Building Equity | Tobacconist magazine

Building Equity

Royal Agio Cigars ramps up its American presence
By Stephen A. Ross

With apologies to Neil Diamond, Royal Agio Cigars is coming to America. Well, a few of its products—Balmoral premium handmade cigars and Panter and Mehari’s premium cigarillos—have been available in American cigar shops for quite some time, thanks to various distribution agreements with American-based companies, the latest of which saw Drew Estate distribute Royal Agio’s cigars in the United States for the last three years. The growth of its brands in the U.S. has been so promising that CEO Boris Wintermans, the fourth generation of the family to head Royal Agio Cigars, has initiated an independent American arm of the international company that makes close to 800 million cigars annually and employs 2,300 people in the Dominican Republic, Belgium, the Netherlands and Sri Lanka.

“We have had partnerships with distributors throughout the years and have learned a lot, and now we have decided that with the U.S. being the biggest market in the world, especially for premium cigars, we should have our own organization,” Wintermans explains. “We have been around for more than 110 years, and we always have adopted the long-term approach to all that we do. We’re committed to making this work long term.”

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To be more exact, Royal Agio Cigars is celebrating 113 years in the premium tobacco business this year. Jacques Wintermans established the company in 1904 with a loan from his father. At the time, the Netherlands was a leading cigar producer, with hundreds of small factories cranking out cigars enjoyed around the world. Today, Royal Agio Cigars is the last of those companies to remain in business. It hasn’t survived the twists and turns of a turbulent 20th century and the beginning stages of the 21st century by chasing market trends. No, Royal Agio Cigars is a steady ship that makes its progress with planning, patience, perseverance and a focus on producing the finest products it can make. It might not be an exciting formula, but it’s one that works, and it’s the same combination that the company is now putting into place at its new U.S. headquarters based in Bradenton, Florida.

“Our entire 113-year history has been about constantly learning, adapting and improving everywhere—that’s how you grow a business, building upon trust and mutual benefit,” Wintermans comments. “We have the brands, the performance of the brands, and we are very confident that we can make this work if we apply the formula of 100 percent dedication and focus to it. We want to take it step by step, and if we promise something, we want to deliver to our partners and consumers. That’s how we have done business throughout the years. Throughout our history we have always relied on partnerships—whether it’s been purchasing tobacco, creating international relationships with importers, or building relationships with retailers and with consumers. There’s a reputation that we’ve established in the last century that we’re going to continue in our next century of making premium tobacco products. That’s the foundation of our entire company.”

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“Building trust in relationships requires rapport. That’s one of the key things that identifies the cigar business in general. It’s a person-to-person business, and if you do business with someone, you like to know something about their background or build up a relationship as well. This is what we are doing now, and this allows us to get personally involved. We don’t build just brand equity, but we are building personal equity.”
– Boris Wintermans

Indeed, from the very beginning of Royal Agio’s existence, the company has built relationships around the world with countless tobacco growers to ensure that it obtains only the finest leaf available. The company sources tobaccos from Indonesia, Cameroon, Spain, Brazil, Peru, Ecuador, Nicaragua, Honduras, the Dominican Republic, Mexico, the U.S. and Cuba to make its 800 million cigars each year. The focus on premium ingredients has won fans the world over, with Royal Agio Cigars’ products now available in more than 100 countries.

In the U.S., Royal Agio’s portfolio is led by the premium cigarillo brands Panter and Mehari’s. The consumer market for cigarillos is growing as people who are more rushed than ever are discovering the enjoyment that cigarillos can provide in a short time. Panter has been produced since 1935, and the line has grown to include 14 varieties, 10 of which are available in the U.S. Panter Classic consists of Blue, Small, Sprint, Red and Dessert. These are available in 10-count and 20-count tins. The Panter Specialty line available in the U.S. consists of Mignon, Mignon de Luxe, Mignon Red, Tango and Silhouette. These are all available in 20-count tins with the exception of Mignon, which is available in 10-count tins.

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Mehari’s has been available since 1976 and is featured in four taste profiles: Ecuador, Java, Brasil and Red Orient. They are available in 20-count packs and 50-count wooden boxes. Since 2010, the Mehari’s line has been the third-best-selling cigarillo brand in the world, and Royal Agio estimates that every second there are 11 Mehari’s being lit worldwide. Pretty impressive.

“People hear that these cigars are machine-made and they automatically think of them as low-quality, but that is not the case,” Wintermans says. “If you go back more than a century to our start, you will see that we always made our products with premium tobacco. Our cigars were all made by hand, but then machines became available that improved the quality and consistency of our products, and they also made them more accessible to the market. They’re not made by hand anymore, but they’re still made from the best premium-quality tobaccos. The wrappers for our cigarillos are made from the same types of wrappers that go on our premium handmade cigars. We see an opportunity in the U.S. market to encourage consumers to think that cigarillos can be premium-quality. That’s our unique segment. We have made premium tobacco more accessible with those brands. It is premium tobacco made in a different way. Those small cigarillos provide all the smoking satisfaction you are looking for.”

