Cigar Hustlers Podcast 239 Skip Martin Part 2

Episode Summary

Part two of the Cigar Hustlers Podcast's special-edition sit-down with Skip Martin of RoMa Craft Tobac, recorded in Orlando. The first stretch is pure off-the-clock conversation: Skip's family Disney trip (he was stationed in Orlando for Navy nuclear power school decades earlier), the economics and logistics of a Disney VIP tour guide, and watching his daughter Fiorella turn into a roller-coaster fiend on Guardians of the Galaxy and Rise of the Resistance. It's a rare look at Skip with work tabled — though he admits he still ended up answering customer complaints while standing in line.

The conversation then turns to Weasel Fest. Skip confirms the event is happening Labor Day weekend in downtown Austin, moved to Sunday so Scarface can headline again, with roughly 250 attendees instead of last year's 400-person target. He's candid about the money: a $50,000 headliner, six-figure production costs, a VIP dinner that costs more than VIP tickets, and the fact that the event has never been a moneymaker. He pushes back on critics who claim it's a cigar-selling event, notes weasel packs likely won't be included this year (with 500 boxes of Cattador Grand Corona earmarked for sale on site instead), and directs anyone wanting ticket news to email Sean rather than him.

From there the episode gets into the state of the industry. Skip and Mike discuss PCA trade show impressions, Boots' role at the show, and celebrity cigar projects — praising Guy Fieri's genuine commitment to the Espinosa project, Ken Hamlin's hands-on work with Arrival, Ed Reed, and Tiago Splitter with Ace Prime, while contrasting them with celebrities who won't put in the work. Skip also points out the most powerful person at the show nobody recognized: former FIFA secretary general Jérôme Valcke at the Mombacho booth.

The meat of the episode is Skip's macro read on the cigar business: the 2018 Nicaragua embargo scare that pulled demand forward, the 2019 US inventory glut and Nicaraguan layoffs, COVID shutdowns followed by an unexpected boom, rollers and skilled workers leaving Nicaragua for the US border, and the resulting hit to cigar quality. He argues US demand is now falling sharply — down 80 to 100 million cigars — while Europe's inventories are empty and demand is climbing, explaining the three-tier European distribution model (brand/distributor/retailer thirds, Schuster, Brexit's effect on UK pricing) and why big factories with existing European distribution will absorb that growth. His closing warning to small brands that don't own their production: know whether you're an arm or a toe at your factory, because "they're going to cut that bitch off."

In This Episode

1. 01
   Disney With the Family
   Skip recounts a two-day Disney trip, the VIP guide experience, and his daughter Fiorella's newfound love of roller coasters.
2. 02
   Never Really Off the Clock
   Even on vacation, Skip is answering customer complaints and handling factory issues from the line at Magic Kingdom.
3. 03
   Weasel Fest 2022 Details
   Labor Day weekend in downtown Austin, Scarface headlining Sunday, roughly 250 attendees, and the real cost of throwing the party.
4. 04
   Why Weasel Fest Isn't a Cigar Sale
   Skip answers critics who call the event a direct-sales play and explains the value proposition of the ticket.
5. 05
   PCA Trade Show Observations
   Boots at the show, meeting Eric Espinosa and Nick Melillo, and why the trade show isn't a place to bring the family.
6. 06
   Celebrity Cigars Done Right and Wrong
   Guy Fieri with Espinosa, Ken Hamlin's Arrival, Ed Reed, and Tiago Splitter versus celebrities who just want a check.
7. 07
   The Coming Demand Dip
   From the 2018 embargo scare to COVID whiplash and Nicaraguan labor loss, Skip maps how the US market got overstocked.
8. 08
   Europe, Distribution Math, and Knowing If You're a Toe
   How European three-tier distribution works, why big factories will capture the growth, and Skip's warning to small brands without their own factory.

Brands & Cigars Discussed

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Transcript

Alright, we're back. Episode two of the special edition. Part two? So we answered one question.

Yes, yes. First hour. Maybe we can go with something a little less broad. Well, let's change the tempo a little bit.

Let's talk about your vacation first, right? Can we do that? Sure. All right.

Sure. So, how have you been doing this? So how was the Disney experience so far for you and the fam? Let me ask you that.

It was really good. I mean, so, I went to boot camp in Orlando. There used to be a naval training. Used to be a naval training thing here, yeah.

Submarine training too, I believe. No, well, they didn't do submarine training. Nuclear power school was here. So all the submarine people are nuclear power trained.

Okay. And in fact, if you went to nuclear power school, it was so long, they never sent you to sub-school, which was in New London. So you kind of got fire training and damage control, flood training, you got all that kind of in a quick shot here in Orlando, but I went to boot camp here, and I went to nuclear power school here, and then I went to A school in nuclear power school here, so I was here for about a year and a half, and during that time, I went to Disney a number of times. Oh, no shit.

Never was a fan. Remember I said the last time I'd been at Epcot was like 30, 30 years ago. But yeah, so we started off the weekend, we did Hollywood Studios, and it was the normal situation, but we did the lightning pass. For one, we only got this for one fucking ride, yeah.

Yeah, yeah, which, but it was, you know, it was nice. Yeah. I mean, we did, we didn't, we did a lot of stuff that wasn't ride related per se, but the thing is, is, you know, The standing in line for an hour and a half, two hours, I think we were in jet out of line for like an hour and a half. Yeah, we weren't, like the projected time frame for that was like an hour or 120 minutes, but we were only in there for about 65, 70 or so, which wasn't too bad.

There was a bit of fuckery. I kind of like the set your expectations really low and then over deliver. I kind of liked that because we were moving to the line pretty quick, but even still like an hour in that line feels like three hours. Yeah, it's brutal.

But at least it was air conditioned. So like, yeah, it's almost like it's almost like somebody sat down and said, OK, let's assume it's 100 degrees outside. Right. They're going to get in this line.

They're all hyped up. They're going to reach their limit. And as soon as they reach the limit, that point of the line, there should be air conditioning. Right.

Where is that? They've definitely done that data analysis. And then they're going to in about 30 minutes, they're going to go, oh, man, I really like the air conditioning. Then that's going to wear off.

Then you just got to start doing, you know, characters and shit or something. Yeah. Cause they're in line with kids. Something to engage.

Yeah. Let me tell you, I'm a full grown adult. Right. I can't stand lines.

Right. Standing in line with a two year old and a three year old, a six year old and a five year old and a seven year old. It's like, right. That's a whole nother level of the third circle of hell.

Yeah. Yeah. So, you know, that's animal class. Yeah.

At least they got to entertain each other though, which was kind of nice. Yeah. Yeah. We had a good number of, You know where there are different levels of engagement there you know that fucking helped yeah but but so so I'm glad we did that the first day right because I was like hey you know it's new for Fiorella is new for us but uh that we're off pretty quick oh yeah but the second day the VIP standard man that's that's the only way to fucking do it if you go to Disney but it's like 600 800 bucks an hour man it's it's no joke you're not it gets up there I mean like we went Nate lunch We had lunch, or dinner, or what, we had lunch, so, number one, it's a place Mike was saying you couldn't even get into if you just, you'd have to have months.

Yeah, the Be Our Guest thing is fucking, it's not easy to get into. That morning we go, hey, maybe around three o'clock we'd like to eat, do you think you can get us in here? Boom. She's like, hey, oh, yeah, no problem.

Table for eight, boom. Yeah, well, you're all set for three. Mr. Shivers.

So, there was that. Plus, she was just awesome. Our concierge. Yeah.

Kennedy was her name. But it feels, I mean, it got to the point where I was walking through the park and I would see a line. I didn't really care what the line was for. Right.

I didn't even know what the line was for. But the first thing that went in my head was, there's something over there worth standing in line for. Can we just go cut? Can we just go to the front of that?

Kennedy would like the front of that line, but... Yeah. Sir, that's for the bathroom. I don't care.

