE: What did working at General teach you about cigars?

BORUCHIN: Everything I know, I learned from them, especially about sales and marketing. My mentor was Dave Burch. When I left General after 20 years, I was one of three sales managers for the whole United States.

SMOKE: What did you do when you left?

BORUCHIN: In 1982, I joined Mike Mersel at Mike's Cigars as an associate, with the intention of Mike retiring and selling me the store in two or three years. At 89, Mike is still around, though. He comes in every day.

SMOKE: And he started the store?

BORUCHIN: Yes, he started it in 1950 and has been in the business ever since. We got into wholesale when I came to the company

SMOKE: Did you open any more stores?

BORUCHIN: Just one store. Mike's philosophy was that you had to watch your store carefully, and we've maintained the same philosophy ever since.

SMOKE: Have you been in the same location?

BORUCHIN: No, we moved about five years ago. The old place was only 1,800 square feet. Business had grown so much that we decided to move to the building we're in now in Bay Harbor, where we have 17,000 square feet. Bay Harbor is the most affluent area in Florida, and the store is a block away from the Bay Harbor Shopping Mall, which is the most upscale mall in the world.

SMOKE: When did you get into manufacturing your own brands?

BORUCHIN: I knew that we needed to have certain brands besides H. Upmann and Macanudo, because we wouldn't make enough money just selling to keep growing. So I went to the Dominican Republic in 1985, and I contacted Manolo Quesada at MATASA, who started to make a bundle for us that, for the longest time, was our bread and butter.

SMOKE: Did he make any brand names for you?

BORUCHIN: Macanudo was the most popular cigar in America at the time, so I told Manolo that I wanted to make a cigar with a taste similar to a Macanudo, and that's when Licenciados was born. During the peak, we were selling over two million cigars a year. Today it's down to about 1.5 million.

Then we bought a little company in Miami that owned Bauza, made by Fuente. That must have been around '88 or '89, and we still sell the brand today. Of course, anything that Fuente makes is of great quality.

SMOKE: Are you introducing any new brands?

BORUCHIN: We own Flor del Cano, which is a very old Cuban brand. We will be coming out with a line of maybe four or five sizes, which are in the early stages at MATASA. We are also planning a couple of lines of bundles, because I think that they are going to be taking over that price range. We also own a couple of brands – King David and Puros San James – and we're working on a couple of lines of bundle cigars.

SMOKE: Do you get any cigars from Central America?

BORUCHIN: We buy cigars from Honduras and Nicaragua, but we'll continue to produce in the Dominican Republic.

SMOKE: How do you see the future of the cigar industry?

BORUCHIN: The future is going to be very healthy, but not [the volume] we've had in the last 6 or 7 years. There were so many things going wrong during the boom; so many bad cigars, so many people bilking the public.

SMOKE: What are your plans when the Cuban market opens up?

BORUCHIN: It's not fair to hurt the people that have invested in the Dominican Republic and Honduras, and they might be hurt if the opening of Cuban trade is not done in an orderly fashion. But, being in a free enterprise country, we'll do the best we can to benefit from it. The big companies should get together and talk about the investments they've already made.

SMOKE: Can Cuba meet demand right now?

BORUCHIN: Yes. Most of the production increase Cuba has had lately is coming from [demand in] the United States. I don't think the market outside the United States has grown so much.

SMOKE: Do you think the Dominican and Central American brands will survive when Cuba opens?

BORUCHIN: The strong brands will survive, especially if the opening of Cuba is well planned. The smaller brands might not be able to sustain enough volume to generate a profit.

SMOKE: Will the opening of Cuba damage the mystique of the Cuban cigar?

BORUCHIN: It's not a mystique – Cuban cigars are the best cigars in the world. It's not politics, it's geography. One area in Cuba – Pinar del Rio – produces tobacco that benefits from all the best conditions: rain, humidity, the chemical contents of the soil. There, you'll find a wonderful leaf that even other areas of Cuba can't match. The illegality of the product creates mystique.

SMOKE: Do you think cigar makers like Fuente and MATASA will open up factories in Cuba?

BORUCHIN: I think they will try to maintain both Cuban and Dominican brands in the market. They have to do it to continue, and they will make wonderful cigars, because the art of making cigars is much more advanced today outside Cuba than in Cuba itself. The manufacturing is much, much superior in the Dominican Republic.

SMOKE: How important are your wholesale and mail-order businesses?

BORUCHIN: At one time, wholesale was 80% of our business. Today it's practically neck-and-neck between mail order and wholesale. We have close to 140,000 consumers on our mailing list, and 6,000 stores.

SMOKE: What about the Internet?

BORUCHIN: We're just now reaching the Internet; we're going online this spring. I think it's a necessary evil. I'm not convinced that we can control the business, security-wise. A tremendous number of tobacco companies don't have any Internet business. We have the advantage of name recognition, so that when we go online, we're going to be as successful as the two or three really strong companies that are currently on the Internet.

SMOKE: Where do you see your company in 10 years?

BORUCHIN: With good planning, we'll continue to grow, hopefully, at a rate of five or ten percent a year. My son-in-law, Oded Ben-Arie, practically runs the operation today. I'm involved in buying, developing relationships in the industry, and marketing. We are 100% dedicated to the consumer. The consumer is critical, so we try to give them the best deals available, and the freshest merchandise. That's the way Mike's has been since 1950.

SMOKE: Will you expand outside the U.S.?

BORUCHIN: I will let Oded make that decision sometime in the future. I don't see myself getting involved with that. But for him, the sky is the limit.

SMOKE: Do you have a favorite cigar memory?

BORUCHIN: I used to travel in Georgia, selling White Owls for General. I remember going into a drug store and trying to sell White Owls to the druggist, and he told me he didn't sell "high-grade" cigars.

Reprint from: “Smoke” magazine, Spring 2000 issue

(All rights reserved to “Smoke” magazine)

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