ACHP Interview with Michael Herklots of Ferio Tego Cigars

Transcript

1. 2.

Three.

All right, we have the one and

only Michael Herclotz in the

building from Fairy Otago.

How are you, Sir?

What's up, man?

It's good to see you, man.

I'm very excited about this

podcast.

I am too.

I'm excited about the day we got

the whole day together.

Yeah, it should be entertaining.

But the reason why I really am

kind of excited about this one

is even though you're 10 years

my senior in this industry, our

stories are similar in a lot of

ways.

You start off in retail just to

really kind of briefly some

eyes, you started off in retail

and eventually you gravitated

into having your own brand.

Now kind of for starters, when

you started, you don't really

talk about the kiosk at the

humidor and then how I, and I'm

going to bash this name, however

you say, what was the cigar

story it starts with?

AG Gloucester St.

Yeah, that's not how it's spelt

at all.

Massachusetts is weird like

that.

Gloucester, Worcester, But it

looks like Gloucester.

Gloucester.

Yeah.

So when I when I started doing

my research on it, I was like, I

think this is it Gloucester.

Yeah.

So you started, you were there

for about two years and two

years, right, Something like

that.

OK.

So like, what was, did you find

yourself around anybody in that

particular point where you might

have had like a mentor or

somebody that really kind of

carried you along into the cigar

industry?

Because that's really when

you're in your infancy, right?

Yeah, but it was a such a wild

moment in time because I loved

working retail, but at that

point I was still so

passionately focused on becoming

a musician that as much as I

took my job seriously and I

loved doing the work, my long

term vision was moving to New

York and continuing to perform

and and do all that.

But there were, you know, I was

very lucky.

I've always been around older

people, you know, my, my social

circle was always just older.

And so when I got into the

industry a little bit at the

kiosk, definitely when I got to

Gloucester St. the, the, the

customer base, my coworkers,

just everyone treated me like an

adult.

And it was a pretty important

shop.

And so a lot of reps would come

in and they would treat me like

an adult and, and be willing to

teach.

And you got to think time and

place too.

That was 9899.

And so it's right at the tail

end of the cigar boom.

And there really was no resource

for information.

So it's very old school in that

way.

Like you, you learned from

people who were generous enough

with their time to share.

And so that that era of sales

reps was a really important era.

I think back, I mean, they were

legendary reps And then even, I

mean, listen, that's I met Rocky

Patel in 1999, maybe 2000, but

he was selling Indian tobacco.

I met Leto around that time.

I mean, all those I met

Jonathan, you know, all these

guys were just starting out kind

of when I was starting out.

And so there was a like, looking

back on it, these are people who

have continued to play a very

meaningful role in my life over

all those years.

Just wild when you think of

where it all started.

But I will say that's a long way

to answer your question.

The original manager at the

Gloucester Street store when I

was working in the cart, he

really, he saw that I was very

passionate and very serious.

And at the time there were free

Wednesday night tastings and so

I had no money.

So I would go to these free

Wednesday night tastings and he

could see quickly that I was

really passionate about it.

And so he would always like

spend a little extra time with

me and teach me a little more.

And then ultimately, when I went

to Gloucester St., he had left

to become the GM at Davidoff and

Madison Ave.

And then I was going to New York

quite often.

And so I would stop by the

Davidoff shop and see him.

But even that was crazy.

Like I was 2021, you know, and,

and they would bring me upstairs

to the VIP lounge and pour me a

coffee.

Like who the fuck is this kid,

you know?

But then Fast forward, he was

like, look, if you're going to

move to New York as a musician,

you know, if you need a day job,

you got 1 here.

And so then when I moved to New

York, I started working at

Davidoff.

And then certainly that's where

I think he really became one of

those key mentor like figures.

But I guess it did start in the

era that you're talking about.

So who's the guy?

David Kitchens.

Is he still alive?

Yeah, You still talk to him?

Yeah, a bit.

He left the industry maybe 10

years ago now, but he was with

Davidoff till 2008.

Then he left to run Holtz in

Philadelphia for a year or two.

Oh, no kidding.

And then he had a place in

Providence, so he would, he had

a, he worked on a store there

for a little while and then he

left the industry and he's back

to like building spaceships or

something.

So he saw the potential in you,

obviously.

Yeah, and then, you know, when

you really like, it's funny, I,

I still see people I knew from

Boston, you know, and they, they

always say like, you know, we

always, the you always spoke

about cigars differently.

You know, that was even like my

first year 2 in like, I don't

know what the fuck I was talking

about.

But it also didn't matter

because at least what I was

conveying was what I

experienced, which was not

rapper binder filler country of

origin.

It was just like, this one

tastes like this.

This one reminds me of this.

You should, I know what you

like, you should try this.

And so even like over the years

now I see people I haven't seen

in 20 years and they're like,

dude, I remember you.

I used to come into Gloucester

St.

You always had this

recommendation and this that,

whatever.

But definitely when I got to New

York, you know, Davidoff

flagship store on Madison Ave.

was a serious place.

The, the, the, the customers

were wild.

You know, it was, it was the

probably one of the most

important stores in the country

at that time.

So it gave me a lot of exposure

to serious cats.

You know, I mean, every

manufacturer that was anyone

wanted to be in that shop and

they came in every celebrity,

every banker, anyone who was

anyone like that was the place.

And I got there when I was 22.

So I had to quickly kind of

like, figure out my character

and figure out what worked and

what didn't and how could I

still be authentically me but

also, like, Polish myself up for

Madison.

But then David really, really

took me under his wing there,

gave me a lot of opportunities.

A guy named George Brightman,

you'll always hear his name pop

up with guys from my generation

because he just was a very

generous guy.

Worked for Cigar Aficionado for

a long time.

Yeah.

I.

Don't think he likes us too

much.

Oh.

That's all right.

He helped out.

You know what?

He doesn't know you.

I'll tell you that.

Yeah, but he helped out Pete

Johnson a lot in the beginning.

You know, everyone has a George

Brightman story.

If you were, if you were active

or growing in that late 90s,

early 2000s period.

Well, he's kind of popped up

again and he's been on a lot of

the podcast and stuff with Bear

and with Coop and all these

other things.

He has me blocked.

He blocked Palmer.

Really.

Yeah.

Well, these things happen.

No.

Big deal.