Yeah. I just went in front of everybody else. Dude, I'm going to tell you right now, just dodging the fucking getting into Magic Kingdom and getting out of Magic Kingdom alone is worth it. That's always been the part you hated the most.

So they came and picked us up at the hotel, drove us to the back lot, like where all the secret, top secret kind of, you know, where they deliver the toilet paper. Right, yeah. Because they're very, she mentioned it a couple of times, like, you're never allowed, a kid isn't, a kid or a guest is never allowed to see a character. Right.

Yeah. Without, without the head, just in, in, in any, unless they're a hundred percent of character. Right. Right.

Right. Cause then, cause it takes you out of the, the magic, the magic, yeah. Right. So, but that extends also to don't let anybody, like, don't let them see you emptying the trash.

Right. Right. Yeah. Right.

We'll hold the whole trash can away, put a whole new trash can there, and then we do the trash business out of people's view. Right. I mean, they have everything down to a fucking science. To a science, right.

To suck as much money from you as possible. But one downside of coming in through the backstage is you get to see a little bit of that stuff they don't want you to see. So they're very strict about, look, you know, don't take pictures, don't pay attention to anything you see back here, pretend it doesn't exist. Right.

So there's only certain backstage places, they won't let you go down into the tunnels, unless there's no kids. Like she said, there's things down there that you can't unsee. Like what? Like Goofy without his head on.

I'm like, oh, okay. They will not let kids down there. Yeah. Like Paul DeGreco from Smokin'.

Kiss My Ash? Yeah. That would crush him. He'd be shot.

He wants to see it, but you don't want to see it. Once you open that door, man, you can't unsee it. No, but it was great. We had dinner at Joseon, the Spanish restaurant, and we basically hit every Disney property.

Yeah. Yeah, we did. In two days. The only thing we skipped was Animal Kingdom, but we hit every big ride for the most part, you know.

The power move was just calling an audible and going to Epcot. Yeah, that was a nice flex. And then we hit all four points of the big things at Epcot. And, you know, she was worried, like, so she, so, you know, this person's experience, Kennedy knows what's up.

So she knows their time frame, right? She knows what time the park closes. Right. And she's like, okay, well, if you want to hit Frozen, Garden of the Galaxy, Ratatouille, and, um, shit, there was one other one that we hit.

Frozen, Garden of the Galaxy, Ratatouille. Oh, and Finding Nemo. Like, that will pretty much suck the majority of your time, right? And we'll be done right at 9 o'clock when the thing closes.

When we get out of the car, Justice starts saying, "Oh, Test Track. " So Justice is a pro, man. Justice is a pro. He goes up to Fiorell and is like, "Don't you want to ride those cars?

" And I'm like, "Oh, shit. " You can't do that. That's a billion dollar waste of time. That's a bad ride.

You don't want to go on that. Right. This is a time suck. No, this is a mistake.

So, you know, then we kind of gathered together. I'm like, I'm gonna tell you right now that Test Jack is every bit of fucking disappointing. And they're like, okay. So, and you could see the relief on her face.

She's like, oh, phew, fucking thank God. So yeah, I mean, hitting all that shit, dude, if like, if we went today and we said, hey, let's, let's go to Epcot, right? For one, you could forget about Guardians of the Galaxy. Like that ride would never happen.

You know, you probably get in Ratatouille and maybe frozen. But then you'd miss the Nemo or something like that. Yeah, but this is what I'm saying though. Let's say you do four rides and the Galaxy ride was like a two and a half hour wait, which is its own, like I said, third circle of health.

Yeah, the only way you can get into that right now is only by doing, by getting on at seven o'clock in the morning and punching it in. That's it. Yeah, that's it. That's it.

So the fact that the amount of time you save, you can do two parks or three parks in one day, just not waiting in lines. Right. So that in itself makes it worth it. Yeah.

" Right. " Right. It's expensive. But you know what?

But think about it. I think it ended up being like 600 bucks an hour. Yeah. Sounds about right.

Is it based on number of people in your party or is it just a flat rate? No. It's a flat rate based on... $600 if you're two?

If you do New Year's Eve, it's the max. If you do January 2nd, it's the least. So, it really depends on whatever the demand of that date is. But not on people, though.

Your group can be up to 10. I was going to say, you guys have like 9, 10 people, so 600 bucks to get all of you into a ride, not that bad. Yeah, but it doesn't even include the tickets. It doesn't include anything.

The first rule of thumb about Disney is the ticket is just the price to get in to spend more money. Oh, yeah, yeah. 55, you know, it's like buying, I mean, it's every single thing as a way to extract another penny from you. Right.

You can't get off a ride without going through a gift shop. And if you're with, you know, kids, it's like, buy me something, buy me something. But you know what, our kids were all pretty good, none of them were really pushing, I mean, you kind of turned it on at the end. You're like, "Hey, what do you think about this?

" Well, Teddy said, "I like, I like, I like, I'm like, let's get it. " But then the boys, I try to talk the boys into getting like Viking stuff, and then they're like, nah, I don't... Hey, at least they're right. That's what I'm saying.

" Stuff? Yeah. Yeah, stuff. But your kids are like, "Well, I really don't want that.

" I solidified them for a droid build as well. Ah, maybe that's the way we'll go. So they know, you know, I actually have to go next week. Ah.

Yeah. You're going to Disney again next week? I have to go next week, yeah. Oh.

So our Disney trip has a residual cost. Yeah, there's a parlay, yeah. There's a parlay. You know, I'm like, hey.

Plus, the other part of that is, they're going to be like, well, why can't we skip lines? Right, yeah, what the fuck is this? Yeah, why are we going to wait in line? We're talking to skip.

Well, you know, like, I actually told my, Jax specifically said, hey, listen, I'm really proud of you for not, you know, saying, well, okay, I'll take that just to take something. And you know, and when Justice started to have the meltdown that it was ending, and like, I'm gonna miss everybody, we're not gonna see anybody anymore, like that whole thing, I was like, look, when we come back, why don't we do the droid build with that, you know, that'll make you a little bit happier, right? And they're like, okay, so, it's a good parlay. The droid build is basically the boy version of the princess dress-up thing?

I think so, you know, so they have two major things in Hollywood studios, they have this lightsaber thing. Right, I've seen that. Yeah, I remember the geeky girl going, this line is for this thing that you had signed up for six months ago, and why are you in this line? Right, like, what are you doing here?

You don't even understand the powers that you're fucking with at this point. Right, and I don't think, I just think that that, so when I kind of did my research, that's just so in-depth, like Star Wars-wise, if you're not like a real geek about Star Wars, a lot of things will go over your head. Well, that was the other thing, the boys were really good, is like, this was entirely built around Fiorella. So it was, okay, do we go to a, or a princess thing?

Right. Like, the boys had zero, look, I mean, when I was nine years old, I'd have been all over hugging up on a couple of those princesses. Yeah, I think Justice was down, but once he saw that his older brother wasn't down, he's like, all right, I'm gonna sit tight, you know? I mean, I would have totally taken the shot.

Right. A little ass grab there? Whatever. I'm not talking about, you know, I don't want to be canceled.

I was 10 years old, but I'm saying getting a hug against a set of those Sleeping Beauties, you know. I'm down. I mean, 10 when I was 10, or 9 when I was 9, is different than 9, didn't they? Oh yeah, absolutely, absolutely.

So they sat tight, they were cool, you know. I gotta tell you, man, yeah, there was really, you know, kids are tough in that long span of time, and the bitching was pretty much non-existent, you know. no two days no yeah it was they were kind of bored at dinner but that was like a drawn out a little bit of a stretch yeah no but it was good the painting of the the the dessert though they were down with that yeah yeah that was great yeah to sum it up uh it went so well that me getting pulled over by the state trooper today there's nothing didn't even bother me you know what what's kind of remarkable for me is like i mean i have seen you in like the family kind of uh atmosphere but Not only in like Esteli, right? Or, you know, we're always kind of, there's work involved to some aspect, right?

