GRANADA – Five years ago, two Canadian friends taking Spanish classes at Casa Xalteva decided to wander across the street during recess break to check out Doña Elba Cigars, a landmark family-run business credited with producing the world’s first organic cigars.
Cameron Heaps says he and his friend Markus Raty, both of Toronto, were by no means cigar aficionados at that time. But they recognized quality when they tasted it.
“We were recreational smokers; we had smoked cigars on golf courses before. But this product clearly stood out as world class,” Heaps said of his first Doña Elba cigar.
As the recess smoke breaks became more regular, the errant Spanish students became increasingly enamored with the cigars and Nicaraguan lore. Encouraged by the captive Canadian audience, Nicaraguan cigar master Silvio Reyes, owner of Doña Elba, took time to explain the different types and blends of tobacco, as well as the process of producing and rolling a world-class puro.
The smooth-tasting cigars from Doña Elba quickly became a hand-held emblem of everything Heaps and Raty loved about Granada – its rich culture, living history, rugged landscape and unique style – all rolled into one.
And that’s the experience they are now trying to replicate internationally with their company Mombacho Cigars of Nicaragua.
With backgrounds in international sales, marketing and manufacturing, Heaps and Raty decided to use their combined knowledge and resources to create a new high-end cigar company, with a taste of Nicaraguan intrigue.
After working with Doña Elba’s Reyes to develop a unique, five-leaf blend that they could market all their own, Mombacho took their new cigar back to Toronto to promote as a luxury product aimed at a discerning and image-conscious clientele.
“The idea was to take this product to a mature cigar market and put it in front of a mature cigar consumer at the high-end price point to see if it could compete,” Heaps said. “We have done blind tastings with some of the most successful Cuban brands of cigars. And the reaction from our customers is exactly what we discovered ourselves the first time we came across the cigars, ‘Wow, this is smooth!’”
Employing a direct-sales strategy and an aggressive promotional campaign, complete with “Mombachita” models, gangster outfits, and a 1947 Packard Super Clipper delivery car, Heaps and Raty have created an exclusive product image to go along with their Nicaraguan cigars.
In addition to hosting their own parties to promote and sell their product directly to high-end customers, Mombacho also helps cater other companies’ events to provide “a more memorable experience for their guests.”
And in some cases, Mombacho complements their catered events with other fine Nicaraguan products, such as Flor de Caña rum or Las Flores coffee.
“We are trying to create not just a Mombacho experience, but a premium Nicaragua experience. And it has been received very well,” Heaps said.
Mombacho is using the Nicaraguan name to create an image of excellence and reach an exclusive, high-end market in Canada.
“We promote the Nicaraguan association fairly aggressively because Nicaragua has earned a ton of respect in the [cigar] industry in recent years,” Heaps said.
While the Nicaraguan name is not normally associated with high-end exclusivity, Mombacho’s strategy has worked in Toronto. In 2010, the company’s first year of sales, Mombacho sold 10,000 hand-rolled Granada cigars, thanks greatly to high-end partner events with clients such as Porsche, Hennessey, Glenfiddich, the Toronto Raptors and the Toronto Maple Leafs.
Now Mombacho is setting its sights on a much larger and infinitely more challenging market: China.
From Canada to China
Mombacho’s partnerships with big Canadian clients have helped the company gain a name for itself in Toronto’s event-planning circles. But it’s also provided an important foot-in-the-door into China.
“Those brand partnerships have been very helpful getting into the Chinese market because they are very brand conscious over there, and that gets us a lot of respect,” Heaps said.
Though the Chinese market and culture are very different from that of Canada, Mombacho hopes to replicate its high-end event-catering model in Beijing and Shanghai, which have one of the fastest-growing luxury-lifestyle markets in the world.
“The Chinese are looking to the West and looking for new trends that they can take part in, cigars being one of them,” said Bryan Dodson, Mombacho’s director of global development.
Dodson, a former U.S. Peace Corps Volunteer from Rhode Island, has years of international sales and marketing experience in Russia and Eastern Europe before joining Mombacho two years ago to spearhead the company’s efforts into the Chinese market.
Though it has been a slow and methodical process over the past year, Dodson says they made great headway in 2010. At the end of last year, Mombacho formalized two partnerships with Chinese companies to help promote their brand and get their cigars into the hands of Chinese consumers.
Mombacho’s goal for 2011 is to more than double last year’s global sales total, from 20,000 to 25,000 cigars.
And if they can create serious demand in China, the growth potential is virtually limitless, Dodson says.
“In 2009, the Chinese spent $10 billion on luxury market items. And that number was predicted to have grown by 30 percent last year,” Dodson said.
Dodson, who spent most of 2010 in China working on government and business contacts for Mombacho, said many Chinese who are becoming a part of the country’s fast-growing luxury market are developing an interest in cigars, and learning more about quality and product options from different countries.
“Cuba has a longstanding relationship with China, and Cuban brands are relatively well known among Chinese cigar smokers,” Dodson said. “But those smokers are starting to seek other options. And Nicaragua presents a very good one.”
Dodson said that there are several other important Nicaraguan cigar manufacturers who are also in China exploring export opportunities, but says there are many legal and regulatory obstacles to entering the market.
“All of us as a whole are entering the market at a measured pace and looking for the right way to get into China while respecting the rules and regulations that the government has in place,” Dodson said.
Though Mombacho doesn’t yet have an import or operating license in China, they are allowed to sell direct to Chinese consumers for “personal use.” Their goal, therefore, is to get their cigars in enough Chinese hands – or the right Chinese hands – to convince the central government that there is sufficient demand to justify awarding Mombacho a coveted import license.
“It is a tight regulation and we understand why; tobacco is very important product to China,” Dodson said. “So it’s not a quick process. Our main focus is to build demand with promotional events.”
Though slow and complicated, the potential rewards are enormous. If Mom-bacho were to gain full access to the Chinese market, “They will keep us busy for the rest of our natural lives,” Dodson says with a laugh.
Promoting Nicaraguan Tourism
In addition to focusing on luxury markets in Canada and China, Mombacho is also doing its share to create a “Nicaragua cigar experience in Nicaragua.”
Nicaragua’s cigar market, much like its premium coffee market was until just five years ago, is still mostly an export market. Tourists visiting Granada and San Juan del Sur who are looking for a cigar bar usually have to settle for buying cigars from vendors in the park.
“International travelers coming to Nicaragua who want to have a cigar experience are discovering it’s very difficult to find one,” Heaps said. “Most of the cigar operators are up in Estelí, which is a bit off the tourist path.”
As a result, Mombacho last November opened Casa Mombacho, Granada’s first cigar lounge inside the colonial house that serves as their production facility on Calle La Calzada. The lounge features poolside couches, rooftop seating, rum and limited food items.
Since opening its lounge, Mombacho has been surprised by its success, selling some 500 cigars each month to curious tourists who pop in for a smoke or a souvenir.
“Similar to our event strategy in Toronto, where we try to make events even more memorable for our VIP clients, we want to make people’s trips to Nicaragua more memorable by giving them more stories to tell when they go home,” Dobson said.
Indeed, from Toronto to China to Granada, Mombacho is proving that sometimes a cigar is not just a cigar.
For more info or online ordering, visit www.mombachocigars.com.