Seems like a good guy.

Honestly he does.

I just want to get him like a

good camera, something decent,

maybe like a reasonable chair so

that you know.

Yeah, but that's you know what,

man?

Like that's generational, bro.

I mean, you know, it's like

Facetiming with your parents.

Like there's no like, hold it.

Up just.

Hold it up.

Everything is done here.

You know it's I'm.

Looking at your ear, mom.

What are you?

What are you going to do?

That's all right, yeah.

That's too funny.

All right, so I feel like, so

you did Berkeley College for

four years, right?

And obviously your dream was

jazz music, so on and so forth.

And then as you're kind of

developing, I feel like you had

the need for the job, but not

only that, I think that you saw

opportunity with those jobs to

kind of parlay like, hey, you

know, we can get the band in

here, we can do these specific

things.

Is that something that that was

that your focal point when you

kind of got into the cigar

industry on the retail level?

My focal point when I got into

the industry in a retail level

was making sure I could get a

discount because I couldn't

afford the hobby.

That's fair.

But you know, as an artist, man,

you get, you get cuckoo about

stuff, you know, you find

something you love and that

passion button gets engaged and

it's like, oh man, you just go

down the rabbit hole of it all

and you know, you want to be.

Every artist I know wanted to be

an artist because it was their

favorite thing to do and they

didn't want to do anything else

other than their favorite thing

to do.

And so they try and figure out a

way to make a living, but then

often they have to find a day

job that they dislike in order

to pursue the thing that they

love.

But I got lucky because I got a

day job doing something I also

really loved and I loved

learning about.

And especially when I got to New

York, I remember we were having

a lot of success with our band

and, and some of the other

projects I was doing.

And so I would take time off

from the cigar shop to go on

tour to go play.

And I really missed it, you

know, like, I mean, I would

bring my laptop and I'd like

e-mail customers and see what

they need and call in orders.

So I can also remember very

early on thinking like, I can't

imagine not being involved in

this.

Like it's just something so

special.

Especially then when you start a

meeting like I met the Quesada

family or like 2003 I went I met

Christian Arrow and went to

Honduras in 2003.

Did he teach you how to retro?

Hell Did who?

Christian.

It certainly came up in

conversation.

That's his thing, yes.

Absolutely.

Even then I didn't participate,

but he did.

But you know, it just, it's,

it's all just so circumstantial

and all these things just

aligned.

And I remember thinking 2004

actually interesting.

We were talking about George

Brightman.

He was working for Xenoplatinum

and he had to take some time

away for some health stuff.

And I was working at the time,

Wednesday through Sunday at

Davidoff.

And George was doing all these

events all over the country and

he couldn't do them anymore.

So I said, look, if we can

reconfigure these events and do

them on Monday nights, then I'll

work.

And then Sunday after we close

the shop or Monday morning, I'll

fly to wherever this event is.

I'll do the event and then I'll

fly home Tuesday.

And that way I can be at work

Wednesday.

And they were like, you know, we

can't, we can't pay you for

seven days.

Like that's outrageous.

I'm like, no, no, no, no, I

don't even want that.

But I'll cover it.

Just pay for my flight, pay for

my meals.

But you don't have to.

I already have the job.

I'll just go do it.

It'll be experience as I worked

like 7 days for I don't know a

year like doing these events.

But it was such an awesome

opportunity.

I met all these people and gave

me experience speaking on behalf

of a brand and you know, sharing

it with people around the

country.

It was just, it was just an

awesome experience that my motto

became if I can do it, I will do

it and if I can't, then I can't.

But so that became this

interesting balance of my life

where I get our band to be like,

hey, we got a week in LA, can I

take a week off?

Yeah, go ahead, take a week off.

Great, let's go.

Let's go perform in LA for a

week, Killer.

Then I'd come back and go do a

cigar tasting in fucking

Kentucky or something, you know?

But that kind of just believing

that there is a reason why all

of this is in my life and

trusting that there is a plan

beyond what I can understand.

But if the opportunities are

presenting themselves and I can

do it, why would I say no to

something that's so obviously

possible?

And so that was it.

And it was just, it was a series

of saying yes to as much as I

possibly could and then in the

moment, try and see why I'm

there.

What can I get out of it?

And even if it wasn't clear in

the moment, you know, even now,

26 years later, there are really

meaningful relationships that

have had, you know, pivotal

moments in my career or personal

life that all came, you know,

from one of these little trips

or one of these tours or one of

these things just happens,

right?

So at what point do you meet

your wife?

I met her.

So I got, I was, I was working

for Davidoff Madison Ave. and

they bought a store on the West

side and they, they, it was a

franchise and Davidoff bought it

from the franchise E and they

moved me there as GM.

So I was just sales associate

and they're like, you're the

guy.

So they moved me there as a

general manager and I was doing

a lot of teaching for the

American Sommelier Association,

which is wine education.

And so when I moved to the West

side, I took that with me and I

started doing the events there.

And my wife's old roommate was

the admin for this association.

And my wife's office was across

the street from the mall where

that shop was in.

So the next class, this girl

calls Tiffany and says, hey, my

friend Michael's doing this

event.

You know, we're going to smoke

cigars and drink wine.

My wife said, that sounds

terrible.

And then she talked to her mom

that night and her mom was like,

oh, slap on some lipstick and

go, you never know who you're

going to meet.

And she came in and it was like

all these wine dorks and all

these people.

And then like in walks this

elegant woman.

And I'm like, where she was

working for you Remember Zagat,

the the restaurant guys.

So she worked for Zagat.

So I'm like, dude, I just got

here.

Like, where do you eat around

here?

You know, like I've been eating

in this Whole Foods downstairs.

I want to die.

She was like, I just get a salad

and sit at my desk.

I'm like, well, that sounds

terrible too.

Like you want to go to lunch

tomorrow?

She was like, yeah, I'll go to

lunch tomorrow.

I'm like, all right, let's go to

lunch.

That was it.

That was 2006, fall of 2006, I

think.

Nice.

Then we started dating O 7 and

then Rock'n'roll and marriage.

So marriage and then kids and

then suburbs.

So you have two daughters,

right?

10 and 8 I think. 11:00 and

9:00. 11:00 and 9:00 so close.

I was close.

I had I had 11 and 9 originally.

You had old information.