But like this time around, work, everything work-wise is really kind of tabled and the whole focus was the theme park, right? So, it was awesome to really kind of see you as, you know, the whole family aspect, right? It was really, like, I haven't seen that. Well, there was like an hour there where I was in a heavy chat session over some slapdickery.

Right, but that's standard, you know, but, you know, that didn't really interrupt all the interaction with Fiorella. I got chastised for that. Yeah, of course, you know. Passive aggressivized?

Yeah, passive aggressivized, you know. Yeah, but whatever, you know, that ain't fucking, that ain't no thing. Yeah, Arlen said, you don't see Mike on his phone the whole time. He spent time with his family.

He's a good dad. Oh, great. Brittany will tell you otherwise. That's true.

Brittany will definitely tell you otherwise. You realize it's your daughter's birthday and you're chatting on about stuff at work and we can never leave work and I'm like, oh man, gotta pay for the trip, I gotta pay for the trip, Brittany will be the first, Brittany will be the first to tell you that when we travel, like I'm still acknowledging orders, I'm still going back and forth with things, I'm still doing those things, your job never leaves you. Yeah, I was dealing at one point with a customer complaint while we were in line, like a customer was complaining about something, so I was like, oh, I didn't realize you were at Disney World, I'm like, hey dude, it doesn't matter. I got to respond, right?

Yeah. Yeah, you know, and, but even still, you know, we were, you were like another degree out of that environment, right, where your main focal point wound up being family and activities, and it was just really kind of cool to fucking experience that with you, you know, I really had a lot of fun, I enjoyed it, you know, like, I don't know, it was really fucking cool. So. Well, I can tell you, I'm, you know, personally, like, that's not how I would spend two days of my life.

Right. Yeah. None of that was, like, for me, entertaining or fun, but I get a lot of, you know, kind of seeing Fiorella all the way live. Like, seeing Fiorella walk off the Guardians, first of all, Fiorella is a roller coaster.

Is a beast when it comes to roller coaster. That's what you were saying, yeah, she's a roller coaster monster now. Look, I really was like, ah, you know, teacups, you know, the little mine train. I thought, oh, maybe she's not, so I insisted on sitting with her.

And the whole time I'm like feeling like on the seven drawers one. Right. I was feeling a little bit, even on the Ratatouille ride, I was like, that was an unnecessary amount of spinning. It was unnecessary.

And I'm like, you know, because I get motion sickness. Right. So I'm like, you know, how's she going to handle it? She's like, she's like, I want more.

Give me more. Yeah, we're just feeding the beast. Yeah. So I didn't go on the Guardians of the Galaxy because I know my own limits.

Right. Right. So I'm standing outside, Fiorilla comes off, or no, before Fiorilla and them come off, I see all the people coming off for like 10-20 minutes. And it's everything from, oh, that's the greatest ride I've ever been on, oh, that was crazy, can you believe this, can you believe that?

And then I saw people coming off that's like shook. Like kids, you know, kids that are like, you know, and then the family's like, oh man, I knew that's too much for her, you know, whatever. And there's like the eight year old girl going, ah, this is the worst experience of my life. And then there's, there was like this 20 year old girl, whatever, she's like, like needs an EMT, she's like, she's in full distress, like, I don't know what was going on with her, but they were like basically, like, you know, putting water on her head and everything, it was like crazy.

And I'm like, oh, shit, this thing must be crazy, this thing, because, you know, you're just seeing all the- Right, he's witnessing all the feedback. Immediately after they get off the ride, they're coming out the exit door where the air conditioning was coming, so I was right there. " And they're coming down these stairs, and I'm like, "Oh yeah," because they have the same shirts on and everything. And I see Fiorella, she's just like, moving out front.

" But she's like, like flexed up, and I'm like, uh-huh, man. That was the move. Yeah, she's a roller coaster, uh, she's gonna be a pro. Yep.

When she gets bigger, we take her to Velocicoaster. Exactly. We do that. We do it the right way.

So, yeah, man, I mean, shit, I was super impressed with how she handled all that stuff. You know, you would think that a six-year-old, eh, that could go either way. She's young enough to enjoy the simple ones. Right.

Like the Toy Story where you shoot at the things. Yeah, the Toy Story mania. Or even the Nemo one. Right.

It's basically just a waste 30 minutes, you know, or the Little Mermaid one. Right. She liked both of those. Right.

The thing about Fiorilla is she almost never, ever watches TV. Right. I mean, you know, she spends more time on her tablet than I would like for her to spend. Right.

But, you know, she's outside. She's swimming. She's active. She loves animals.

Yeah, she loves playing with the animals. She loves doing, like, activities, like coloring and drawing more than anything. But she doesn't watch a lot of movies, like she's not gonna sit in front of a movie and watch it for three hours. Right.

So she's seen some Disney things, but she's not like my kids when they grew up, they had every VHS tape, they knew all the characters, the whole collection. So where she really kind of lit up are the ones that she knew, like Frozen and Mohana, well there wasn't a Mohana one, but the Frozen, the Nemo one, she knew, but like Toy Story, she kind of knew. Right. But a lot of those, like Guardians of the Galaxy, she has no idea what it is.

No idea, right. You know, some of those things, they were kind of, they went over her head a little bit. Right. Yeah, it didn't matter as long as the ride was fun.

Yeah, like she has no idea what Star Wars is. She had no idea. Right. That whole thing, you might as well have been showing her, you know, something from the 50s.

Right. She has no idea. But she still had a good time on that ride. Right.

They're done, I mean, remarkably done. Well, the other thing is you have to realize they have no context, meaning they've never even been to an amusement park. Right. So Arland's like, you know, a carnival with the normal carnival rides or whatever.

Right, where somebody falls off and dies. So she's completely fascinated by the whole, the whole thing. Right. It's just like a whole brand new, like, you know, it's one thing going to Disney and you know what Disney's gonna be.

Right, right. She had no idea what it was. Right. No expectations at all.

You know, when we were walking around the Epcot and it's like, you know, You know, buy some funnel cakes, buy a beer, see a couple of characters walking around. She thought that's what Disney World was. She didn't even, she didn't understand, like, she's even seen a roller coaster, but she's never, she never had the context of where they do the, like, the Jedi ride where they do the whole story. Right.

In the 10 minutes of the ride. Yeah, the rise of the resistance. She's like, she has no idea what, she's like, you know, that's crazy. Right.

It's insane. It's crazy, yeah. That was a blast. Pretty good time.

What's the next on the subject? Weasel Fest. Yeah. People are wanting to know if there's going to be a Weasel Fest.

What the fuck is going on with Weasel Fest? So, um, the short answer is, there is going to be a Weasel Fest. It's going to be Labor Day weekend, it was supposed to be Saturday, with VIP stuff on Friday, and then kind of some shooting and stuff on Sunday. Then Scarface couldn't be there on Saturday, so we had to move the whole thing to Sunday so that he could be the headliner again.

Okay. He's a huge Roma guy, but oddly that's not reflected in the prices. You know, like I'm sure Nick could have Joe Rogan show up and do a little, you know, 15-minute MC. You know, Scarface is not in that mode, but I don't mind paying for it.

Right. So the problem is when that one piece of the thing costs $50,000 and you're only going to have 250 people, do the math, you're already at $200 per person before anything. Right, you haven't even touched booze, food, nothing. Right.

So, like last year, we ended up, we wanted to have 400 people, right, with 100 VIPs. And we planned for that. So we spent like three or four hundred thousand dollars, which would have been about a thousand dollars per person. Right.

We ended up having about 150 people there. So do the math. I mean, we spent like, you know, the tickets were two, three hundred dollars, whatever, but just the price of mailing the weasel packs was more than what we collected on ticket sales. Right.

Right. So, it was never meant to be a moneymaker, but when you have people criticizing you, oh, well, they're selling cigars, it's like, well, we're giving cigars away with the ticket, but the whole entire thing is not even about cigars, it's about just being a part of our world for a day, right? People fucking complain, well, they're selling cigars? I got some of that.

