Cigar Aficionado

A business leader and politician, Alejandro Martinez Cuenca is the man behind the rebirth of Nicaragua's oldest cigar brand, Joya de Nicaragua. When he bought the company in 1994, it was a faded jewel, still struggling to recover from a war that had left the factory burned to the ground and a failed social experiment in which company operations were managed by factory workers. Martinez Cuenca brought fresh ideas to the company, rehired many of its old rollers and blenders, and eventually released Joya de Nicaragua Antaño 1970, a full-bodied cigar that recaptured the taste of the brand's glory days.

Martinez Cuenca, 59, is a member of Nicaragua's Sandinista party, which sprang from the populist movement that overthrew the Somoza dictatorship in 1979. He has worked both with and against Nicaragua's recently reelected president, Daniel Ortega. Most recently, he unsuccessfully opposed Ortega in a bid to be their party's presidential candidate. Ortega had led the Sandinista rebellion, which culminated in the nationalization of industry and the seizure of land from private owners, then ruled Nicaragua during the 1980s. He first served as president from 1985 to 1990, when the United States embargoed Nicaraguan goods.

Senior editor David Savona sat down in Managua with Martinez Cuenca in January, during the week of Ortega's inauguration, to discuss the political outlook for Nicaragua as well as the revitalization of the Joya de Nicaragua brand.

Savona: Let's talk about your involvement with Tabacos Puros de Nicaragua, the maker of Joya de Nicaragua cigars. When did you acquire it?

Martinez Cuenca: Let me tell you why I acquired it. When I was 16 years old, one day my father found me smoking a cigarette, and we were living at that time at the house of an uncle here in Managua who smoked cigars. He said, Give me that cigarette—from now on you will smoke these. And he gave me a big Joya de Nicaragua to smoke. As a punishment. [Laughs.] At that moment I quit smoking. When I was 30, a friend of mine from Spain brought me a box of Davidoff, and that was my first box of cigars. It was a pure Cuban cigar, before Davidoff went to the Dominican Republic. Two years after, I became minister of trade. When Somoza left the country, this company became public, so I was asked to try to look for markets for the cigars, and I visited for the first time the factory in Estel'. This is 1979.

Q: Was it was very busy at the time?

A: Extremely busy. And my big question was, How can you replicate a cigar, with so many people participating in its creation, and make sure that it's the same cigar with the same quality and the same blend at the end of the road? How, without machines, can you do that? And that was my first big amazement about cigars. Then I went to Cuba and I got familiar with other companies that were manufacturing Havana cigars, and I always posed the same question: what makes a cigar so unique, and so human? It became a fascination to me. When Ortega loses the election, the company was loaned to the workers of the company, so they would continue producing and have something to live from.

Q: How did that work out?

A: That was 1990. In 1992, that whole project stumbled, went to pieces. Imagine 80 workers without a head.

Q: Eighty bosses.

A: Eighty bosses making a cigar. In 1992, I knew Joya de Nicaragua was being manufactured by my dear friend Nestor Plasencia in Honduras.

Q: So Joya was made in Honduras during the embargo?

A: Yes. And I knew there was a problem with the trademark—I knew Somoza had sold the trademark. Then it was decided that it was going to be privatized. And one day, Leonel Raudez, who is now my general manager, walked into my office and said, "Doctor, help us. They are going to close that company. We have the know-how." I didn't want to get involved with anything that had been nationalized. But he opened my interest. I called the minster of the presidency and asked if it was true he was going to sell the cigar company. He said, yes, it was going to go to a public bidding. It was all in shambles.

Q: Was it operational?

A: The building was there, there were two or three people making cigars. I had someone do an evaluation of the company, and I bought the company for $600,000 in 1994. And I said, "Let's look for the old workers who worked here." I rehired most of the best-known rollers, tobacco producers, and started working with them. But then I realized what I had. In 1995, fortunately, the [cigar] boom started, and that helped us put together a team of well-known specialists who started producing tobacco. The boom helped us. It created the conditions for us to be alive today, because when the boom started we had only made $40,000. I said to my workers, "We are going to rebuild this company. I want your initiatives, I want your discipline." It was a difficult task, trying to consolidate our sizes. I had been familiar with it only because I smoked it. When I was minister of trade, there used to be two guys who would come to my office, Silvio and Alfredo Perez [of tobacco grower ASP Enterprises Inc.]. They came and told me, "We can't get out of Nicaragua—they don't give us the visa." I put them in with Immigration so they could continue doing business. And every Wednesday, they would visit me and keep me informed. In 1995, I called Alfredo and said, "I have a problem. Help me." He said, "What do you need?" I said, "I need tobacco." He said, "Look, the only place we can bring it is from Connecticut or Ecuador." Connecticut was too expensive, so I said Ecuador.