But you said on one of the other

podcasts, I was just trying to

put it all together as far as

the dates are concerned.

So you travel so much last year

and the year before especially,

right?

You're constantly going around.

How do you find the time?

First of all, are you still

travelling at the same pace?

Let me ask you.

That yeah, you know, I always

say I'm not going to and it's no

different than what I just told

you.

If I can I do you try and set a

more reasonable schedule, try

and carve out more time, you

know, put as many of my family

things in as I can so I don't

miss stuff.

But then, you know, if I'm, if

I'm out last week and I'm out

next week and I'm home this

week, and then someone says,

hey, do you think you can do an

event on Thursday in Detroit?

I can, right?

And I'm trying to build a

business.

So fuck yeah, I'll go to

Detroit, right.

And then it's like, well, as

long as I'm going to Detroit, I

could come in Wednesday and then

we can do two things in Detroit.

And then before you know it, I'm

gone for another week and you

know.

I mean, that's the forever

challenge, right?

And your kids are right at the

age, you know, 11 and 9, where I

don't know if they're into

sports or I think they're into

ones in the gymnastics.

Yeah, gymnastics and soccer and

all of it.

You don't really want to miss

any of that stuff either, you

know?

It's really hard and I do my

best to make as much as I can.

But you know, I think they also,

they understand what we're

doing.

I mean, they remember when, you

know, daddy worked for another

company and I was traveling a

lot then and, and then COVID was

great because we were, everyone

was together, you know, but then

once we started getting back

with Ferrio, I remember

explaining to them, you know,

I'm going to have to start

traveling again.

But it's different because

before I would travel because I

had to keep my job and I had to

prove, you know, that I'm doing

a good job and that way I get

paid and said now it's

different.

Now this is Ferrio Ortega and

this is for us.

We're not doing this for anyone

else.

This is our family.

This is Brendan's family.

And this, I'm doing this for

you.

I'm do you know, this is a, this

is a different kind of move.

And I remember it was like after

my, I don't know, it was like a

after the first six months or

something, I was travelling all

over and I'd just gotten home

and I was like, look, let's

make, let's have a great weekend

because I have to leave on, on

Monday again.

And they're just like, see a

Christmas Dad, just like that.

I was like, yeah, but I have to

do it.

And my, she was so little at the

time.

She's like, I know Dad, it's for

Fairy Otego, right?

I'm like, yeah, exactly.

She's like, all right, you have

to go do it.

I feel like daughters are more

blunt than sons, you know?

Yeah, I know that you only have

two girls, but I could tell you

that, man, when my daughter

speaks, it's like daggers.

And it's just cutthroat, right

to the point, extremely

distinct.

And you're like, OK, got it.

Whereas my my boys are a little

more.

They're they can be emotional,

but they're not as direct.

That's funny.

All right, So I want to touch

briefly on Brendan because you

mentioned him in a few of the

other podcasts, but it's very,

very brief.

So for one, who is he?

I know he's obviously no idea.

Yeah.

So he's obviously a business

partner of yours with Ferrie

Otego.

You know, where did you meet him

and how did that relationship

kind of build?

So before Ferrie Otego, I worked

at a company called Netsherman.

I've heard about them.

Like he just says it like nobody

knows who that.

Is.

Well, some don't.

I mean, let's face it, it was

we, we really only built, built,

built the cigar business

starting in 2011.

So even though, you know, people

that were from the Northeast or

maybe even Florida, because of

the connection to New York, had

a lot of relationship with it.

But otherwise, you know, if you

go to Chicago, no one ever heard

of that Sherman really.

So I don't want to assume people

know it.

Plus it's been gone for five

years.

So people who just it's true,

started enjoying the hobby in

the last five years.

No, I didn't know about it

either.

Right.

So anyway, I worked for Nat

Sherman.

I got hired in 2011 from

Davidoff and Brendan was the CFO

of Nat Sherman.

He started a couple years before

I did 2009.

And so he was actually really

instrumental in either at

advocating if, if the family

wanted to keep the retail

business and keep the cigar

business, that they really had

to go all in, take it seriously,

fix some of the problems and

make it a real business.

And I mean, Brendan tells the

story really funny, but that the

Shermans, they were dealing with

this recruiter who was like, we

have to get somebody like this

guy Michael Herklatz at

Davidoff.

And they kept bringing in these

candidates and, and the the

family would be like, you got to

find something more like

Michael.

And then the recruiter came in

one day and was like, how about

we just go get Michael?

And Brendan was like, finally,

that sounds like a great idea.

And then they reached out to me

and we had some meetings.

And then, you know, it was like,

right as we're doing the deal,

Brendan tells me the story.

It was so cool.

I'm like, all right, well,

let's, you know, we're going to

do it.

Let's do it.

So then we really got to work

building the business, you know,

and trying to grow it and being

thoughtful.

And, you know, I really

appreciated his support, but

also his discipline.

I mean, he's ACFO.

So like we were talking about

this in in the store earlier,

you have one person who thinks

very reasonably, very

responsibly disciplined.

This is numbers, this is

revenue, this could be

investment, but let's just like

look at this pragmatically with

zero passion.

I, I wish I could do that

because I look at things exactly

the opposite way and forget that

things have costs and you know,

you need to get more than you're

putting out and all that kind of

stuff.

And so that's what we did all

through our time together at Nat

Sherman was was work together to

grow the business, balancing my

impatience and and aggressive

forward movement with.

Reasonable thought and test and

measure and repeat.

And and so we did.

We worked great together, not

without conflict, but it was

great conflict because we had

the same goal in mind.

And so it was terrific.

And then when Nat Sherman sold,

then we worked together on that

acquisition and transition into

Altria, which was a pretty

substantial body of work.

And then we grew the business

together with Altria for

whatever it was three years.

And then COVID hit and then we

had to work together to try and

sell the business in 2019, which

we tried to do first.

Then when COVID hit, it killed

the ability to sell it.

And then we had to work together

to close the business.

And so when it was all done, you

know, we, we were much closer

than we had been ever, you know.

And so then we were talking

about who was doing what and I

was going to do this ferry Otego

idea and just start something

small and new.

He was going to take time off

through the holidays and then

look for something later.

But then the opportunity came

where we might be able to

acquire the old brands.

And I, I had engaged with Altria

and said, you look, if you're

willing to sell the brands,

we're going to buy the brands.

