On the Record: Jorge Padron Cigars

1/26/12 - New York, NY

Legendary cigar brand Padron Cigars President Jorge Padron was recently in New York City for a special private event at Nat Sherman (12 E 42^nd Street). January 26, 2012 was a big night for cigar buffs everywhere as Padron made a trip up from his home in Miami to the legendary New York City cigar retailer for a tasting of some of the brands very well-liked cigars. I was lucky enough to get a chance to sit down and talk with Padron. We spoke about many things but one thing I found fascinating was his experience in the business of Padron Cigars. This second generation gent has taken his immigrant-father's 40+ year old brand out to a much wider audience in the years he's been President of the company. After all this time though it never gets any easier. Padron was open about many of the stresses and challenges that Padron Cigars still face.

Jesse Schmitt - You got your degrees in Marketing; has that degree informed the moves you've made with Padron Cigars?

Jorge Padron - My education has helped me significantly in terms of my appreciation of products presence in the marketplace and everything else that comes with it. I think it (MBA) was a critical thing for foundation, but at the end of the day you have to learn how to apply a lot of those principles in real life and make the right decisions. Sometimes people get carried away with marketing principles and they forget the essence of the product you're trying to put out. You can have great marketing concepts but if you don't have a product that has legs and can stand on its own then you're going to have problems.

JS - Padron has always been pretty proud of the quality of the products you produce; are there market pressures which have forced that to change at all?

JP - Being a private company we don't have to answer to anyone but ourselves. Obviously with all the work that's gone into creating and establishing our brand we don't make any short term decisions. Any decision that we make is taken with a long term view. I can tell you that we haven't had a down year in 22 years. Every year there has been growth. Some years more than others but we have a very solid brand that has a lot of loyal customers.

JS - Does Padron still handle all their own distribution?

JP - We sell 6 million cigars a year without a sales force. I think we're the only cigar manufacturer that does things that way. We have very good relationships with the people we do business with and we're very close to the action.

JS - Are most of your sales domestically or do you sell all over the world?

JP - We sell all over the world but our primary client base is here in the US.

JS - I'd like to talk now about some of the societal pressures against smoking broadly. How has that impacted your business?

JP - When we talk about these types of issues you have to put things into context. We make a handmade product that's not consumed by minors. When you're talking about a cigar that's 4 or 5 dollars you're not going to find a lot of carryover to minors with our product. Looking at what's going on today in terms of all the regulation I think a lot of it is totally ridiculous. I will say that I think when they banned smoking inside of restaurants I thought that was totally called for. when I finish my dinner I don't have to light up a cigar at my table and I certainly wouldn't like it if someone did that next to me. So I totally understand when they did away with the cigar smoking in restaurants that don't have a separate area for smoking. But to ban smoking someplace like Central Park…I think in terms of regulation it's like we're at a pendulum and we're in the wrong end of the pendulum in the way people look at the industry and the way people look at the product. But there's a big difference between the products that we make and a lot of these other products that people have demonized. I think that it's our job to educate these legislators about cigars and that we are not the same. You can't lump is in as the same thing as these cigarettes and other products.

JS - What are you doing on that front?

JP - There's a group called Cigar Rights of America which basically consists of consumers. They go out and distribute information. Now we're starting to get into some form of lobbying and education about why cigars are different than cigarettes. That's just one of the things but there are a lot of other things that are happening at different levels in terms of retail organizations in different areas of the country. In every state there are different local groups that are organizing and spreading the word. It's an uphill battle because there are a lot of pressures.

JS - What are the biggest market pressures Padron Cigars is going through right now?

JP - Legislation. These regulations are something that could decimate our industry. Taxation and other things are obviously not good but that's something that the consumer has to decide to take on. But if you can't get your product into the store, if you can't sell your product if you can't promote your product, you've got your hands tied and it's actually counterproductive to what the American system is all about.

Sources:

http://www.padron.com/

http://www.cigarevents.com/2012/01/nat-sherman-hosts-jorge-padron/

www.natsherman.com

http://cigarrights.org/