Q: That was Connecticut seed from Ecuador?

A: Yes, that's how I started remaking the Joya, with Connecticut seed.

Q: What was the wrapper in the old days? Nicaraguan?

A: Nicaraguan Habano. There was a tremendous shortage.

Q: When was this?

A: Nineteen-ninety-five. During the boom we produced that kind of cigar. But the boom was horrible at the end of the day. When the boom was over, at the end of 1998, all the good years of the boom gave us a financial reserve, so we never went to the bank. I told my shareholders we are benefiting from an accidental boom—we kept building the company. It was the smartest thing to do. We would not have been able to survive the downturn. That's when I decided to make the Antaño.

Antaño comes to the market in 2000. It took two years to find out what tobacco to use, blend it, and manufacture the cigar of the quality you see here.

Q: What did you want to do with Antaño? What was the idea?

A: I had heard that in the 1970s Joya de Nicaragua had replaced the Cuban cigar at the White House receptions. They were buying Nicaraguan cigars because it was the closest to Cuban Vuelta Abajo. With Mario Perez, we put together a group of five rollers who had been with the company from the very beginning, and we dedicated for two years blending.

Q: So you were trying to capture the taste of the old days?

A: Yes, that's why the name: antaño means circa. And the person who manufactured the Joya in the 1970s was our major blender. After thousands of blends, he said, "This is it."

Q: So it wasn't just trying to recapture the style, but to actually make the same blend?

A: Yes. So that's how I came out with Antaño. Before throwing it into the market, I wanted it to be Joya de Nicaragua Antaño. Joya de Nicaragua was ed by my company everywhere but the United States. [Altadis S.A. owned the U.S. rights by virtue of its acquisition of Hollco-Rohr.] I got in with Mr. [Theo] Folz. I went to the United States, and I found a real gentleman. That guy is the most astute guy I ever negotiated with. In 1998, we spent four hours in a negotiating room, and at the end of the day, he said, "This is the deal: you take it, or leave it." I said, "I take it." That's when I bought the trademark.

Q: What was the consumer reaction to Antaño?

A: When we sent the first trials, Brad [Weinfeld, who is in charge of the brand at S.A.G. Imports] called me and said, "We hit it. That's what the market wants." And then, some years later, some people tried to get the same wrapper, the same filler, but they couldn't make the Antaño. When we came out with Celebración, we asked the question why the market hasn't taken to Celebración, which is a full-bodied cigar, but much less strong.

Q: It hasn't been the hit that Antaño is?

A: No, no, no. If I were to choose between Celebración and Antaño, for a soft, nice smoke but still with strength, I would take Celebración.

Q: When people reach for a Nicaraguan cigar like yours, what do they expect?

A: I want them to recognize that Nicaraguan tobacco is a tobacco that has won its place in the market not only because it resembles Cuban tobacco. Nicaraguan tobacco has much of the greatness of Cuban tobacco, but it's more than that. It's something genuine. When you come to Nicaragua and smoke a cigar, you will find the Nicaraguan tobacco has some likeness to the Cubans, but there is more to it. There is the Nicaraguan identity.

Q: What does the future hold for Nicaragua?

A: I think there is no possibility that we're going to go back to the past. Everything that is in front of us—regardless of who is sitting in the presidency of Nicaragua—should be forward. Nicaraguan tobacco, regardless of the political situation in this country, will continue to be the best tobacco in the market, the best quality. I am still confident that Nicaragua will continue to be a good place to make cigars and grow tobacco as we have been in the last part of the 1990s and the 2000s.

Q: How important is the cigar and tobacco business to Nicaragua?

A: There are 23 formal businesses dealing with tobacco and cigars in this country. There are 14 owners. In total, we are benefiting around 80,000 individuals directly and indirectly in Nicaragua. In the northern part of Nicaragua, including Jalapa, Ocotal, Condega, Estel', you see booming activity. The major cause of that is tobacco: production of leaves, companies that manufacture boxes, companies making the tools for cigars, cellophane—simple companies. At the end of the day, you're talking about 80,000 Nicaraguans depending on the business. Sugar doesn't contribute as much. The only industry that can compete is coffee. Aside from coffee, tobacco is the highest labor-intensive activity that is carried out in this country.