And so they were like, look, you

got to put an offer in because

other people are bidding.

And if you want it, you know,

get serious.

I'm like, I'm fucking dead

serious.

So I called Brendan, I'm like,

they're going to sell the

brands.

And it's like, well, you know, I

figured that was going to

happen.

I was like, well, I told him we

were going to buy the brands.

And he goes, who the fuck is we?

I'm like, all right, listen,

listen to the idea here.

Ferry Otego.

We use that as as the as the

flagship that becomes the Halo

that becomes the brand.

And we just put timeless in

Metropolitan under it, let it

exist exactly as it did before.

Go back to the factories.

They're already said that

they'll support me in my

endeavor.

They'll definitely support us if

we're bringing back the volume

of the old stuff.

And he was like, OK, let's do

it.

And we got to work.

And you had the relationships

and.

We had the relationships, so,

but we also trusted each other.

And that was a huge, like, if

you think about that moment in

time, especially in the

Northeast, I mean, it was

absolute chaos.

You know, the, the pressure of

COVID, the working from home,

the, the, the literal deaths and

health issues that were

affecting so many people up

there.

I mean, it was such a

distressing time.

And now we're winding down this

business and we were just

exhausted, like just beat up and

exhausted.

And at the same time, we're

losing our jobs and we have to

come up with whatever this new

plan is going to be.

And how do you even think about

it when you've been stuck for

home, stuck at home for nine

months and just everything has

gone wrong?

And so, you know, our business

plan was like an afternoon of

just brainstorming like, how

might this work and what could

go wrong?

And you know, where are we

exposed and is, do we really

think this is going to work?

Yes, it's going to work.

Like it has to work.

And then I remember we just

looked at each other and he's

like, look, I trust you

implicitly.

Can you make your side work?

I'm like 100% can you handle all

this, all the finance and all

the back end and putting

together the corporate

structure?

He's like 100% like then dude,

we've already done this before.

Like let's just fucking do it.

He's like, all right, let's do

it.

Then we had to tell our wives,

which is a whole different.

That was a whole different part

of the process, but an equally

good one.

And they said the same thing.

Like, you know, Brendan, you

don't his wife, like Brendan,

you don't know anything about

making cigars.

Like, yeah, but he does.

He's been doing it.

And my wife's like, but you

don't know how to, you know, do

books and business stuff and

whatever.

I'm like, of course not.

I just know how to do everything

up until that point.

And that's he's the CFO, he can

do it.

But together we've been doing

this already.

Let's just do it.

And they were like.

OK, go for it.

So does he go to PCA too or no?

Oh yeah.

He, he travels a lot.

He does a lot of the industry

stuff.

He works a lot.

We're we're distributed by

Davidoff.

So he works very closely with

Davidoff and all of our planning

and procurement and then he

works a lot with the factories

doing that planning and

procurement, all of our

corporate stuff, all of our

trade stuff.

And then he would come to every

event that I go to.

It's just, you know, it's very

expensive to pay for two flights

and two hotels and two.

You can't stay in the same room.

What's that one bed?

Excuse me, I have a call.

Hello.

No.

So, you know, we're like local

stuff.

He does a lot.

He's coming to a great smoke

this weekend.

So he does a lot of the stuff

and is doing more and more.

But if it's if we're talking

about a week in market with our

representation and doing events

and do it, it's better that I

just do it solo and then he

focus on still maintaining all

the operations at.

Home.

That makes more sense.

Yeah.

All right, so, so Davidoff

handles your distribution and

obviously you had a relationship

with Davidoff, right?

As Michael Wasp was, you know,

high fiving in the background

over here.

How did you get that to happen?

And like, what did that look

like?

Was it just a phone call?

Was it a whole pitch?

You know, 'cause that's a big

deal.

Having Davidoff handle your

distro, that's up there.

It's about as up there as it

gets.

Yeah.

I mean, there's no, there's no

better endorsement than the

global leader of luxury cigars

saying we want you in our book.

For sure.

So I worked for Davidoff for

nine years.

Then I left Davidoff to join

that Sherman.

One of the blends that we make,

our metropolitan host, was made

by the Arrow family in Honduras

that Davidoff subsequently

bought in 2008.

I think they bought Camacho.

So that product, that project

stayed in that factory after

Davidoff bought it.

When I joined that Sherman, we

were going to get serious about

the cigar business.

And literally my first call on

my first day was to my buddy JT

at Davidoff.

You know, like, OK, first day,

what are we going to do?

Like we have this project here,

it's we're going to grow this

business like we have to really

work together.

So we immediately started

working together again, working

on this host project.

And then we also had retail.

So I brought in some of the

Davidoff brands into the Nat

Germantown house.

And so it was just a an

uninterrupted relationship from

2002 until 2020.

And throughout the process, we

were keeping all our factory

partners up to date.

You know, when we were trying to

sell, then when COVID hit, then

we couldn't sell.

Now we're going to wind down the

business like it was constant

updates to the factories of

look, this is where we are now.

This is where we are now.

So the last call we made in

November was, hey, don't throw

anything out, don't do anything.

We just bought the brands.

So after the holidays, when you

reopen the factories, let's

engage and let's talk about what

this is going to mean.

And so immediately they were

like, great, we'll get to work,

but how are you going to sell

this?

But I have no idea.

But we'll figure it out by the

time these cigars are ready.

So can you just start

production, which is, by the

way, a whole other piece of this

story.

By the time we started

production, now you're in the

height of the COVID boom and

every factory was already at Max

capacity.

We went to Casada, Placencia and

Camacho that did not need any

orders.

And we said, we just bought the

brands.

Aren't you happy?

And they're like, good for you,

but we don't have any room in a

factory and like, well, that's

tough because we need product

now.

And they put us in the front of

the line, all three factories.

And they started manufacturing

based on what we thought we were

going to be able to sell with no

money because we had just spent

all our money.

And they said no problem.

All of them, the cigar ring

started printing.

Everyone started manufacturing

and we didn't have to give a

dime.

And that's awesome.

And that's because, you know, my

and my parents are and my

grandparents, they all they

really believe in, like you do

the right thing, you stay above

board, you respect people, you

know, you treat people right.

And I've always operated that

way.

