Jamaican Cigar Exporter to Take on Home Market

Source from:  Jamaica Gleaner‎  11/08/2012

Two decades ago, Jamaica had a thriving cigar production market, albeit dominated by Cuban investors.

Today, the sector has diminished, but a small export market remains, which includes producers such as Barrington Cigars Jamaica Limited, which is operated by siblings, Margaret 'MJ' Adams and Barrington Adams.

Their operation since 1996 has largely been focused on cigar for exports. About 75 per cent of output is currently sold overseas.

Now the Adam siblings are about to take on the tiny Jamaican cigar market, where tobacco consumption is baked into the culture but is mostly confined to cigarettes.

Barrington Cigars already has a slice of the local market but cigar consumption is largely confined to imported brands.

Indeed, cigar volume imports outperform exports by three to one - 3,840 kilogrammes compared to 1,133 kgs of exports — according to data from the Statistical Institute of Jamaica (Statin).

Last year, imports of cigars and cheroots were valued at US$131,681; exports amounted to US$27,008.

The Adamses say their cigar operations is concentrated in Kingston but with some marketing done from New York.

Their 12 brands compete domestically with other Jamaican cigars, including the Jamaica Grande and Santa Cruz, according to cigar retailers.

Another rival brand, Royal Jamaica, was a favourite, but is said to be unavailable currently.

"Royal Jamaica was by far the most renowned and we would love to see it in production again," said Stacy Anderson, manager of Last Call Duty Free & Tobacco shop at the Norman Manley International Airport.

The competing brands against Barrington House "are not consistent, but Jamaican Grande is doing well", she said.

small producer

Barrington Cigars is a small producer, but one intent on growth.

"It is estimated that approximately 278 million cigars were imported into the US in 2011 alone," said Margaret 'MJ' Adams, who is managing director of Barrington Cigars Jamaica.

"We are currently in the United States, Germany, Canada, and more recently we have successfully began to penetrate China. We are also constantly looking to expand into other markets," Adams said.

Statin data otherwise indicates that cigars are also exported from Jamaica to Antigua, Bahamas and St Lucia - not markets in which Barrington has a presence. Statin says it would be a breach of the Statistics Act to release the name and contact details of companies behind the trade data it collects, while the Jamaica Exporters Association says it has no member who exports tobacco products.

Barrington Adams says his company's presence in Germany has been affected by current economic problems of the European Union, and that he has travelled to Hong Kong and Korea hoping to open new markets for the brand in those countries.

Statin data indicates that the US is Jamaica's major cigar export market, accounting for 77 per cent of sales volume and 71 per cent of revenue last year.

The main sellers overseas for Barrington Cigars are brands 'Pride of Jamaica', 'Montalvo', 'Fundadores' and 'Harvill', which comes in five flavours: rum, cognac, passion rum and coffee.

In 1996, Barrington House Premium Cigars Jamaica Limited was formed to acquire Combined Tobacco, a factory that was four decades old at the time. The company was later renamed Barrington Cigars Jamaica Limited in 2003.

"My brother Barrington Adams and our adoptive father and real estate business partner Asher Hiesiger were successors to Combined Tobacco," MJ Adams said.

The company operates a tobacco farm of undisclosed size in Clarendon, handles production and sales from Kingston, and its products are warehoused in New York, but Margaret says there is no legal or operational relationship between warehousing company and the Jamaican operations.

"They are independent," she said, but owned by the same person.

The New York operation is exclusive distributor of Barrington Cigars brands in the US market, she adds.

The company's Spanish Town Road, Kingston, plant produces 1.5 million sticks annually but full capacity is four million sticks, Barrington Adams told Wednesday Business.

The cigar company employs up to 72 workers, with 22 working full time as rollers. The cigars are hand-rolled.

The siblings note that they have been able to pull workers formerly employed by Cifuentes, another former Jamaican cigar maker, which at one time employed up to 600.

The tobacco for Barrington's cigars is sourced from its Clarendon farm and a number of farmers, but the company also imports the 'Black & Mild' cigar made by Altria for distribution locally.

The Adamses say 25 per cent of the output from their Kingston plant is sold locally but they hope to grow that ratio to 35 per cent by 2013.

It is not clear how Jamaica-made cigars product stacks up in quality against other big producers.

But according to Barrington Adams, the soil types of Jamaica and Cuba, which are in the same geographical zone, are quite similar and, as such, the flavours of their cigars are also similar.

At one time, he adds, there were five Cuba-owned factories in Jamaica.

Cigar manufacture in Jamaica dates back to 1875 and was pioneered by the Machado family, according to reports on the history of the sector.

Combined Tobacco, which was acquired in 1996, was owned by a "Jimmy Chang who also worked in the Fernando Garcia factory in Cuba", Barrington said.

"When we got in, there was a lot of debt which we satisfied. Workers were also owed money. But they were loyal. We started making a profit in 1998," he said.

The Adams siblings say the company remains profitable, although Barrington says he has never drawn a salary or taken cash from the company, preferring to reinvest in local operations.

COST OF LABOUR

The operation is currently challenged by the cost of labour which 'has gone up', and also by difficulty in sourcing good-quality packaging and on-time printing locally.

"We are forced to source packaging abroad and also use printing services there, and when we do, we pay high duties to bring them in," Barrington said.

Recently, however, Barrington Cigars caught a break in the form of market assistance received from state investment agency JAMPRO, which is helping to introduce the cigar producers to the tourist sector.

The new market segment has increased the company's revenue by 10 per cent, the Adamses said, and they see scope for further growth.

Having participated in JAMPRO's Business Linkages Programme in 2011, Barrington Cigars now has access to hotels, duty-free shops, gift shops, airports, lounges and supermarkets.

The duo is now planning to open an office in the resort city of Montego Bay to facilitate further sales.

In the meantime, their focus is on developing "brand recognition both in the local and overseas markets and focusing on a more extensive network in acquiring larger market share", said MJ Adams. Enditem