After over 90 years, Nat Sherman International will exit the cigar business. Today Nat Sherman announced that at the end of September 2020, it will cease operation of its wholesale cigar business and close its flagship Nat Sherman Townhouse store in midtown New York.
Back in October 2019, it was announced that Nat Sherman International was exploring options for the future of the business. These options included a potential sale of Nat Sherman International from its parent company Altria. Plans of a sale did not work out.
“We worked hard to successfully transition Nat Sherman International to a new home, the COVID-19 pandemic created new challenges that were unfortunately too big to overcome,” said Jessica Pierucki, General Manager and Managing Director for Nat Sherman in a statement. “This decision in no way reflects on the incredible people who have worked to build Nat Sherman International’s business or the quality of the products,” she continued.
“Leading what has become Nat Sherman International’s final chapter these last nine years has been the honor of a lifetime,” asserted Michael Herklots, Vice President of Nat Sherman International. “We delivered our early goals of re-establishing the legacy of Nat Sherman International’s premium cigar business. I will be forever grateful to all our employees, current and former, as well as our manufacturing partners, who left it all on the field day in and day out to grow this business throughout our 90-year history. I am equally grateful to the incredible retailers, wholesalers, distributors, and consumers who have invested in our products and enjoyed them. Hopefully, our premium cigars will live on in the humidors of our greatest fans and appreciated with fond memories for many years to come.”
The exit of Nat Sherman includes the premium cigar brands: Timeless, Epoca and Metropolitan. It also includes the premium pipe tobacco brand Metropolitan Tabac, and accessories brand Ancora.
It was in the late 1920s when Nat Sherman acquired a New York City-based company known as Schwab Brothers and Bear which owned the Epoca brand, a “Clear Havana” blend produced in Tampa, Florida. Following that acquisition, a real estate developer named Abe Gubertz approached Sherman for a loan to complete construction of a building on 1400 Broadway in Manhattan. In return for the loan, Gubertz gave the building’s lobby retail space to Sherman as a partial payment. This is where Nat Sherman would open his first eponymously named store where he would sell cigars and cigarettes. Eventually, Sherman would go on to develop his own brand of cigars made in Tampa, Florida. For a while, Nat Sherman was an importer and distributor of the Cuban cigar brand Bolivar in the U.S. market. Later, Nat Sherman would expand into the cigarette business with the release of Nat Sherman Ovals.
Nat Sherman’s cigarette business would grow and even after the Cuban Embargo, the company continued to be a player in the premium cigar space. By 2011, things had changed for Nat Sherman in the premium cigar business. The company was under the leadership of Nat’s son Joel, and his children Bill, Larry, and Michele. Premium cigars were now being primarily distributed through catalogs at discounted prices, and the business was not growing to the level of satisfaction. That year, the company brought in Michael Herklots, who had been the manager of two of Davidoff’s retail stores, to become its executive director of retail and brand development.
Once at Nat Sherman, Herklots would work to streamline the portfolio and take control of its distribution, including transitioning to a brick and mortar sales model. At the same time, the company would introduce new brands such as Timeless, 1930, Sterling, and even resurrect the Epoca line. The decade of the 2010s saw a renewed energy and excitement at Nat Sherman, and the premium cigar world was taking notice. In 2014, the limited-edition Joel Sherman 75th Celebration by Nat Sherman captured our Cigar Coop Cigar of the Year.
In 2017, the Sherman family decided to exit the tobacco business and sold all of its holdings, including its cigarette and cigar business, to Altria. Under Altria, the company continued to operate its premium cigar business where Herklots would serve as its Vice President. During this time, the portfolio underwent a major restructuring and it released several limited editions.
By October 2019, the decision was made for Altria to transition out of the premium cigar business. At the time Jessica Pierucki of Nat Sherman commented, “Nat Sherman International is a terrific business. While we recognize the strength and value of the premium cigar business, it’s not core to Altria’s tobacco portfolio so we are exploring options for NSI.”
This created a very unique situation for Nat Sherman to have the opportunity to find a new home. As the efforts progressed into 2020, the COVID-19 pandemic threw a monkey-wrench into those plans. Over the past few months, I have been told in multiple conversations that the Nat Sherman team remained intact and on the payroll even during the difficult times the business was shut down.