And when all of a sudden, you

know, this whole combination of

things happened and I needed

that little bit of room, every

manufacturing partner was like,

no problem.

So then we continuing dialogue

with what's happening with

production, what's happening

here.

These are the options that we're

looking at for distribution and

fulfillment and storage,

whatever.

And they said, you know, we

should look at this like this is

an interesting opportunity, like

let's look at what we can do.

And so we took a very different

approach.

Rather than just fulfillment or

just representation, it was a,

it was a much more, it's a very

different way of structuring a

distribution deal.

But ultimately it ended us up in

the portfolio sitting next to

Avo and Camacho and Zeno and,

and those great brands and let

alone Davidoff.

And so ultimately that became

the plan and which was awesome.

But then the other problem is

now we went from Brendan and

Michael and a couple of brokers

figuring out how to bang on

doors and sell cigars to now we

were going to restore these

brands through Davidoff

distribution, which was

enterprise level distribution.

We didn't have enough product on

order manufacturing.

So then we had to call the

manufacturers again and like,

OK, you want to know how we're

going to sell?

Good news, we're distributed by

Davidoff.

That's great news.

Yes, here's the updated P OS and

we need, you know, another 40%

of what we said we were going to

need on top of what we asked for

and we need it by September.

And they were like, what are you

doing?

Like we're going to, we're going

to do this right bro.

We had 100% of our orders from

all the manufacturers sitting in

Pinellas Park, FL by the third

week of September.

No kidding.

Wow.

All three.

Everything.

That's impressive.

I mean to get one to do.

That is to everything dude.

Placencia esta Lee COVID boom

100% delivered and right.

No wet cigars, no bullshit,

properly aged like real deal.

Beautiful work.

Wow, wow, man.

All right, so, so you, you start

to take off here, right?

And you kind of like one thing

that you liked that you've

mentioned in in previous podcast

too, is the fact that when you,

if you were knocking on doors,

OK, realistically maybe get to

like 102 hundred accounts maybe

in your first year, but you

maybe right, you kind of

launched into a fact where you

had 500 to 1000 accounts

somewhere in that realm, right

in that threshold.

So now you have PCA coming up

and you always kind of have

these goals, I would assume as

far as where you want to be.

What would be a number for you

that you'd say, hey, this is a

great PCA.

How many accounts would you want

that were new to open up Ferry

Otego this year?

It's not the way I view a show.

I should ask Brandon that

question.

It's a it's a Brandon question.

Well, you know, like I think

every year we we probably get 40

or 50 leads.

I think that's a really nice

number.

That's a realistic number, yeah.

Yeah.

But you know, we count the

leads, we follow up, we share it

with the Davidoff crew, they

follow up.

But more than just the leads,

for me, it's the conversations.

And sometimes those

conversations are with are with

our current supporters.

But look, if if we have to fly

all the way to New Orleans or

Las Vegas to write an order,

everyone is doing something

wrong, right?

But if you're together with the

majority of the industry, the

best in class, are we really

going to say two boxes of this,

three boxes of this, five boxes

of this, or we going to talk

about tell me about your

business exactly and how you do

business.

And then let me share how we do

it.

And are we really making the

most money together that we can

or what are we missing?

And so for me, it's the

strategic conversations and like

the real demonstrative moments

of partnership that I leave

saying, OK, these are the

opportunities for this year.

Could be a special project,

could be a series of events.

It could be just a shared target

of, of how we're going to do

incremental increase or add

these new blends.

Those are how we measure

success.

The sales are great, the leads

are awesome, but leaving with a

strategy with, you know, two

dozen partners, that to me is

the measurement of success.

And I think Brendan would say

the same thing.

So yeah, that's kind of

incalculable.

Of course it is, which I know is

brutal for financial people and

people who think, you know, like

most smart business people do.

But as an artist, it's you got

to think differently than that.

You have to think about, you

know, who loves the work and who

who resonates with your story

and resonates with the products

that they will go out and share

it and evangelize it and tell

the story over and over and

over.

That's worth more than you know.

A5 store order.

Is there a retailer, let me ask

you this, is there a retailer

that you've kind of seen maybe

as of late, in like the past six

months to a year that you're

like, that's somebody I would

want to do business with?

I like how they do things,

whether you see them on social

media or wherever.

Of course.

Yeah.

Who is it?

You.

We already do business.

I know, but that's where it

started.

Yeah, well, it did.

Yeah, of course it started.

And there's there's a handful,

but you know, I've at this point

we're three years in right 3

1/2.

And though I, I fairly Ortega

was in no way household name,

but I think among the the the

best informed, well educated,

savvy members of our industry.

I have to believe they've all

heard of us and hopefully seen

ratings, seen reviews, seen the

success of our brand in market

since our launch.

So if we're still not doing

business, then I don't know if

year 3 is the year that I should

be trying to convince.

No, yeah, I don't think that

that's, I'm not.

I'm not looking at that aspect,

you know what I mean?

I just think that.

So sure, there's there's great

stores out there that we are not

in I.

Just think that real recognizes

real.

Sometimes you like, you know,

hey, I like what you're doing.

You know, I, I or you see, you

just see them and you can see

that they're working hard

whether they're supporting your

brand or not.

So I have those conversations

and once in a while they work

out great as we did.

And sometimes they say, oh,

thanks very much.

Congratulations to you too.

And.

I'll tell you what man that was.

And you're not doing.

Business.

Our conversation was like a

breath of fresh air for me.

PCA is so up and down.

You know, they're really high

highs and they're really.

Low lows, right?

Of course.

So you can you can be sitting

there for an hour or two with

nothing going on and you know,

and then some a retailer comes

along and they just punch you in

every sink in the gut, you know,

with we hear that I don't have

the shell space.

I'm not really interested.

I just want to really try the

cigars or, you know, you could

just tell that they just want to

have, they just want some free

sticks and they just want to

move on their way, right?

Or they want to get out of the

conversation.

Yeah, which is also fine bro.

Right, I don't, I don't want to

sit here and talk to you either,

like right, 100%.

So, you know, I think that on

that day when when we had kind

of reached out, when we when we

had kind of met, I was like,

that was fucking awesome.

You know, that was, that was

definitely you.

Hobbling on one wheel.

I was, I did, I popped my calf.

So, so I'm that retarded dad

that will do everything with

their kids as far as

athletically.