And if you’ve got the time to kill an hour or so with a relaxing smoke, Royal Agio has something to offer with its Balmoral line of premium handmade long-filler cigars. The Balmoral brand was established in 1895, and Royal Agio makes the cigars at its factory in the Dominican Republic, where just three pairs of rollers and bunchers craft the cigars under the direct supervision of the factory’s manager, Francisco Batista. Like all of Royal Agio’s products, Balmoral Anejo cigars are made using only the best well-aged tobaccos available.

A passionate cigar smoker himself, Wintermans spearheaded the launch of Balmoral’s latest creations—Anejo 18 and Anejo XO. Sadly for the cigar consumers who fell in love with Balmoral Anejo 18, the supply of the rare 18-year-old Brazilian Arapiraca wrappers has ended, so the cigars are no longer available. Instead, the company has ramped up its production of Anejo XO, expanding the line to include six sizes: Rothschild Masivo (5 x 55), Torpedo MK 52 (6 1/4 x 52), Petit Robusto FT (4 1/4 x 48, FT stands for Flag Tail), Gran Toro (6 x 52), Corona (5 7/8 x 42) and Gordito (4 x 58). Royal Agio introduced a seventh size—Lancero FT Edicion Limitada (7 x 40)—in 2016. No longer available to the general market, the Lancero FT Edicion Limitada is now available only at special Royal Agio events while the available supply lasts.

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Packed in 20-count boxes, Balmoral Anejo XO cigars offer a medium-to-full bodied smoking experience, with notes of cedar, cacao and spice and an underlying sweetness. They are made using an aged, sun-grown, 10-year-old Brazilian Arapiraca wrapper; Dominican Olor binder; and Dominican, Brazilian and Nicaraguan filler tobaccos.

“Balmoral Anejo cigars are the peak of perfection for us,” Wintermans explains. “They are our interpretation of the best of the best that we can produce, and I am very passionate about them. They represent all that we have learned in the last 113 years and what we think is the best possible quality we can make. With the Balmoral line we’re not going to just throw 10 different sizes and new extensions on the market every year; we’re going to build on it gradually. We have access to the best tobaccos in the world, and we have a huge inventory of those tobaccos and the knowledge and experience in blending with them. If you want to make new blends that are unique, why not leverage that?”

Which brings us back to the motivation behind Royal Agio establishing its American division. Yes, the company has grown working with its partners, but to reach the level it wants to ultimately achieve, it was time to make the investment to put all the pieces into place to achieve its lofty goals.

“We still are with Drew Estate in Europe,” Wintermans says. “The relationship is a healthy one. They are helping us out still. There is a transition, and Drew Estate will still distribute for us for the next few months as we build our own organization. We decided that if we really want to grow something here, we need to have our own folks who will be dedicated to [making] them grow.”

To help establish the infrastructure for its American division, Royal Agio has enlisted Michael Chiusano as an outside consultant. Retailers will remember Chiusano for establishing Cusano Cigars, and Royal Agio USA’s headquarters is based in Cusano’s old location. It is in the process of hiring full-time, dedicated sales reps who will travel their territories doing nothing but promoting and selling Royal Agio products.

“If we’re doing something, we need to be all on board and have a shared sense of purpose,” Wintermans explains. “If you share that on a value basis, that’s one of the most important keys to success: to be motivated and on the same page 100 percent. Once you have a direct relationship with retailers and consumers, you get to tell the story yourself and create awareness. We have a great story to tell. We have a big history, and we have a family behind it that is passionate and driven, so it’s real. That authenticity is something that I would like to build into our brand. It comes from the heart. People naturally recognize that, and they appreciate it. Sharing that story with the outside world is one of the most important things that we learned that American consumers really enjoy.”

Having a dedicated sales force with a team of people staffed at the Bradenton office to support them enables Royal Agio to tell its own story in its own way. You might think of it as an autobiographical business expansion that will improve its growth and allow the company to perform at its best in customer service and reliability. Ultimately, it allows the company to have a one-on-one relationship with all its customers.

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“Building trust in relationships requires rapport,” Wintermans says. “That’s one of the key things that identifies the cigar business in general. It’s a person-to-person business, and if you do business with someone, you like to know something about their background or build up a relationship as well. This is what we are doing now, and this allows us to get personally involved. We don’t build just brand equity, but we are building personal equity.”

Gaining equity takes time. It’s not an exercise in instant gratification. Thankfully for Royal Agio, it has 113 years of experience sacrificing the short-term quick profit for the long-term reward. While Royal Agio may be the world’s fourth-largest cigar company, its goals in the United States are more modest.

“We are not looking to be a top-three player, but we are focused on delivering quality, consistency and exciting consumers with our products,” Wintermans concludes. “The ultimate goal is for our cigars to be part of a daily conversation about what cigar a person might enjoy that day. It takes time to age tobacco, and building market share requires the same approach. We’re not in a rush to build our market share. We’re about doing it step by step and making sure that we over deliver on our promises to our retailers and their customers.”

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