With the announcement today, the 90 years of Nat Sherman being “tobacconist to the world” is coming to an end. Over the last ten years, those of us covering the cigar industry got to see one heck of a ride with the Nat Sherman label. Perhaps no cigar brand was associated with New York like Nat Sherman, and come September a chapter of the Big Apple’s history will come to a conclusion.
September 9th is the deadline premium cigar companies had been given to file for Substantial Equivalence to keep non-predicate (non-grandfathered) products on the market. This week the U.S. Food and Drug Administration (FDA) sent a letter to Judge Paul Grimm of the U.S. District Court of Maryland outlining a plan that includes an option for companies to request a deferment for filing for Substantial Equivalence (SE) and again reopening the question of how premium cigars should be regulated.
Under the FDA’s Deeming Rule, cigars introduced to the market before February 15, 2007, do not require FDA approval to remain on the market, but products introduced to the market between February 15, 2007, and August 8, 2016, require the costly Substantial Equivalence (SE) process. When the Deeming Rule was announced in May 2016, the plan was that product approval, which includes SE, would be implemented beginning August 8, 2018. Shortly after U.S. President Donald Trump named Dr. Scott Gottlieb FDA Commissioner, Gottlieb announced a delay that pushed FDA approval out nearly three years to August 8, 2021.
This triggered a lawsuit filed by the American Academy of Pediatrics in the U.S. District Court of Maryland against the FDA claiming the FDA did not have the authority to delay the implementation. It created an interesting scenario where the Cigar Industry and FDA were on the same page as far as the 2021 deadline. In May 2019 Judge Paul Grimm of the Maryland Court ruled against the FDA, thus restoring the original August 8, 2018 deadline. Since that time had passed, Grimm implemented a new date of May 12, 2020. Because of the COVID-19 pandemic, the deadline was pushed to September 9, 2020.
In terms of the letter, there are three key points:
- The deferment option is one that will be considered on a case by case basis for cigar companies – and it’s unclear how long a deferment will be granted for Substantial Equivalence (SE).
- The FDA has acknowledged it has limited resources, and that premium cigars are a lower priority. In fact, the FDA said in the letter, “Because the FDA’s current information indicates that youth smoke premium cigars comparatively less than most other deemed tobacco products, like e-cigarettes, premium cigars remain the FDA’s lowest priority for premarket review.”
- The FDA will be undertaking a new research effort in regards to premium cigars and will be seeking public comment once again.
The letter was written to Judge Paul Grimm and includes language from the FDA on how It defines a premium cigar.
It’s unclear if the letter requires a ruling from the judge or not. The plaintiffs in the Maryland case have indicated they oppose the relief and request an opportunity to respond by August 17th, 2020. It is important to note that Judge Grimm originally ruled in favor of the plaintiffs when this case was first filed. Finally, oral arguments about the question of Substantial Equivalence were held in the main court case in the U.S. District Court for the District of Columbia, and a ruling is expected on that sometime this month. The Maryland case is the one that set the September 9th date, thus why the letter was sent to this court
Nonetheless, the industry is looking at this as the glass half full. Premium Cigar Association (PCA) Executive Director Scott Pearce noted, “this is an important indication by the FDA that they do not have the capacity or resources to regulate premium cigars for premarket review. However, the industry needs further clarity and is hopeful that the Trump Administration will take definitive action in support of the small businesses across the country and go a step further. We cannot operate businesses in regulatory uncertainty and the FDA’s action further complicates the situation especially without their definitive release of guidance on the topic.”
Cigar Rights of America (CRA) Executive Director Glynn Loope added, “While this letter is a welcomed recognition that premium handmade cigars warrant regulatory relief, it is concerning that the industry will be asked to submit, yet again, analysis to demonstrate what has already been proven – premium handmade cigars are unique and lack the adverse public health impact some seem determined to claim. This letter also recognizes that the agency has higher priorities. It is time for the FDA to provide the premium cigar industry and its family owned businesses permanent relief from this unjustified regulatory scheme, rather than this uncertain potential process.”
Boutique Blends Cigars has announced it is bringing back the Oliveros Gran Retorno, a line the company first introduced back in 2016. The line returns and will feature a unique aging process that the cigars have undergone. Like all of the lines under Boutique Blends, they will be distributed and sold under the Altadis USA umbrella.
Before there was Boutique Blends, there was Oliveros. And it was Oliveros that launched the successful Aging Room and Swag brands. While Oliveros never completely disappeared, the brand name did subside to the background. In 2016, Boutique Blends released the “Gran Retorno” (grand return), a line that was meant to mark the return of the Oliveros brand.