So when it comes to playing flag

football with them or practicing

or anything like that, I'll go

full Sprint and stuff and after

it snaps, I continue to play

with them anyways and.

It may come as no surprise to

you.

I'm not that dead and I have

never, I have never snapped

anything bro.

Oh man, I've popped both calves

at this point.

I don't even have calves, I go

from knee to ankle.

That's fantastic.

There's no calves.

How do I get that?

I'd like, well, just stop doing

stuff.

Like eating, Just give up food,

that's it.

I really like food.

I hear you, I do too.

All right.

So if you're kind of looking

back, like you said, you're

still kind of in your infancy,

right?

It's three years running, right

as you look at a child.

Exactly.

Yeah.

So but you still have enough

time there where you can kind of

look and say, hey, could we have

done this differently?

Would you have done anything

differently looking back saying?

As far as your approach, in a

perfect world, we would have

done things differently OK in a

COVID world, we just did it the

way we we did it sure.

So like flow we we we launched

Ferio.

We also shipped timeless the 1st

2 Timeless at the same time as

Ferio.

It didn't give a lot of, we

didn't leave a lot of room for

brands to be re established

because we felt that it was so

important to get the timeless

and metropolitan brands back on

shelves as quickly as possible

to close that gap of absence.

And it seemed critical at the

time.

I don't know if it was critical

necessarily, right, but it made

the most sense given our

manufacturing partners, our

distribution partners, it just

made the most sense at the time.

But you know, looking back, I

don't know if I would have,

would have rather let Ferrio

live for a little while longer

and maybe launch Timeless in

Metro in, in the first quarter

of 22, let's say.

But you know, time and place,

man, it was just such a wild

moment and there were so many

things happening and it was just

like, let's just, let's just do

it.

The faster it's done, the better

for everyone because then we can

figure out what normal is going

to be.

Because the other thing is we

didn't have a normal launch

anyway, because it's not like

this is a brand new brand, brand

new company.

We're going to start with store

one right here's here's person

zero and then it's two and then

it's four and then it's 8:00

because we just let we let it

RIP through Davidoff's

distribution.

So like day one when we launched

Elegance in Generoso, we shipped

to 400 stores the first day.

So we couldn't take that

approach anyway, you know what I

mean?

So I don't look back with

regret.

I look back with like, you know,

some level of combination of

like wonder and PTSD that even

got through it all.

Well, you kind of always look to

get better, and the only way you

can get better is if you kind of

look at the past, right?

I'm 100.

I love reviewing the past, I

love learning from the past.

But I don't live in the past.

No, you know, and like to think

of how many people during COVID

have said, I can't wait to get

back to the way things were.

It's like you've never said that

in your life.

Why would you spend the next 15

months trying to reset your life

back in 2019?

And things will never be the.

Same.

They will never be the same.

And if you take the opposite

approach and you learn during

this period and you get scrappy

and you get agile and you try

new shit that you never would be

able to do before, you're going

to come out the other side way

better than you were in 2019.

And I really think we did.

I think we, we've, we've

established a very small

business that has a super

comprehensive portfolio.

And now we have the benefit of a

great core portfolio that we

don't have to innovate with.

We just have to tell each story

over and over and over and over

again and continue to build the

equity in the brands that we

already have.

Do you think that, I mean,

Timeless and the Metropolitan

are two totally different things

when it comes to comparing Ferry

Otego?

Yeah.

Do you feel like when you

because you released him at the

same time Ferry Otego just

didn't get enough spotlight at

that point?

Because it did.

It got lots of spotlight.

OK, tons of spotlight, right.

But again, it was only two

skews, right, But just Elegante

and Generoso.

I didn't have the, I wanted to

do Suma, I wanted to do Core,

but I had to get Metropolitan

and Timeless back because these

were important brands to people

who've been selling them upwards

of 30 years.

Like you know, we got to get

those back in market.

Yeah, and it became a point

where customers were out seeking

them for through other

retailers.

Like you couldn't get them

anywhere else.

And once they were gone, they

were gone, you know?

And then we finally got Suma out

a year and a half ago, two years

ago and I then it was like OK,

boom.

Now Ferrio Otego has presents

beyond just two boxes now and

that is really lifted

everything.

So I, I, I don't have regrets.

I think we did it.

I think we did exactly what

needed to be done in our

circumstance, which is there's

no, there's no case study for

what we did.

No, you know, you can look at

lots of startups, lots of cigar

startups and you can learn which

ones did things well and which

things which people didn't.

And but there's no way, no, if

anyone wants to do it right, we

are the first case study.

So feel free to, yeah, good luck

with that to beat us up and

figure out what we did.

Write that down.

But we're a one of one story for

sure.

So now, OK, so we're going into

PCA.

You have, you know, more often

than not a lot of brands like to

do limiteds, right?

Some will do it every month,

which you've kind of spoken your

opinions on and then some will

yeah, maybe once or twice and

some will we'll talk about maybe

one release every quarter or

maybe just two or three

throughout the year.

A lot of a lot of consumers,

brand owners, manufacturers will

actually use that as kind of an

incentive to book an appointment

at the show so that they can get

that traction.

You don't have a limited, right.

So what is your way of pulling

other retailers into your store,

like right into the into the

booth to really kind of talk

about Ferry Otego?

Because as as much as memes rule

the world.

Yes.

Korus King.

OK.

Period.

I agree.

You can look at, I'll look at

any retailer's point of sale

system and look at their top 10

selling SKU's and they're not

limited.

Well, just overall volume.

I mean that would make more

sense.

So what do you sell when you run

out of the Dog Booger 2024?

Well, the Dog booger the 2024

year was really good.

So I would put that in a salty.

I'd put that in a sampler pack

with the other with the dog

Booger.

But you know what I mean,

Retailers need a sure thing.

Sure.

And eventually they retailers

want brands that they don't have

to evangelize because their

brands that their customers

already know, love, trust and

want to buy.

That's our model and it sounds

like a very, you know, new way

of thinking or, or prehistoric

way of thinking, but it's, it's

just, it's the way it is.

I mean, if you look at the

strongest brands in our

industry, the most time honored

are often the ones with the

least amount of innovation

because they're just doing it

over and over and over and over

and over.

Yeah, I mean that's.

Not critical.

It's not meant to sound like

criticism.

