Rakesh “Rocky” Patel is celebrating his 25th anniversary in the cigar industry with the motto “in it all the way.” He is investing substantially in Nicaragua, where he’s now cultivating Connecticut and Broadleaf wrapper, and after purchasing considerable areas of arable land will soon be cultivating 845,000 square meters (120 manzanas). The construction of a brand-new factory in Estelí is planned to begin this year, in order to concentrate production in what has previously been seven scattered buildings at one operating site. The design capacity of the factory will reach up to 50,000 cigars per day, although he initially plans to produce a maximum of 25,000 in Estelí. The total output from his own production in Honduras and Nicaragua as well as contract manufacturing is currently just under 80,000 units per day. In 2018 alone, Rocky Patel Premium Cigars (RPPC) exported around 22.5 million cigars to the United States. Recently, when Rocky’s Tabacalera TaviCusa in Estelí – it is run by his friend and business partner Amilcar Perez Castro – reached maximum capacity, a neighboring building was converted into a giant aging room. Three million cigars are awaiting their launch there. One of these is the new line for the Cigar Smoking World Championship (see Cigar Portfolio info box); a second cigar is the one for the 25th anniversary of RPPC.
None of these are tentative growth steps. Someone is really stepping on the gas here, and this in times when many people do not see the future of cigars in a rosy light. In conversations among colleagues and industry insiders, the prevailing view has always been that Rocky Patel would prepare his company, which supplies 189 countries, for maximum profit optimization and sell it at the best possible time. After the interview for this story, I am, however, convinced that this is either not his intention or, at least, not the right time for it.
“To be honest, up till now, there is no serious offer,” says Rocky, wiping away the speculation. “People talk and show interest, but no solid buyers have approached us.”
His company, Rocky Patel Premium Cigars, is excellently positioned. According to the owner’s estimates, it ranks among the top five to ten percent, in terms of EBITDA,1) and among the five to six top-selling cigar companies in America. As far as the approval or registration of existing tobacco blends is concerned, with more than 2,500 protected blends in stock, Rocky is considered to be the “predicate king” of the industry. “We once listed our blend portfolio on a huge wall. It somehow reminded me of the movie A Beautiful Mind,” he laughs. He does not need to worry about substantial equivalence orders of the FDA2). But he is terrified that the FDA might impose constituent testing (mandatory tests on ingredients, smoke, chemical analyses, etc.). He has calculated that these procedures could cost him up to USD 66 million. “This would put many manufacturers out of business. And we would have to take several lines off the market.”
As is well known, Rocky Patel is one of the most committed fighters against such excessive regulations. Legal actions against it are pending and, to his regret, the former lawyer spends more time lobbying than with his clients.
“The current situation is more than unsatisfactory. Until there’s a final decision on the powers of the FDA, it’s like the entire industry is driving in the truck-climbing lane. Imagine that the authorities impose a parking ban, but nobody specifies where it’s illegal to park,” says Rocky shaking his head. And he points out that on the American cigar market there are 55,000 items. It would take the FDA decades to complete the planned tests for all these cigars. The way that the agency is addressing the issue of premium cigars seems to him like sending a plumber to inspect a rocket of a spaceship.
“Yes, we’re planning further growth and continue to invest … possibly soon in our own farms in Jamastrán [Honduras],” says Patel, revealing his long-term plans. He does not like empty announcements and immediately qualifies, “But first I want to concentrate on our own brands. To do this, we’re pushing ahead with internal integration, i.e. expanding our own tobacco production. Plus: we’re buying as much of the top tobaccos as possible, like Jamastrán wrappers, Pennsylvania Broadleaf, Connecticut Broadleaf, Connecticut Shade, Ecuador Sumatra and Cameroon from great producers, among them A.S.P., Meerapfel, Oliva Tobacco, Plasencia, etc. We need these for further limited and special editions like A.L.R.”
According to Patel, Connecticut Broadleaf in particular is currently in short supply around the world because the demand from the cannabis industry has increased considerably. Rocky openly admits that his Sun Grown Maduro will soon be on back order for six months, precisely for this reason. “It’s really difficult to replenish stocks at the moment. You don’t know which blends will finally take off, but you need enough stock to be prepared,” he says from experience. Although Rocky Patel certainly owns 80 to 100 brands, he keeps a cautious eye on the acquisition of others. “I don’t want to be specific about this yet. But I have it on the radar. Acquisitions sometimes happen quickly,” he cryptically states.