In May, 2017, Altadis USA and Boutique Blends entered into its strategic alliance. At the time the decision was made to concentrate on the Aging Room brand, and production of other lines such as Oliveros were put on hold. Fast-forward to 2020, and the Gran Retorno is making another grand return.
Production-wise, Oliveros Gran Retorno moves to the Plasencia factory, a factory both Boutique Blends and Altadis USA have worked with in the past. Previously Gran Retorno had been produced at Felix Mesa’s El Galan factory. For the relaunched Gran Retorno, Rafael Nodal, Head of Product Capability for Tabacalera USA, teamed up with Nestor Plasencia Sr. to select the right tobaccos and then begin the aging process.
The aging of the Oliveros Gran Retorno involved a unique three-stage aging process that first involved aging the tobaccos in traditional bales for 24 months. The cigars then remained “reposado” in the factory Cedar Room for six months before being packed and aged for more than 33 months in their individual cedar boxes in the company’s humidor in Tampa, Fla. This three-stage process involved over 5 years of aging.
“I love to create new flavors and new experiences,” Nodal explained in a press release. “This unique three-stage aging process revealed different characteristics at every step of the way. I loved observing how the tobaccos were becoming a beautiful marriage of flavors as they continued to mature.”
As previously, Oliveros Gran Retorno will feature three different wrapper options: Connecticut, Habano, and Maduro. Each blend will feature all-Nicaraguan tobaccos for the binder and filler. Each of the three blends will be available in three sizes – each named reflecting homage for Nodal’s passion for music: Swing (50 x 6), Banjo (52 x 4 1/2), and Fiddle (54 x 6). These names had been used on the previous release of Gran Retorno.
The tobaccos come from the Plasencia family. All are Nicaraguan grown except for the Connecticut Shade which is grown in Honduras by Plasencia.
Espinosa Cigars has announced it has cancelled its 2020 La Zona Palooza event due to the COVID-19 pandemic. The company has said it will announce plans shortly for a virtual component to the event
In a communication to the media, Erik Espinosa, President of Espinosa Cigars issued the following statement:
Espinosa Premium Cigars regrets to announce that our 2020 La Zona Palooza has been officially cancelled.
We agonized over this decision. We know this is disappointing, but we are fully committed to the safety of our staff, attendees, and local residents. We waited as long as we possibly could to make this decision, truly hoping that there would be a silver lining to this current situation.
Sadly, South Florida has become the epicenter of COVID-19 within the State of Florida and we cannot in good conscious hold this event, if even the remotest chance existed that a single member of our team and/or our La Zona family could become a victim of this pandemic.
While we wrestled with this decision and its outcome, we are resolved that “the show must go on.” So while we sadly announce the cancellation of the 2020 La Zona Palooza, we are proud to announce an innovative and entertaining virtual component which is currently being finalized to replace La Zona Palooza 2020.
Details for this event will be announced on August 15, 2020. We at Espinosa Premium Cigars thank our cigar family for its continued support.
La Zona Palooza is an annual invitation-only fan festival that was started in 2016. It has been held each year at Espinosa Cigars’ headquarters in Hialeah Gardens, Florida. The 2020 edition would have been the fifth year for the festival.
La Zona Palooza is the latest major consumer-based cigar event to be cancelled due to the COVID-19 pandemic. Recent cancellations for major consumer events cancelled include Rocky Mountain Cigar Festival, Drew Estate Barn Smokers,WeaselFest 2020 Texas Cigar Festival, and Smokin in the Carolinas. At press time, other events such as Cigars International’s Cigar Fest, Cigar Aficionado’s Las Vegas and Miami Big Smokes are still planned to take place.
Gurkha Cigars has announced it is partnering with the TABSA factory in Nicaragua to re-release it’s San Miguel brand. San Miguel is a grandfathered brand by Gurkha.
San Miguel is the third line that Gurkha is producing at the TABSA factory, joining the Gurkha Trienta and Gurkha Nicaragua. The cigar itself is a Nicaragua puro featuring Aganorsa grown tobaccos. The blend is highlighted by a Nicaraguan Shade Grown Corojo wrapper. The cigars will be available in three sizes, each packaged in 20-count boxes.
Gurkha has said San Miguel will sell for under $10.00.