Splurging on smoke

Kaizad Hansotia was in the watch industry with his father when he came across a cigar company that was suffering losses. It was in 1988 while on vacation in Goa, India, that he stumbled into what would become a revolutionary multi-million dollar company in the cigar industry According to Kaizad, “I ended up buying their entire business from them for $143. I bought all their cigars and also the company name, which was Gurkha. At that time they had a dead company, so I decided to buy them out.”

Hansotia continues, “I bought all the cigars as corporate gifts for my watch clients. I didn’t know anything about the cigar industry at that time, absolutely zero. I started giving the cigars out to all my duty free suppliers, and they liked it. Pretty soon they started asking me for more.” On the other hand as a matter of foresight, Kaizad saw the opening and like an aggressive running back, attacked at full speed. “That’s when I realised there was a real business opportunity here. So not knowing anything about cigars or the tobacco industry, I talked to a friend who was also a tobacco grower.”

He decided to make high-end cigars for people who wouldn’t mind splurging. He says, “It’s like wine. If I am out for dinner with friends, I wouldn’t buy a $9 bottle. I would buy the $100 bottle because I wouldn’t mind splurging at that point.” At a time when the most expensive cigar in the world was a $7 Davidoff, Gurkha cigars sold for $12-14 each. Over time, the company created a super premium line. They came out with limited edition boxes with select tobacco starting at $25,000-30,000. But, it’s not just a splurge for the smokers.

Hansotia says, “We had a Black Dragon Edition Speciale that was sold for $125,000, we re-sold for $680,000. So, people realise that buying these boxes is like making an investment as well, even if you don’t smoke cigars. The resale value is ridiculously high.” Being a company that boasts of clients such as Hollywood actors Matthew McConaughey, Tom Cruise, Harrison Ford, Sylvester Stallone, Keanu Reeves, Mel Gibson and the likes, there is no question that Gurkha cigars are sought out by those who appreciate tobacco.

As far as the Indian market goes, their entry has been slow and steady. Hansotia explains, “In this country, people don’t know Gurkha yet. In Russia, they say, ‘If you’re a millionaire, you smoke a Davidoff cigar. If you’re a billionaire, you smoke a Gurkha.’  We sell to the top 1% of the yachts and casinos in the world as well. Indians love luxury items and there is a market for it here.” To cash in, the key is distribution. He says, “In India, there are about three stores to sell cigars. There are about 7,000 in the USA. We will have to sell through hotel chains and word of mouth. We have started with hotel chains such as the Taj and the Oberoi, which will be happening over the coming year. We will also be handing it to wedding and party planners and high-end gift sellers as well.”  

Right now, they have over 40 brands of cigars that they sell including His Majesty’s Reserve which sells for $35,000 a box and has a waiting list for those who want it. Only 50 boxes are sold per year to maintain exclusivity and hence, the waiting period. For India, the main kind that will be sold here will be the $15-75 per cigar range, which cater to Indian tastes and will be mild to medium in flavour. As far as the luxury market in India is concerned, Hansotia believes that they’re here to dominate. “We’ve had a great response so far and we’re expecting it to get better as we go ahead. It’s all about educating the consumer. Once they realise what they are getting for the price, they will want it over and over again.”