BURN BY ROCKY PATEL
In addition to his ambitions for growth as a cigar maker, Rocky Patel is working flat out at being a proprietor of upscale bars. He opened his first Burn by Rocky Patel lounge in Naples, Florida, ten years ago. The second – in Pittsburgh – followed in 2018, after which doors opened one after the other in Oklahoma City (where a rooftop bar will be added in the summer of 2020), Atlanta, and Indianapolis. But five locations aren’t enough for him. Rocky is on the lookout for further locations in Nashville, Houston, Dallas, Las Vegas …
“Burn is a concept directed towards the Millennials. This generation has the resources to enjoy life. When we were young, we were hardly able to buy a beer, but today, young people are fortunately in the position to afford luxuries like whiskies or cigars. Our Burn lounges are simply the best bars in the respective cities. Period!”
The lounges are, in fact, well thought-out in every detail, captivating in design, sophisticated and elegant. Rocky invests an excess of USD 4 million into each establishment to provide top-class ambience, range and service. And he has hit the mark. Allegedly, on evenings towards the end of the week the individual locations make an easy USD 20,000 in turnover. Last year, the lounge in Naples alone sold cigars worth USD 800,000; the investment was paid off after two and a half years.
SUCCESS HAS A PRICE
Rocky Patel, who is the main owner of RPPC along with his brother Nish Patel and his cousin Nimish Desai, has worked hard to attain his success. “The price is sacrifice,” the workaholic points out. “Sacrifice of family, friends, relationships … a life in cars, airports, airplanes and hotel rooms – you just have to suck it up.” And endure it. In the past six years, he has drastically changed his every-day life. He eats much more healthy, is at the gym almost every morning at 7 o’clock and strives for a work-life balance. Golf, water skiing, alpine skiing, football, and basketball are among his favorite sports. With his role model effect he has already gotten some of his employees – as well as Nish and Nimish – onto a healthier track. Rocky even goes to the trouble of cooking lunch for his staff at the headquarters in Bonita Springs. “Yeah, I love to cook,” spouts the man still in his fifties enthusiastically. “On Sundays, I’m often in the kitchen for hours preparing lunch for the coming days in the office.” One of his favorite dishes is Persian tandoori chicken marinated in saffron, onions, garlic, lemon, Greek yoghurt and cucumber. Of course, due to his Indian roots, he also likes to cook Indian. And as a hobby fisherman he often brings along groupers, yellowtail, snapper or kingfish from the Gulf of Mexico. His passion for cooking led him to blending cigars. Rocky loves to experiment, in the kitchen as well as in the tobacco warehouse.
One thing Rocky Patel cannot do is nothing. He cannot imagine lying on the couch, staring at the TV or hanging around idly just doing nothing. He also prefers to spend time with people rather than alone. He and his team are not only together during office hours, but often also in the evenings, on weekends and holidays. “Somehow, the company functions more like a sworn fraternity than a tight organization,” he notes proudly. After a brief pause for thought and a draw on his A.L.R., he leans forward and says, “When I come home from a business trip, it sometimes hits me that I don’t have many friends in my private circle. My friends are also business associates and are scattered around the world. At home, my team is my circle of friends.”
When I ask him how he deals with his employees/friends when things go wrong, he answers, “I can get loud and stern at times, but that doesn’t last long. It’s important that we learn from our mistakes. Overall, I’m a hopeless romantic when it comes to loyalty.”
Almost all of the people in his inner circle are – like Rocky himself – career changers who have worked in other industries but have found each other through the passion for cigars: Nimish Desai (vice president of operations) worked in telemarketing, Nish Patel (executive vice president and the “Swiss army knife” at RPPC) in the paper industry; Christopher Mey (international sales) used to work at a technological university, Rob Rimes (senior creative director) worked on video games. Only
Dave Bullock (vice president of sales) and Hamlet Paredes (master of tobacco) had relevant professional experience. With satisfaction, Rocky points out that all work is done in-house, from design to sales. However, he does think that it is time to set up a central warehouse in Europe soon. But RPPC cannot and will not operate such a facility itself. He is in talks with the Slovakian wholesaler MY & MI s.r.o., which organizes the supply of European markets for other large manufacturers as well. The outsourcing of European distribution will significantly improve and accelerate the availability of the brands.
Rocky Patel is bursting with ideas for the future: a new factory, more farms, more Burn lounges … but that is not all. He is currently experimenting intensively with whisky and champagne. A blended whisky and a single-barrel Scotch are already well-developed and almost ready for bottling – under the umbrella of the Rocky Patel brand, of course; the trademarks are already registered. His entry into the Cigar Smoking World Championship also underlines his efforts to find new marketing strategies, new markets, new consumers and friends. Let us not forget that he started 25 years ago with just 150,000 cigars. Rocky Patel does not do things by half measures, he is in it all the way.
Copyright Images: Rocky Patel Cigars, Mammoth Studio/Justin Sicard