I heard some of that. About, you know, oh, you're selling, you're selling direct. Like, oh, you're inviting us here and you're selling cigars. You're selling grand perfectos that we can't sell in our store.

Give me a fucking break, dude. Yeah. So anyway, that's like the analogy that you said to me when we were rolling about, about like, you know, you have a dick, so I'm not going to introduce you to my wife, right? Because, you know, there's potential there where you could sleep with her, you know?

Yeah, come on. Yeah, exactly. It's fucking ridiculous. It was really wise what I said, but I don't remember exactly what I said.

Yeah, it was really on point. You had me dying. Yeah. So, just the one day, or are you going to do the VIP Friday, then there's a VIP Saturday?

The last email I saw, I think Mike had, so we were going to do a dinner at Bob's Chop House on the roof for the VIPs, which in itself is more than the cost of the VIP tickets, it's ridiculously fucking expensive, you know, dinner for a hundred people is like $30,000 or something. So the short answer is, I don't know, I'm trying to stay in as disconnected from the planning of this as possible. Right. Basically, A, it can't be at our headquarters, because the autism school took over the Grubhub place.

Right. And so our whole lawn area is gone. Okay. So, and plus everybody just wanted to hang out in the headquarters instead of being out in the...

Right. So then, and a lot of the expense was the tents and the stage and all this stuff. So we found this really cool venue. Justin Andrews did a event at Whiskey Fest when he was there at this venue.

And it's really dope. So, but, you know, anytime you do anything anywhere else, it always comes back to the smoking. Right. Yeah, I was about to ask.

So you can't do it without smoking. Right. So it's like this back and forth, like trying to find a venue where you could do the smoking. And in downtown Austin, you might as well be in San Francisco, I mean, it's like, you know, you can smoke as much weed as you want, but as soon as you light a tobacco product, it's...

Right, you're killing everybody around you. Yeah, exactly, you're killing the planet, you're giving us all immediate cancer, not even, you know, it's also, there's probably some gender complaint or something too. so um the long and short of it is i don't know the exact details but you know like last year we had two food things we had two uh beer things we had two liquor things we had uh three acts for music and the goal was to have 400 people so i think this time we're trying to scale it down to about 250 people right you know last year people just didn't get it what it was going to be and They felt like they missed out. This year, if you miss out, you miss out.

I mean, we're just throwing the thing. If you don't get it, you don't get it. So I don't know what to say about that, but it's going to be, I think we may still have two liquor things, but we only have one food thing. We're only going to have maybe one or two music acts, probably two, because the Mech Step, which is part of Third Root, I really dig what they do, so I'm going to try to get him to do the first thing.

, who I don't know if you know who that is, but it's a big deal and Scarface is more of a friend of ours so we went with him. I mean, he does great anyway. So, you know, you know how it is. Yep.

I told them to plant it small and then I'll add on to it as soon as I start. So, you know, if the ticket's $250, you're going to get $2,000 worth of value. I mean, it's, you know, whatever it is, but you know, I don't, I don't care about it. If it costs me 200 grand, 300 grand, it's not going to be, you know, 20 folding chairs and let's a bunch of fat guys sitting around just, you know, whatever.

Talking it up. Yeah. Or, and it's not going to be a trick or treat where you're there to, to buy cigars and get free cigars. It's a party.

Right. If you get it, buy a ticket. Right. You won't regret it.

Right. If you don't get it. Whatever your airplane ticket costs, whatever your hotel costs, believe me, the value you're getting at the event is more than all those three things together. Of course.

Of course. I don't think we're doing the weasel packs this year, just because I think we will have, so, I think we have another 500 boxes of the Cattador Grain Corona that we specifically earmarked for the event. Right. That we'll sell at the event, instead of including it in the ticket price.

That's cool. Yeah, and then... You need to smoke them there. And then, um, there will be a VIP something, but I'm not sure exactly what, but I would plan for Sunday, September...

Labor Day weekend. Whatever that is. Right. Fourth, I think.

Yeah. And if you can't make it, you can't make it. Right. So there you go.

It's like, it's like our cigars. Right. We're gonna sell them as fast as we make them. Right.

As soon as we put the tickets out, they're gonna be gone. So I'm not, I'm not sweating, you know, promoting it, whatever. If you get it, you get it. If you don't, that's cool with me.

Right. Okay. So, there's your answer, Phil. Because Phil always asks me.

Why do you say call him Phil? I thought that was Boots. It is Boots. It's Phil the cameraman.

He's got a different name. I thought Phil was the... I don't remember that guy's name, Phil. Stan?

Oh, no. Phil was the name you use when you don't remember the guy's name. I do. That's what I do.

But we named our cameraman Phil. Yeah. Okay, but his name... So, it's like a secret.

His name's not really Phil. His name's not really Phil. Okay, I'm not on the inside joke, I guess. He likes calling him Phil.

And then I just roll with it. Okay. All right, so Weasel Fest, check. Weasel Fest, just summarized, we don't know where, we know when.

Well, it's going to be downtown Austin. Oh, downtown Austin, Texas. Well, I meant specifically where. Yeah.

Okay. But we do have a date though now at least. Yeah. So if people want to start going planes and hotels, they start looking around.

Here's what I know. What I know is we've signed a contract. Right. We've paid a deposit.

Right. I think we're like $70,000 in so far, so it's going to happen, something is going to happen on that date. The train has left the station. You can't move that date.

Right, okay. So what I don't know is exactly what it's going to be. Right, but it'll be worth it. Right, so if you want to book a hotel in downtown Austin in the middle of, close to downtown for Saturday and Sunday and buy an airplane ticket, you're probably, you know.

You'll be safe, you'll be okay. Yeah, I mean, if you're at least going to see Scarface, what I would do, and I'm not saying this is a process. I'm just saying what I would do personally, if I bought an airplane ticket and a hotel room. For that weekend to Austin, and I would send that to Sean and I would say, hey, I've already booked.

Right. Right. Can you make sure you let me know as soon as possible when to buy a ticket? Right.

That's what I would do. Perfect. And I assume Sean would say, got you. Right.

I'll let you know when the ticket portal is going to open. Yeah. You can count on Sean. And it'll probably open an hour or a day before we kind of tell people.

Right. So that those 20 or 30 people can get in there and, you know. There you go. Yeah.

Easy peasy. Good deal. That's what I would assume. Right.

So, email Sean, not me. Email Sean. Email Sean. Email Sean.

What else? That was the only question I had. That's a question people have been asking me. Yeah.

I wanted to go to Orlando to ask you about Weasel Fest. No, you came here for Disney World. I'm just a bonus. What else do you want to know?

Yeah, let's go. Mike Palmer? What do I not know? I know everything there is to know about you.

I've stayed at your house. We have technically slept together. Wow. I've slept at his house.

Yeah. He did sleep at your house. Wow, that escalated really, really quick. Everybody knows anyway, Skip.

You've never been in my bedroom, have you? Uh, no. No, I've never crossed the threshold. Okay, so the answer is no.

The answer is no. Well, you've been in the room I slept in, though, when I was in there. What was I doing there? I think you're showing me where things were or something.

Did you have clothes on? No. No. Of course not.

Believe me, because I would still be washing that out of my brain. You wouldn't have made it here today. So let's talk about, what do you want to talk about? The PCA?

What do you want to talk about? Ooh, yeah, I mean, we haven't really covered the state of the cigar industry. You want to switch over to the Patreon? We're in an hour and a half?

Yes, let's do Patreon, and we can kind of... Okay, wait. We're not going to finish this half hour? How long were you out on this?

30 minutes? 30, and we do have a 9 o'clock. Fuck them. Fuck them.

Hey, listen, when you commit, you got to commit, you know? We're a featured guest. Yeah, you've got another hour and a half. How long do you think this Patreon is going to last?

I don't know. This guy's never on time. It's always late. Yeah, he's always late.