At all that's that's.

Exactly.

It's admirable because that

that's the, that's real brand,

real brand equity.

I think that that's true the but

now if I look back at the end of

2024 and especially Q3 and Q4 of

that year, you started to see a

dip, right?

You started to see consumer

smoking less.

And a lot of those brands, what

they did was they started

pushing out a lot of different

limiteds, you know, to boost

their sales to further that

number so that they could finish

off positive for the year,

right.

So you know, I don't have the

answers me neither, you know

what I mean.

And and I love your view on

things.

I love your perspective on

things.

I believe on the whole Korus

King thing.

I also believe in bringing

attention back to the brand when

it comes to one offs or

different.

Things we did, we did a, we did

a limited edition timeless in

2022.

We're going to do a limited

edition this year on another

project.

So to me, as long as they're

thoughtful, like you can see,

you can see the difference when,

when you look I, I'm a Davidoff

fan forever.

And now you know, more so

because they do our

distribution.

If you look at what they're

doing, they're not just dropping

flavor of the months every

three.

They're meaningful releases,

commemorative releases.

They have they're they have a

real thought and structure.

They can answer the reason why

they exist.

And it's not to close the gap on

a tight year.

It's because they're bringing

something memorable and

different to either celebrate a

moment or or often experience

that can't be offered in in

Mass.

And I take that approach.

Maybe it's 'cause I, I learned

under that discipline for so

long.

So if we have something to

celebrate, yeah, absolutely

we're going to celebrate with

something special and limited.

But you know, it's, it also

depends on where you are in your

journey as a brand.

So if you're an established

brand, time honored brand, then

sometimes you need the the

headline and excitement of

something new to keep your time

honored brand feeling relevant

in a time when all these new

things are happening.

But we are this kind of hybrid

of legacy and the new and being

a three-year old company with

three brands, 12 blends, we have

something new that you don't

sell.

And it's much to me, it's much

more thoughtful to rather than

bring in something brand new

that no one's ever heard of that

everyone has to tell a new story

of.

Well, if you don't have Ferrie,

Otego, Timeless Sterling yet,

make that your new, you know,

let's grow the business with

something that already has fans

so you can see a faster return,

so that you can help build the

equity and make continue to make

these brands and blends the ones

that people go to after the

shiny limited meme cigar is sold

out.

You know, we have our portfolio

was big enough.

There's fourteen stories.

It's a lot of stories to tell

for sure.

And you add one more, that's one

less that they're going to tell

from the 14 we have.

Yeah, I totally.

And there's definitely some self

cannibalism or whatever where,

you know, your consumer is no

longer smoking the one, they

move to the next one and so on

and so forth.

Yeah, I mean, I could see all of

those things.

I can also see the fact that a

lot of retailers aren't really

good at their jobs.

You know, that's always the the

downfall in this industry.

And sometimes like to bait the

hook to keep them interested.

You know, sometimes companies

will make a new cigar every

month or something like that.

And I, and I don't necessarily

agree with it.

I don't think I disagree with it

either, you know?

But the cycle has shifted.

When I started company, brand

creates cigars, retailer

discovers brand, retailer and

brand former relationship that

then the retailer evangelizes to

their consumer.

They share the excitement and

the moment of discovery to the

consumer.

The consumer appreciates

retailer and then discovers

brand, which is how it should

and then goes back to retailer.

Retailer goes back to brand now,

right Brand.

The phone.

Makes a product right, then

brand has to make customer fall

in love with it, right?

Customer has to ask retailer

enough times for it that then

the retailer will order it,

right?

And then when it gets to the

store, brand has to tell

customer to buy it right?

And then they have to go back

and find it and then come back

again.

Which is crazy.

But it is what it is.

It is what it is.

You know, it's, it's not

frustrating when it's just the

North.

It's not just our industry,

right?

It's beer, it's sneakers.

It's, you know, the, the whole

relationship of brand and

consumer and retail has just

shifted because it's become

easier for consumers to have

relationships with brands.

And so if that's what it is, no

problem, then it's our job to

make the retailer's job easier.

For sure.

It's just the way it is, you

know, and if you fight it, then

you get frustrated and but you

also don't win, you know, So you

have to just look at it.

If this is the language we're

talking now, then let's go, you

know, no problem.

I'm going to work harder.

I'm going to do more events.

I'm going to get out on the

road.

I'm going to help make the

relationship stronger with our

retailers, but I'm also going to

spend most of my time with your

consumers.

And your consumers are going to

come because I'm the one that

put it out on our social brand,

our brand social media to

connect that circle again,

right?

But that's what it is.

Right, All right.

I got two more questions a

little, you know, a little bit

further down the road here.

OK, so Speaking of that

structure, I had a customer of

Postonia reach out to me today.

They emailed me and they said,

hey, I bought some cigars from a

retail store and and I've just

received the product and it was

all extremely dry.

Now I know this account, I

haven't done business with this

account for years just because I

didn't like what they were doing

with the product and I'm not the

person to have that argument.

I'd just rather say we're done

here.

Customer asked me if there's

anything I could do for having

those bad cigars.

So what do you do in that

situation?

Well first of all I always

respond me too cause lots of

brands just yeah ignore it.

You can't dead.

Air, so you have you have to

respond.

My rule is always look our as

much as I'm grateful for our

relationship consumer, we live

and die with our relationships

with our business partners.

And so you're not a customer of

ours, you're a customer of

theirs, right?

And so the first thing is you

have to reach out to your

retailer because that's who you

did the transaction with.

And I can reach out to the

retailer, but you did the, the

deal.

So you should really work out,

work out with your retailer how

to make that hole.

But keep me in the loop because

if that retailer says, hey #

sand, well, obviously they're

not, they're not looking to keep

you as a customer ever.

And so then if I know that it's

in our best interest to keep

that customer as a customer,

then you find a way to help him

out.

And, you know, I don't think it

has to be 100% restitution.

I think people are really just

looking to it's almost just a, a

pulse check on on, you know, how

serious are you?

You know, what, what are you

going to do?

What I had a guy actually reach

out the other day who said he

bought, he was saying that when

he takes the foot band off his

Elegantia, it pulls a little

piece of the of the rapper leaf

off.

Oh, God.

And it's happened, you know,

four times.

And he sent me a picture of the

foot.