Q: With Daniel Ortega being made president again, many people are concerned about the future, given the man's past.

A: I think people are taking the new situation in of Ortega relatively quietly, not too much concern. People understand very well that the vote that Ortega has taken is very fragile. There's the minimum required number of votes. People get concerned because they don't know what route he is going to take. What I have said is there aren't too many routes—continue, that's the only route, because anything else would be putting the country in a very difficult situation. The country cannot afford it.

The point is, here we are, and the new president is being sworn in, and everybody is saying, I'm going to wait and see. I don't see people moving out of the country as they did in the 1970s and 1980s for one basic reason: I think the experience of Nicaraguans outside Nicaragua was so harsh and so difficult—even though some of them were successful—that people are convinced that if they leave this place, they are going to lose their niche and others will take it.

Q: That said, though, do you think some people are thinking of contingency plans? Many cigarmakers making cigars here also have cigar factories across the border in Honduras.

A: I think anyone who is serious in business needs to have a contingency plan. I think it would be terribly irresponsible, not only in of yourself, but in of your customers, not to have a backup plan in case things go worse than you think. At the end of the day, we are 14 individuals making decisions on what to do in regards to cigars in this country. And I have talked to all of them. In the beginning they were concerned. And I have told them, it's never going to happen.

Q: You don't think nationalization will happen in Nicaragua again?

A: No. And let me tell you, I never thought Ortega would win. That's why I proposed an alternative candidacy.

Q: You yourself.

A: Yes. Once he won, it's important we all have some backup alternatives, but it's important to take the opportunities the country has today, which is demonstrating tobacco is improving tremendously, not only in of volume of tobacco being exported, volume of cigars being exported, but also people are more concerned today with quality than they were before. So leaving this niche would be suicidal for anyone. You have a lot of producers from the Dominican Republic buying tobacco from Nicaragua, you have many Hondurans buying tobacco from Nicaragua. Why leave that to someone else?

Q: Should investors be worried about the close relationship that's developing between Ortega and Venezuelan president Hugo Chavez?

A: The talk of Ortega on his partnership with Venezuela should be viewed more of rhetorical position than anything else, even if the many promises Chavez made for cooperating with Nicaragua were to become real. Do not forget theÊpolitical leverage Ortega has is very limited, and therefore, political realism should prevail over and above the concerns that have now flourished.

Q: You were instrumental in reconvening the group of Nicaraguan cigarmakers and tobacco growers, which convened in December. Can you talk about that?

A: When I called for this organization to finally be put on its feet, I told them there is the possibility that Fidel [Castro] is going to away. Even if he doesn't , the reality is, now you have a Democratic majority in the [U.S.] House and Senate. I think sooner or later Cuba is going to open. What I said to that group is we should not [pull together] because of fears of Ortega. We should do it to prepare ourselves better, to continue to put the name of Nicaraguan tobacco on the minds of international consumers in the United States and everywhere else, so when Cuba opens we will not be hurt as an industry, and we will maintain the niche markets. So regardless of what happens to Cuba, we will continue to sell our products and continue to grow. Some say Cuba is never going to compete with us. But they now make 300 million cigars for the market, and you don't feel it that bad. But when they have the American market open, most likely most of the product is going to go there. The important thing is we continue to hold our niches in the American market, and whatever is left in the rest of the world, we can take opportunities in those markets.

Q: But you compete with Cuban cigars now: people in the United States get Cuban cigars now, not legally, but they get them.

A: Yes, it's true, but it's not the same as when you have, say, 50 million sticks around than when you have 200 million sticks.

Q: At that meeting, wasn't the prime area of concern for the election of Ortega?

A: Most of the group was careful not to express too much anxiety. I don't think Ortega is going to break with the international organizations. It would be suicidal.

Q: Didn't Ortega say he was breaking from CAFTA [the Central American Free Trade Agreement] at his inauguration?

A: Ortega has never said since his inauguration he would remove Nicaragua from CAFTA, even though he signed ALBA [a cooperation agreement between Venezuela, Cuba and other countries promoting redistribution of wealth]. According to press reports, in the recent meeting Ortega held with the secretary of commerce of the U.S. in Ecuador, Ortega reaffirmed his commitment to hold to CAFTA in spite of the cooperation agreement with Venezuela. By now, Ortega should be clear in his mind that there is no return in of CAFTA, because such action would weaken not only Nicaragua, but would undermine any possibility of reaffirming a constructive and good working relation with the U.S. and his presidency, and I believe Ortega does not want that to happen.