I'm not late. I either don't commit to when I'm going to do something or I'm exactly on time. Mm-hmm. There you got it.

Well, let's talk generally about PCA. Okay, okay. Instead of the cigar industry, we'll get 30 minutes left. And then we'll parlay that into the Patreon deets.

Oh, into the Patreon. Okay. Okay. I don't like, as a guest, having to dictate your agenda here, Mike.

I figured a certain level of professionality, you'd have some questions. Well, we had something. Well, questions. I didn't find that you were coming until 30 minutes before you were on your way.

You've been asking me to come. You know what? It's true. You don't wait till the fucking guy who's 80 years old who has a legend, who's a legend to die before you write his obituary.

You write his obituary, you have it continuously updated so that... So I should always have a set of skip questions on hand. Of course. Just in case.

Of course. Boots, am I wrong? Yeah, we may have some... Phil, let's Phil.

Absolutely not. We may have some shutters that he has to buy soon too, so I mean, you know, you gotta... Right, yes. You gotta prep them right.

Do you need new shutters? So let's talk about boots at the trade show. Okay. I'm gonna make some observations here.

Some observations here. Okay, let's go. Okay. Let's do this.

Based on the last podcast I listened to. So, number one, he gets it. He does get it. He knows his role.

He knows his role. He fucking does it. Yep. This is true.

He's on time. I remember the whole speech you had about being on time, blah, blah, blah, blah. Right. Who's the first person that's not on time?

Yeah, well. It was a minute, Skip, one minute, and it was my wife. That would have been longer than a minute. He said, one minute is not an excuse.

That's it. If you're not ready on the dot, we're leaving without you. That's it. He could have left, I would have got there.

He should have left. He should have. He should have. I'm soft.

You can't draw a line in the sand, wait for Palmer to stick his toe over it. Right. And then get mad when you don't do what you say you're going to do. I know.

You're right. I, uh, you know, I fucked it up. I should've, uh, I should've just left. Should've just left.

I would've parlayed in a whole other level of fuckin' fuckery. Uh, we might not have seen her again for the week. I mean, maybe in the end you made the right choice. It may not have been the choice I would've gone with.

But, my point of that is to say, I was very impressed by, uh, Boots' ability. Boots is a leader. He owns his own company. He's a leader of men.

He's in charge of shit. Yep. Know your role. In that situation, he had a very specific role, and he fucking executed.

He is fucking lapping this up right now. Am I wrong? But am I wrong? Am I wrong?

Am I wrong, Boots? No disagreements. Absolutely not. See?

See what I'm saying? I like that. Yeah, he was, he was, yeah, you know, it's really kind of remarkable, too, is like, he also geeks out, like, with the celebrities, especially, like, the athletes, too, and stuff like that. But we made sure that we worked it out where he had the opportunity to kind of meet those people, right?

And, yeah, he just went with the phone. Did you get to meet Guy Fieri? No. He wasn't excited.

He met him already, though. That was the one everybody was. You got to meet Guy. He met Guy at the Great Smoke.

Yeah, he met him briefly before. And, you know, whatever. It's great that he's in the car. Everything I've ever heard from anybody who really knows him is he's a first-class human being.

Right. Which, to me, means a whole lot more than any other fucking thing. Yeah, I mean, were you there? Yeah, you were there when we were talking with Eric, right?

No, no, Skip wasn't there that night. " He fucking stops. Yeah, I mean, yeah. Like, he could be in the middle of his meal.

But I'm not even talking about all that bullshit. Yeah, but... I'm talking about being a decent human being. Right.

Number one, be a decent human being. Right. All the other stuff is know how to deal with your celebrity, all that stuff is, you know. There's these people in the cigar world that think they're a celebrity.

Right. Step out of the cigar world for one second. Which is kind of funny. Like, I'm sorry, who are you again?

Right. Exactly. You know, I don't need to say any names, but you know, you're standing in a random restaurant, they don't know who the fuck you are. Nor do they care.

Right. Nor do they care. Nope. I don't give a shit.

Guy Fier walks in and, you know. Exactly. It's different. Yeah.

My only thing with Guy, and this is, you know, I'm not saying this is fair, so what I really think about that project is, A, I like all the guys at Espinosa. Right. I really, really like some of them. Right.

You know, like, they're really good friends of mine for a long period of time. Right. What I really like about Guy Fieri is, is he's not, you know, Ray Lewis, go to a couple events, sign a thing, and then when he's not thinking about it, you know, just go make me some money. Right.

He's really committed to supporting the brand, and he will do as much for Eric and his team as Eric and his team are doing for him. Right. That is just, you know, um, I had a celebrity chasing me for like two years to make a cigar for him. Mm-hmm.

And I said, "Look, I really like you. I really like your work. You seem like the kind of dude I could be down with. " These things don't work out, but here's what, if you're willing to do it, here's what we can do, come to Nicaragua, you do exactly, you go through the tobacco school, you learn about it, you tell me about what you like, I give you the tools to make it, so that when you say you made it, you can say you made it, I will make it that way, you go, I'll ship it to you, you deal with all the bullshit you have to deal with, picking the packaging, I'm not doing that for you.

You pick your packaging. I have to approve it. I'm not gonna do it for you. Right.

And there's a big difference there. You know better than everybody. Right. Right.

So, then, when you get it, I'll ship it to wherever you want. You go sell it. You go promote it. If you need my help, I'll show up and help talk about it, whatever.

But this is your project. Right. " So, someone else ended up making the cigar for him. I know who you're talking about too.

Right? Mm-hmm. And guess what? Nobody will ever know it fucking existed two years from now.

Nope. If I did it? Right. It would be like what Eric's doing.

Right. Right? Because I would make, the thing is Eric doesn't, Eric doesn't even go to Nicaragua very much. It's really Hector.

Right. Right? And now they're not even really doing a lot of stuff in Lozona, they're doing it at AJ. Right.

So that's one way of doing it. I'm not criticizing it. Right. There are different approaches.

So Guy had nothing to do except for maybe selecting the blend. right right from what from what i think hector said was this was something he had been working on for a while anyway right they just kind of plugged this thing into guy's thing it's a good cigar it's a very good i don't think it's outrageous i don't know how much it is no it's reasonable yeah it's not outrageously overpriced yeah so it's not like take a 12 cigar charge 14 because aj's making it then charge 16 because the celebrity is endorsing it right right yeah it's It's not that kind of deal. No. Yeah.

But all that said, step away from Guy Fieri and that thing, which I hope is fabulously successful. Right. Because A, it's a decent cigar, or good, depending on your taste, right? B, it's going to make retailers money.

It's going to make Eric money. I know it frustrated Hector having to deal with a celebrity. He turned into a security guard instead of a blender. Jack loves it, right, and their salespeople love it, so, you know, and look, Guy's a decent human being.

He's a first-class human being, right? So, all that aside, I will say, there are some people that are doing projects in this business, like Tiago Splitter with Ace Prime. He's not even, they don't even really talk about him very much. He's an NBA player.

There's Ken Hamlin, spent years going to La Aurora, Placencia, Nicaragua, the Dominican. In Honduras, learning about tobacco, blending a cigar, and he's out on the road selling it. Right. He's a good guy.

So like, if I'm going to support a celebrity cigar, I'm supporting the arrival from Ken Hamley. Right. Because it's the real fucking deal. Right.

I'm not saying he's a tobacco expert. But he's putting an effort. I'm not even saying he blended the cigar. Right.

I'm saying he's learning. Right. He's doing everything you need to do to be a cigar brand owner. Right.

Which doesn't mean you have to own your own factory and blend your own cigars. Right. And he's a super nice guy. And he's a decent human being.

He's a good human being. Yeah. Right? He really is.

So, right? So these other celebrity things, you just got to judge them one by one, I guess. Right. You got to take them.

But to your point about Boots meeting celebrities, to bring it back to the original thing. That's what we're talking about, Palmer. Yeah. Thank you.