And I said, look, first of all,

thank you for sending this

directly to me.

And, you know, I'm sorry to hear

it.

And foot bands are tricky, and

you know, you have to take a

little care.

The good news is the cigar

didn't unravel, it didn't fall

apart, and as soon as you light

it, that part's gone anyway.

But obviously that's not a fault

of your manufacturer.

That's just one of the realities

of this.

It's not a systemic problem,

certainly, or I would know it.

But if you'd like, when I get

back to town, if you want to

give me an address, I'd be happy

to send you a couple Elegantias

and I'll take the foot bands off

myself and that way you know

they'll be all right.

And he wrote me back.

He's like, all good man, no

sweat.

I just wanted to let you know,

and next time you're in town,

maybe we can have a cigar

together.

That's cool.

Perfect, you know?

But if you said hey, that'd be

great, here's my address.

All right?

I'm not going to say I can't

send you a whole humidor full of

cigars, but I'll send you a

couple cigars, What the hell,

you know?

For sure.

OK, that's a good way to handle

it.

But on, on larger issues, I

bought 2 boxes and they're dry.

Well, they weren't dry when we

delivered them.

And so you really have to have

this conversation with your

retailer.

And then of course, you have to

evaluate your relationship with

that retailer too, because if

there's, if yours are dry,

they're all dry.

And if they're all dry, that's

the end of that.

Right.

All right.

One last quick topic.

So I don't know if you've seen

this circulating, but Aficionado

is allegedly being there's a

lawsuit pending with them as far

as selling data.

Really.

Yeah, you haven't heard that at

all.

He.

Doesn't subscribe, so he's like.

So you're not a subscriber.

So it's been, it's been.

So here's what's kind of

remarkable to me is it's kind of

all over social media.

It's like it.

It's in my feed, you know,

Really.

Yeah, like recently, Yeah, I've

been on the road.

I haven't looked at my feed.

So, you know, I get hit up with

this and I'm thinking to myself,

wait a second, how do you know

that this fits for my profile,

right?

Like how did Instagram give that

away to the lawsuit people about

Aficionado, You know what I'm

saying?

I don't even understand what it

is.

So they're.

So they're supposedly aficionado

had sold the data of their

consumers without the consent of

the consumers knowing.

Name, address, phone number,

that type of stuff.

Yeah.

And now there's this lawsuit

that's pending on Aficionado.

So you haven't heard that.

From Who's suing them?

It's a class action suit some

lawyers trying to get together.

You know what, man, everyone has

my name, address, telephone

number.

I mean, honest to God, what's it

worth anymore?

Could you imagine trying to hey,

listen, I have this really

valuable database of name,

address and phone number of men

between the ages of 35 and 6030%

who have died already and.

Yeah, I thought, I thought that

was kind of crazy too, right?

Because, you know, our phone's

listening to US 24/7.

If I say electric scooters, all

of a sudden they're going to be

on my feed.

And that's perfectly fine.

But meanwhile, it doesn't feel

like a class action lawsuit

that's going anywhere.

And I have to believe that my

data has been sold so many

times, significantly greater

volume, greater price and to

higher targets than whoever

would want to buy Cigar

Aficionado's list.

So I I won't lose sleep over

that.

One, I just thought it was

crazy.

Man, it was crazy.

All right, well, I think that's

pretty much where we're going to

wrap things up.

Man, this is great, bro.

Thank you so much for coming out

and doing this podcast and and

doing the cut and light

upstairs.

I appreciate the opportunity to

share the story because as as

many times as you share it,

there's still infinites number

of people who haven't heard it.

Sure.

And I mean, I told you last

year, I think what you guys are

doing with this show and with

all your content and all your

work, even the shop, I mean, if

you guys haven't been to the

store, it's so well appointed,

it's so well lit.

You know, you know who works

there, you know who doesn't?

It's, I was saying to one of the

guys like, I've been in, I've

probably been in 600 stores in

the last three years, 2 1/2

years.

And you just know when a shop

has it right?

And immediately you're like,

you're in the 1% of the 1%, you

know, which seems so crazy.

But when, when so many stores

are doing things so poorly, not

because it's bad, but just

because they're not thinking

differently or trying harder.

When you walk into a business

that is clearly focused on the

business and the customer

experience and the and, and

caring about your vendors and

making sure that it looks good

and it's well lit, man, it's

just such a relief because you

know that the scenario that you

just described with the

gentleman with dry cigars from a

from a bad retailer would never

happen here and that we were

talking in the car there's and

you asked the question too.

Are there retailers that you

want to be in?

Sure.

I want to be in every retailer

and there's legacy retailers

that have been in business

forever.

It would be an honor to have a

place in their humidor, but I'm

also really proud to be in the

new stores and the smaller

stores and the and the single

owner operated stores.

When you walk in and you see how

serious they take it, it's just

like, this is where we want to

be.

This is where we're going to

grow because this is where our

story is going to be shared and

told and loved and revered.

So I'm from this to the show, to

the to the store.

It's just man, you guys do it,

you do it right.

I'm super pumped for the rest of

the night.

Thanks man.

I appreciate that dude.

And then you're going to be at

the Great Smoke.

And then the Great Smoke Man

Saturday you're.

Going to be there this Saturday.

It's going to be awesome.

It always is, yeah.

It is.

It's a great experience.

For sure, I'm hosting the

virtual side again so I got a

full day on camera and I don't

know when this is going to air

but.

I'm I'm probably going to

release it tomorrow.

Oh cool, so then if you're

watching this on Friday then

make sure you can TuneIn

Saturday on YouTube and Facebook

and watch The Great Smoke.

Too Full dose of Michael

Herclots throughout the weekend.

Brutal.

Do it in small doses, break it

up a little bit.

Well, thanks again bro.

I appreciate you coming out now.

So, all right guys.

Thanks.

Show Notes

In this interview, we have the pleasure of speaking with Michael Herklots, a true visionary in the world of premium cigars. As the co-founder of Ferio Tego Cigars, Michael has been instrumental in reshaping the landscape of the cigar industry. Known for his deep knowledge, unwavering passion, and dedication to the craft, he shares his insights into the artistry behind Ferio Tego's exceptional cigars, the future of the brand, and his personal journey through the world of fine tobacco. Join us as we dive into the mind of one of the most influential figures in the cigar world today.