Q: You know Ortega, probably better than anyone else in the tobacco industry. What kind of a man is he?

A: I met him for the first time in 1977. And then I worked with him in '78 in Costa Rica. I know the young Daniel, the middle Daniel and the older Daniel.

Q: Are they different?

A: The Daniel that I met in '77 and the Daniel in 2007 is a completely different Daniel. In '77 he was nothing; now he is a very eloquent, very intelligent, very able politician. Nobody can doubt that. He was able to split the vote of the right. He was able to maintain the party of which I am a member, and to act politically in searching for solutions to avoid having the party split. We worked together very closely in the 1980s, and we had our disagreements. When he lost in 1990, everybody thought Ortega was over. And nevertheless, he maintained the party. And even though he was in the opposition with no power, he was able to maintain that level of political acuity. The Ortega I am referring to, the Ortega of the 1990s, he was a negotiating Ortega. In the 1970s, he was a guerrilla. So he was always negotiating, and that made him open to the opportunity to continue building. Even though he lost three times, he continued to be the candidate of the party.

Obviously, he did things with which I completely disagree. He went against the rules of the party when he eliminated the possibility of a primary process in the last election, and that's why I opposed Ortega in that regard.

Q: So it was his doing that changed the election laws?

A: Yes. Negotiating with [Arnoldo] Alemán, who was then president, they changed the constitution, and they decided to move the level that [a candidate] needed to win from 45 to 35 percent, as long as the one that was behind you was five points behind.

Q: That's quite a difference. Was that when you decided to oppose him?

A: In 2001, I ran in the primary against Ortega, I respected the results when they were not favoring my candidacy, and I even worked for his candidacy. In '06 I told him, if you don't respect the bylaws of the party, I cannot your candidacy. The party establishes that in order to establish the candidate of a political party, you go through a primary process. You don't do it by hand, which is what happened.

Q: So there was no vote to make him the candidate of the Sandinista party?

A: He was selected by his friends, who decided to violate the bylaws of the party. That's my criticism of Ortega. Once he won, I cannot oppose the fact that everybody else played by the rules, and the rules gave him the majority of the vote, regardless of how small or how big.

Q: Did you leave the Sandinista party?

A: No. I will continue fighting.

Q: In the United States, "Sandinista" is a bad word. Tell us what it really means, what the purpose of the party is, so people can understand what it means in its purest form.

A: The extreme right vision of the world basically is understood as to let the minority produce growth and then it's going to filter down to the large majority of the people. That's why I became part of the revolution in 1970, because I was convinced, coming from a high-middle-class family, that the model of development that was being pushed by the Somoza regime, which was basically an extreme right-wing vision, did not work. And that's why I became a Sandinista. Because we feel you must give priorities to public policy, that help education, as you do in the United States. Here you are on the right or on the left. If you are critical of the model, you are on the left. The Sandinistas have been critical of the model of the filtering down process.

Q: The trickle-down model?

A: When you have public policy being dictated in the assembly, when you promote investment, when you promote growth and stability and respect for property rights—once all that is done, there shouldn't be a difference between the left and the right. Until now, there has been a perception that the left doesn't respect private property, doesn't respect human rights, doesn't respect criticism from the press. That taboo on the left is not part of my thinking. It might have been different in the 1980s, but at this time the difference between a Sandinista and an ultra-right person should be that we have a different model, but coming from a common ground: there are basic elements that both the right and the left have to respect.

Q: It seems as if Ortega, in having changed the election process, has already shown disrespect for some of the principles you mention.

A: When you have Hugo Chavez trying to expropriate a TV channel because they criticize him, obviously that has pulled back the stigma of the left. All of that is against the liberties we have won. To answer your question, what is the difference of the Sandinista today versus the 1980s? In the 1980s, we did not commit ourselves to recognize property. The Sandinistas recognize that that was a big mistake, to try to give out wealth in order to improve the distribution of wealth in the country. It's more important to give opportunities to people.

Q: We spoke about what the cigarmakers of Nicaragua think about the election. What of the opinion of the international community, those who might be considering investing in Nicaragua? Do you think this has given them pause?

A: If I am reading the signals correctly, people are saying, Let us wait and see. If I am investing in something, I'm not going to stop, but if I wanted to complete this investment in a period of six months, I might want to postpone it. I think it's understandable. That's why Ortega has to understand that this is a tango that takes two to dance. Unless there is investment, the country cannot solve the problems of poverty and unemployment. Some say Hugo Chavez may give us if we lose investments, but how long will that last? It should be looked at in the long-term perspective.