Yeah. Yeah. So there's some people there that are interesting to meet just because they're cool people. I mean, Jerome, that was there with Mosigneus in his little 10x10, you know, booth with his wife, he used to be the general secretary of FIFA, I mean, the guy had more security than the president of the United States, had private jets, fleets of cars, you know, decided World Cups, controlling billions and billions of dollars of stuff all over the world, that's a very powerful position.

Right. That was probably the biggest celebrity at the show. Right. That nobody had any idea.

Yeah. , right? Right. You plop it, you do the PCA thing in Germany, whatever it's called.

Where are you guys going? Yeah, I mean, he doesn't do that job anymore. Right. He got kind of screwed out of that.

But, you know, that's a whole other discussion. Right. But, I mean, that guy is like meeting, if you're in Brazil or South Africa, it's like meeting Obama. Right.

That guy. Who were the other celebrities that were there? Ed Reed. Well, Ed does the work, too.

Yeah. He's not rushing it. And he's a great human being. Yeah.

I mean, not this time around. I feel like this time around, he felt a bad vibe for me. So I was like, eh, I'll just keep my distance, whatever. Well, he's really close with Rosie and Sam.

Yeah. So that's how I've met him. So, yeah, we shot the shit at TPE. I got to FaceTime my kids in and stuff like that, you know.

And he's a Hall of Famer. Yeah. I mean, that's kind of a big deal, right? Right.

I mean, probably the best safety in the game, period. Right. Ike Taylor was there and, you know, Leon Searcy, those are the guys that were next to us. They're doing the work, man.

They're, you know, they could have fucking wrote it in, showed up for a day and said, hey, I'm out. So those are good dudes that he met. Who else did you meet? I mean, those three mainly.

Yeah. Yeah, that's pretty much the big ones, but I got to meet some cigar guys this time, like, I never met Eric. Yeah, you never met Eric Espinosa. Bro!

Yeah. I like pointing him to, you know, the one guy, Plasencia, I'm like, "That guy? " You know, Nick Malillo, he doesn't know who he was, but you know, we got to shoot the shit and talk with him a little bit. Nick's a good guy.

Yeah, so, and he just went with the flow. Yeah. I mean, I spent most of the time walking around talking to people when I was there. I mean, I didn't really spend a lot of time.

Yeah. It was cool. The whole approach was better, I feel, especially for Roma, right? The motherfucker woke up early in his shit in the morning and took me to the gym.

" Took you to the hotel. Yeah. Took me to the Venetian to work out there for one day. Who did?

He did. Rich did. What I said, man. Professional.

Yeah. Complete pro. Pro. Complete Pro.

Know your role. That's it. That's it. That's my role, man.

I'm so glad. I mean, you were occupied with other duties. You know, it's an ongoing thing. PCA doesn't, when the show closes, you know, it's not over.

As you know. People don't get it. No. And it's not a place, I mean, it's not a place to bring your wife and family.

Unless they, unless they really. Unless they get it. There's only two ways it works. One, if you're like John Huber, and you're like, when it closes, I'm out of this motherfucker, I'll see you tomorrow morning.

Right. Right, that's, that's the way he is, that's his perspective. Right. And, and look, he makes it clear, and that's just what it is.

Methods are his methods. Right, and it's been, and he's like that in general, you know, his family's important to him, he brings his family, this is their chance to get away. Right. It's all about the family.

Right. Right. Um, it's a known thing going in. All the sales guys know it, all the customers know it, everybody knows it.

And so, the guy drew a line, you got to respect it. Right. Then there's the guys who, you know, it's like, oh, I'll bring my wife, she'll help out in the booth, you know, or whatever, it's like, no, it's not going to work like that. No.

And then she's going to be bored. Right. And you're going to be distracted. Right.

And you're, you know. Right. But, like, well, the other, the other line is that, you know, you can bring your spouses, but they got to go out and do their own thing, right? It's like, hey, you know, do a little girls thing, or whatever the case may be, go to the pool, all this other shit, like I'm not available, you know?

Right. And if they understand that, that, that, that, that's also doable. Right, right. Meet you up for dinners or whatever.

Yeah, that's completely doable, as long as they get that. Right, they gotta be on that page. Right. All right, so where are we at?

145. That's pretty good. That's pretty good. Well, I mean, I don't like this clock watching.

This is your chance, Paul. This is it, this is your moment. He does the interviews, I don't do the interviews. But we want you involved.

I am involved, I'm running the board. No, listen, look, look, look, you don't work for me. I know it don't work for you. I didn't say it worked for you.

Speak freely. You do the interviews. It's not my end of the program. I want you, I want, we need you entrenched here.

Um, you know what, so I'll kind of, a couple of the things that, uh, you know, we talked about at the show, I talked, you know, the things that came up at the show. s the other ones go to the europe we ship them as soon as they're ready they sell as fast as we ship So when our demand is $3 million and it goes down to $2 million, we still only make $1 million. 5 million, we still make less than what our demand is. So we don't really feel the impact of it.

It's like we're the iceberg under the waves. It doesn't matter. But there are people who've made big moves to gross up their production. you know what people like the quick recap end of 2000 okay 2018 we had the problems in Nicaragua right the sales teams were out there saying hey there might be a new embargo you know we they may not ship anything out of Nicaragua for the next year two years three years buy as much as you can as fast as you can right so all these people that had any kind of inventory got scooped up and they sold every bit of it for a year or so so come 2019 the trade show they're doing deep They're trying to move, because they've upped their production for this new demand signal.

By the end of 2019, there was a glut of inventory in the United States. A lot of it had been sold to the big five, famous JR, CI, etc. And the factories had no demand. S.

S. was full of inventory. The retailers were full of inventory. S.

were stacking up inventory of even stuff that normally is backordered right so they started laying people off and all my time in Nicaragua I'm sure there's been 10 here 50 there whatever but there was like like Scandinavia laid off like 800 people right right that's a big one people who who do nothing but grow were letting people go right now I'm sure at any given time in any company you could cut 10 percent right there's always dead weight and when you cut that The bottom 10%, there's another low 10%. There's always the bottom 10%. Always. You can always get rid of the good ones that are a pain in the ass, the ones who don't show up to work when they're supposed to and the ones that don't do the work they're supposed to do.

There's always those people to let go. You let them slide, you let them slide because you need them. There's always those people to let go. As you witnessed.

We did that a couple of times. So the point was, is that it was really clear, at least from a Nicaragua perspective, there was a lot of inventory and they had no demand. " Nobody had any idea. They just knew it was coming.

By February, March, April, they knew some serious shit was coming. Right. So they stopped making cigars. So when the exact opposite happened, and the demand went up, everybody's like, "Oh shit.

I don't have enough raw material. I don't have rollers and bunchers. " You know, all that. I let them go.

Right. I didn't weather the three months. Right. Right?

So then, two things happened. One, everybody started making cigars. They started making cigars with less than ready tobacco, not everybody, but a lot of people, and everybody started hiring taxi drivers and teaching them how to roll cigars, which has never really happened in Nicaragua, so then, another whammy happened, which was, all of a sudden, after Biden got elected, somebody sent the word out that if you just come across the border and say, "I'm from Nicaragua," that's right. Macaragua, I claim asylum from political asylum, that at least they're going to give you a court date, they're not going to throw you in a cage, and then those court dates were two, three years away, so by the time they get back on you, you've made enough money, sent it back home, whatever, then you're hiding from them for two or three years, next thing you know, you got 10 years in the States, whatever.

So there were dozens and dozens and hundreds of people, I think something on the order of, I think I read a statistic, like 300,000 people in six months from Nicaragua, which I don't know how many from Esteli, I don't know the number, but I know it was a lot, there was one factor, because what they would do is they would get a group together, they would get a bus, they would go up to Guatemala, and then they would have coyotes and they would go up to the states or whatever, so they'd go as big groups, caravans, if you watch Fox News. So then what happened was there were people who, hey, this Friday, you know, a hundred people left from Perdomo, or what, you know, I'm making that number, I don't know if it was Perdomo, I don't know the number. AIM factory, just an example. Yeah.

So, I mean, there were huge chunks of people leaving. Right. I almost never lose employees. And I had four people leave.

No shit. Yeah. And they're not, and they're not the, they're not the, I don't have any lazy, whatever, unproductive people. Yeah, it's an extremely efficient factory.

But I'm saying, you know, at the big factories, it's not your best, it's not your worst people that you'd like to see go, it's your best, smartest people that go, because they're the ones that have the best opportunity, they have the money saved up to pay a coyote, they have the assets to borrow against to pay whatever they need to pay, and they're going to be, if anyone's going to be successful, they're going to be the ones successful, so those are the people to leave. And so all of that's combined to the fact that, you know, it's been kind of an issue, and it's showing in the quality of the cigars, I think. Right. You beat judge for yourself.

That said, we've done a fairly good job as a community, kind of getting people trained up, getting the raw materials, kind of improving. Right. And making better, you know, getting back to the level we were at. S.

demand is going to disappear. Yes. So I think it started kind of going down in November. I don't see it, so I don't see it.

Mm-hmm. But from just everything you hear from retailers and other people, retailers started getting overstocked after Christmas. Mm-hmm. They realized they were over inventory.

Mm-hmm. They bought too deep. Not just buying, but they had so much shit on backcord that came in in January, February, March, that they were in a lot of trouble once it all landed. Right.

Unless they just turned it away. And the consumer wasn't there as much. Yeah. S.

gets to 240, John stops putting it on orders. Right. But if someone calls and says, "Hey, I want 20 boxes of aquatane cranium," he looks and sees we have negative 180, but then he sees in Nicaragua over the last 16 weeks we've made blah, blah, blah, so we have a net positive in the pipeline. Right.

He can order up to, so we never order more than what's been produced. Right. And if we get to the point where what's on order, what we have in Austin minus what's on order is greater than what we have actually produced. We'll shift our production to making more of that thing.

Right. So the point is, you're never more than two or three months away from whatever it is you want. 2 million. So our back orders averaged about five, six hundred thousand, and I'm talking about wholesale value.

So if, um, I think our wholesale value got down to about 220,000, where it was mainly like, uh, Cro-Magnon and Neanderthal, that was the only thing that was really on backorder. Right. And which is really rare for us. So we even started having like, you know, a couple of weeks worth of inventory in the warehouse.

Right. Right. Like we have a very, very small warehouse. So when, so when the shelves are full and you actually have stuff on the pallet after the shipment is processed, never happens.

Right. But now that stuff's going to be gone in a couple of weeks, it's not like it just sits there. But, so we even saw that. " But, you know, I don't want to get out on that limb.

Right. But that move had already been, that card had already been played by a lot of people, and they're still building up inventory. and so we knew kind of going back till november december it was going to get tight for the market right and then march april then you start seeing everybody else has cleared out their back order 100 and now they're doing the you know buy get two free and a reach around and a pocket knife and yeah t-shirt swag whatever whatever right helicopter giving away bitcoins and fucking And, yeah, all that, it's like, okay, it's here. Right.

So this trade show, no one will tell you this. Right. But there are some companies that went out of business, they just don't know it yet. Right.

It's like that movie where the guy's running around trying to figure out who killed them, and they're already dead. Right. There's some companies that have already committed so much to factories, have inventory, and didn't have a good trade show, they're in a lot of trouble. Yeah.

I mean, I could name some of them, but you're gonna, you get it, you know. Right, oh yeah. And then the ones, you know, the point is, the exact opposite is happening in Europe right now. Right.

So what's happening in Europe is, all the Habano prices went up, four years ago, I'm driving through France, through Spain, you go into a shop, they're 80%, 90%, so Germany's 50-50, New World Cigars and Cubans. Right. But they keep a good balance. There's demand.

Right. You go into France, Spain, UK. 80-20. You know, you see brands like CLE or Hoya or...

A couple things pop up. Davidoff. Right. But you're not going to see, you know...

Right. Postana. You're not going to see Roma Craft. You're not going to see...

Right. So, this time, their inventory is super low. " Right. In countries that weren't even interested in cigars from Nicaragua before.

You're starting to see that in the news, that there are weird countries that are all of a sudden, somebody's announcing they have distribution in. Yeah, so there's really kind of like, there's three kinds of distribution. Okay, so, the number one way of distribution is, somebody has their own distribution, like Davidoff, or like Jay Cortez with Oliva, they have their own distribution. So, they make cigars in Nicaragua, Dominican, Honduras, they ship cigars over there, they have people in multiple countries, Belgium, UK, Germany, that are getting their stores out to retailers, because in Europe, retailers don't go directly to brands so much, they go always through a distributor.

, I set the price at Y, I sell it to a retailer at Y, The retailer sells it to the consumer at Y times two, basically. In Germany, it's one-third to the distributor, one-third to the retailer, and one-third to the consumer. So if it's nine euros, I sold it for three, the retailer bought it for six, and then the retailer bought it for six, and the consumer buys it for nine. That's not generally the general rule.

Right. So what happens is, I send it to Schuster for $3, they sell it to Salih Dele for $6, Salih Dele sells it for $9, he makes $3. " So he starts being the distributor for Crown Heads in Germany. So he buys it for $3, sells it to $6 to other stores, but he sells the majority of it at $9.

So he's making two-thirds of the three parts of the pie. Right. So in a lot of countries like Cigar Agua in Holland or certain people in Belgium, certain people in France, they become the distributor because that's a brand they're really behind. Right.

And the reason why they want to be the distributor is because they can get two bites of the apple. Increased margin, right. Right. Right.

And they selectively pick those. Like our distributor in the UK is a big retailer. Right. So he brings all the Roma in.

He only sells it in his stores. He doesn't sell it to any other store. He doesn't get enough to sell it anywhere else. But we sell it to him directly.

We used to sell it to him through Schuster. So he used to buy it at $6 and sell it for $9. Maybe he'd market it to $10 or $11 just so he'd get a little bit more. But now with Brexit, now we only sell to Schuster and to him.

If a retailer in Switzerland, Czech Republic, Vienna, whatever wants our stuff, they have to get it from Schuster, so Schuster buys it for three, they sell it to them for six, they maybe mark it up to 12, 15, whatever, so you can see a Roma Craft for 20 euros in Switzerland, but it's because they had to buy through two middlemen, and so it doesn't sell a lot. Additional taxation, all that other shit. All that stuff, right. So, then there's people who are like, just, you know, some regular guy who wants to be a broker, distributor, and he goes, hey, send it to me.

Right. I don't really do this for a living, but I'm a good customer, and I know three places who will buy it from me. Right. So then they become your distributor.

So every week on Halfway, it's like so-and-so's got a new distributorship in... Right, right. In Belgium or... Holland, Finland, whatever.

It's like, oh, man, these guys are fucking blowing up. No, they're selling like 14 boxes a year in this country. Right. You know what I mean?

Really, seven of those 14 get smoked by the guy who's distributing. Right. He just figured out how to buy a $9 cigar for $3. Right.

Do you see that maybe the future of that, given the current market in Europe, that the third, the third, the third would eventually change? Because, like, I mean, you know, like, look, motherfucker, you need it. No, I think more likely what will happen is, and by the way, every country is different. I just described Germany mainly.

Yeah, just in general. But what's more likely to happen is, right now, as New World Cigars become more popular, more people will start creating their own distribution hubs with track and trace. Right. Their own bonded warehouses.

So people like CLE have their own bonded warehouse with Martin Schuster. S. So they cut out one of those middle then? Yeah, they'll be the six to the nine.

That makes sense. S. for the last 12 months, I think is going to go down probably by 80 to 100 million. And then the European number will go up by 80 to 100 million.

But the companies that already have a lot of distribution in Europe, that make medium, kind of Cuban-esque, kind of acceptable cigars, will easily offset and eat up most of that 80 million. And people like AG who can make anything, people like Placencia who can make anything, both of those guys already have good distributors, you know, Davidoff, Padrón, Fuente, La Aurora. Those guys are already plugged in. They're already plugged in.

So they're going to eat up that 80, 100 million. Right. I mean, even if I could do another 50, you know, 500,000 cigars, I don't make the kind of cigars those people who've been buying cigars in France for the last 20 years want to buy. Right.

Right. Right. So, I mean, it's not going to affect me much, but the point, the reason why I bring this up is to say that there's a disturbance in the force. There is a disturbance.

Right, there is a disturbance. You've gotten into a little Patreon action that we've talked about, yeah. There is a disturbance in the force. It's very true.

S. are going to see the bite. They're going to see the shrinkage. And the bigger companies that have been getting their lunch eaten a little bit by the little guys have this whole new blue water to play in.

So the effect is going to be, even though these big companies haven't been really growing because the little guys have been kind of nipping at their heels, they have this whole new place now to grow into. S. S. We're going to start creating products specifically for Europe.

We're going to start investing in our own distributorships in Europe. We're going to invest in our own brand people and salespeople in Europe. And you're going to see, they're going to go get that, you know, because 80 million cigars is, let's say 100 million cigars is a half a billion dollars. Right.

Of wholesale. And a half a billion dollars is enough of a pie for them to go. We should pay attention to this. Yeah.

Right. Of course. S. start crushing little companies.

Right. S. S. for them.

So they, because I said before, they make more on private labels, they really kick up their private label business. Right. And they start making a lot of cigars for those people. Mm-hmm.

You know, my father makes a lot of cigars for people, Aganorsa makes a lot of cigars for people. What happens though, is they're really doing that to scale their own operations. Right. And they're picking and choosing key partners.

People like Dion have done as much for Aganorsa as Aganorsa has done for him. Right. Right. People like Lorenzo, with HVC, he got squeezed out.

He figured out really quick, ahead of the curve, I got to go get my own little place. As big of a pain in the ass it's going to be, as hard as it's going to be, I got to go make my own cigars. Right, he's got that mindset. I see the writing on the wall.

Right. But these other people that are like, say, Viaje at Aganorsa, or, you know, I'm not saying, like, Alan Rubin is Ray C's Cabana. Right. Dion is Aganorsa.

Aganorsa is built up, but he's an integral part. He's like the right arm, the left arm, whatever. You can't chop it off. Right.

But if you're a finger, or a toe... We can afford to lose this. Yeah, they're gonna chop that bitch off. You know, so if you're getting, if you're, and I try not to talk about certain companies because everybody gets fucking pussy hurt.

You know. Right. You know, vaginitis is a serious disease in the cigar business. Right.

You know, feelings. Feelings. My feelings. But my point is to say that these little guys who are a toe or a finger at, you know, They're at, you know, or they have a toe at this factory, a finger at this factory, a toe at this factory.

Those guys are in trouble. Right. Now, there may be bigger things that happen. Like, if I had to guess, Fuente's opening a factory.

Fuente's partners with Newman, but Newman has their own factory. Right. Fuente also is a partner with Ashton, in a way. Right.

Ashton makes a lot of cigars than my father. Maybe Fuente starts making cigars for my father. Maybe my father agrees to make more cigars for other people. You know, I don't know.

You know, I don't know. Right. You know, it doesn't really matter to me one way or the other. Right.

But my point is, if you are a little brand that's getting made in another factor or has significant chunks in other factories, you have to realize these macro trends in the business to understand what's coming. Right. Because if you don't, you know, look at Robert Holt. Robert's a good friend of mine.

He has cigars made at AJ. When he started making cigars with AJ, it was a big move for AJ. It helped AJ. Like, Robert's done a good job with his brand.

You know, if I'm Robert, am I a toe? Right. Or am I an arm? Right.

And, right? And at this point, you can't go be a toe at another factory either. Can't start over. You know, like, you know, I know, I remember when the guys at Crux, you know, kind of shifted a little bit of production away from Placencia to AJ.

Or when Nick's kind of moved a little bit away from Aganorsa to AJ. Yeah, I'm glad I'm not in that position because there's a lot of big dynamic things happen in the cigar business that are going to affect small companies. I'm curious to see what the PCA looks like next year. Who didn't make it back?

I don't know. We could, yeah. I mean, you know, nobody in this business ever goes away. Yeah, it's a question of how much abuse you want to take.

Yeah. To end up at a different company. That's true, too. Yeah, or, you know, somebody, you know, buys your brand.

Right. And, you know, when they say XX cigar company got sold, you know, whatever cigar company. It's like, well, you don't make cigars. You don't sell cigars.

You don't have a warehouse where you receive them and distribute them. Right. So you design swag and you own a brand, which you've trademarked. Now someone else has that.

Right. So now basically it's more like you became an employee at this company. Right. And they relieved you of the impending implosion.

Right. Or the ongoing, you know, this ain't worth it. Right. The overall stress of it.

Right. And at the end of the day... Hold on, Phil's got something to say. You'll find out.

It said that recording stopped because it's full. Oh, then the iPad's full. We maxed out. You can delete today's show from this morning.

You don't know how to do that, though. All right, we're at the end of the second hour. When did it cut off? Just now?

Just now? Just, yeah. Okay. So, finish your note.

We'll just leave a blank screen. At the end of the day. No, I was saying, you gotta know. Right.

You gotta know if you're a toe. Right. You gotta know if you're a toe. You gotta know if you're a toe.

That is a sound bite. Right there. 209. You know what I'm saying?

Yeah. If you're an arm, or another important vital organ. Right. You're gonna live.

It's okay not to be in charge of your own production. Right. It's okay to not be in charge of your own future. Right.

You can't be a toe. You can't be a toe. Because they're going to cut that bitch off. Right.

Hey, we'll stop there. All right. Well, hey, thanks for coming on since we're in a blank screening right now on YouTube. We appreciate you driving all the way out here, getting a speeding ticket, getting here as fast as you possibly could.

He bet it wasn't our friend that worked for the highway patrol. Yeah. Stogie Trooper. Stogie Trooper.

No, I basically, I basically told him, look, I'm overdue. I haven't got a ticket in 20 years. Yeah. I was speeding.

Guilty. Guilty. Give me the ticket. Right.

I'm on my way. We can both get on our way. You can, you can give me the, the fine, or you can give me the speech. Right.

I don't need both. I know I was speeding. I know people die. Right.

I get it. They're lost. That's been a smoothing violation in decades. Right.

You caught me. You got me. All right. Well, we'll wrap it up there.

Thanks for coming on. Thank you, Skip. All right. A Cigar Hustlers podcast, its owners, and its sponsors take no responsibility for the opinions or statements made by the talk show host or their guests.

Statements or show topics are not necessarily the beliefs of Mike & Mike Productions or the podcast providers, and opinions between talk show hosts may differ. It is not our intention to libel, incite, or hurt anyone's feelings. We invite you to write the show's host, Mike Szczepankewicz, with any feedback or suggestions that you have for their shows. These broadcasts are presented and made public as entertainment in the hope that they will be entertaining to the audience.

This has been a Cigar Hustlers Podcast, a Mike and Mike production. Be sure to listen every Tuesday at 10am for all new episodes. Hi, I'm doing, I'm Husto-E-Raw. Yeah, we just don't have to do a single, uh, single podcast ever again.

Perfect. I'm good, Mike and Mike. How are you guys doing? The Hojo, the...

Hojo! It's the Hojo! Demandre... He didn't even let him fuck it up all the way.

I gotta get past Hojo! I don't even have to try to enter. He's not even going to try. We're going to cover a lot of ground here, Mike.

All right. Try to keep up. That's a sign of a good podcast. Maybe like four cigars when I walked in a door.

All right, end this.

Show Notes

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