Gurkha Cigar Company is known around the world as one of the most luxurious brands of premium cigars. With many different blends and lines, there is a Gurkha cigar to fit almost any occasion and any palate. Retailing from anywhere around $10, to over $15 or $20, Gurkha also claims some of the world’s most expensive and exclusive hand rolled premium stogies that go for as much $250,000 a box! Producing approximately 4 million cigars each year, this premium cigar company famously appeals to everyone from prominent Navy SEALS teams, celebrities, Fortune 500 CEOs, to Monarchs, Sheiks, and everyday cigar enthusiasts. From the attractive packaging, to the excellent quality of the cigar blends, it’s no wonder Gurkha is so popular. For this story I spoke with the man that started it all, the Chairman of Gurkha Cigar Company, Kaiza Hansotia.
Let’s start at the beginning of how this pioneering cigar company came to be what it is today. It was in 1988 while on vacation in Goa, India, that Kaizad Hansotia stumbled into a godsend that, little known to him at the time, would become a revolutionary multi-million dollar company in the cigar industry. Out on the town one night during the vacation, Kaizad was enjoying himself and having a few drinks. Before he knew it, he was buying cigars off a couple of Portuguese vendors who were selling a brand by the name of Gurkha. According to Kaizad, “One thing led to another and I ended up buying their entire business from them for $143! I bought all of their cigars and also their company name, which was Gurkha. At that time they had a dead company, so I decided to buy them out.” Was this a matter of fate, or a matter of foresight? That’s for others to decide, but at present it looks like both.
As on the one hand a matter of fate, Kaizad continues, “I was in the watch industry at the time, and the reason I bought all the cigars were 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 realized there was a real business opportunity here. So not knowing anything about cigars or the tobacco industry, I talked to the one friend I had in the business who had been a tobacco grower. And that’s how I started out, and how Gurkha Cigars began.”
Revolutionizing the Cigar Market
Not knowing much about cigars or the industry, Kaizad began studying the market trying to figure out a way to break through. It wasn’t long before he realized that “there wasn’t a market yet for a really upscale cigar. In those days, in the late 80s, Davidoff cigars were $8, and that was the most expensive cigar. There really wasn’t one good ultra-high quality cigar out there. That’s when I knew I wanted to make the most exclusive cigars, and focus on quality rather than quantity.” It was the foresight of his original concept, to create a new market for the ultra-premium cigar, which would soon revolutionize the industry.
That’s when Kaizad decided to come out with the first super premium category of cigars. Today that’s what Gurkha is known for, high-end, small batch cigars. Kaizad tells me, “In those days when I came out with a cigar that cost $12, people thought I was coo-coo! Every other cigar that came out in the 1980s was between $2 to $2.50. At that time, if there was a very high-end premium cigar that came out, it would be $5 or $6. This was right before the cigar boom of the early 1990s. Once again, one thing led to another, and we came out with $12 to $14 cigars. Eventually we even came out with a $5,000 box! People really thought we were nuts, but now that same box sells for about $20,000.”
By creating exclusive high priced cigars of excellent quality, Kaizad and Gurkha Cigar Co. were able to define a new segment of the market, and change the way people think about and purchase premium cigars. The very first cigar that he came out with was the Grand Reserve, which was infused with Louis XIII Cognac and retailed for the unheard of amount of $12. Worried that people wouldn’t buy the cigars, retail shops and lounges made Kaizad agree that he would buy them back if they didn’t sell. It turns out that they did sell, and the market was forever changed.
Gurkha soon grew to heights previously unimaginable. Not long after, they would go on to create the world’s most expensive cigar to actually produce, called His Majesty’s Reserve and for good reason. With fewer than 100 boxes produced each year, these gems made for royalty retail for around $15,000 for a box of 20. So much for $12 cigars! An entire bottle of Louis XIII Cognac is infused into the 20 cigars making up a box. In addition to this early super exclusive line, Gurkha now has some extremely high-end and rare small batch cigars that sell for $150,000 to $250,000 a box. As Kaizad tells me, “Our typical buyer of cigars like these, range from Middle-Eastern Royalty like the Sultan of Brunei, to CEOs of Fortune 500 companies. A lot of these people buy them as corporate gifts, weddings gifts, birthday gifts, and so on.”
Another way that Kaizad and Gurkha changed the cigar industry is with the packaging itself. The packaging goes hand in hand with appealing to what was at the time a new market of ultra-premium cigar smokers.
Said Kaizad, “When I came into the industry, quite honestly all I saw was a bunch of crap. Everyone used those cheap paper cigar boxes and the packaging was boring.” With that in mind, Kaizad created some of the highest quality and most intriguing cigar boxes, cigar bands, and modernized the overall appearance of cigar branding. Everything from the $200,000 boxes of cigars that come in lavishly handmade humidors, to the $200 boxes of cigars that come in solid wood chests with eye catching designs and insignias. Kaizad started a trend with Gurkha that has never looked back.
Staying Ahead of the Curve
From that first $12 cigar that changed the market, Gurkha now has over 40 different lines of cigars. They also have some lines that are only available in brick and mortar retails shops, while other lines are available through online retailers. This is often a point of contention in the cigar industry, given the balance between the importance of brick and mortar shops and the inevitability of the internet. I asked Kaizad to give me his perspective on this debate and he said, “The bottom line is this: sometimes you can’t fight with where life is going to take you. I do not personally shop online, but I realize that every single one of my assistants, secretaries, and friends all shop online. So people have a preference, and I think every retail store can do well.”
“It’s not always about the price, it’s about the service you give to people. I give the same example to every single person- there is a retail store in Minnesota called Tobacco Grove, and I’ve never seen two gentlemen who run a store better. They have a huge customer base, all because they take the customers around the store, have them sit down, and let them enjoy the whole experience. They provide great service. It’s like going to a restaurant. Why do you go to a high end restaurant? It’s to get the experience and the enjoyment of great service and the beautiful atmosphere. Anybody can buy a steak for $9 at the market, so why would anyone pay $60 for a steak?
It’s all about the atmosphere that people want. So the same thing goes for a brick and mortar cigar store, if you have great service people will always come back to enjoy the atmosphere, because they don’t mind spending the extra few dollars. But the fact remains that the internet is a big part of the future of the business. Actually most shops already have an online retail site where people can buy cigars, and if they don’t already then they should!”
In addition to embracing both internet and brick and mortar retail stores, Gurkha is continuing to stay ahead of the curve with the addition of the new president of the company, Gary Hyams. Previously the company was led primarily by Kaizad, but with the addition of Gary Hyams as president, Gurkha sees new potential in continuing to innovate. With Kaizad as chairman focusing more on creative aspects of new blends, and Gary as president focusing on growing the business even further, the sky is the limit. Mr. Hyams brings to Gurkha an illustrious résumé in the cigar industry, having previously been the chairman of CAO International prior to the brand being sold to General Cigar Company. Hailing from the UK, Gary has also successfully built several brands overseas.
Putting it in Perspective
From the fated roots of what amounts to a $143 drunken vacation purchase in 1988, stands today a company built on the foresight of Kaizad Hansotia and his impressive Gurkha team, that has gone on to revolutionize the cigar industry. From being the first person to act on the idea that a $12 premium cigar would actually be purchased by consumers, to using innovative modern packaging to make it all a reality, K. Hansotia, as it appears on the Gurkha cigar bands, has made quite a name for himself. From knowing nothing about the cigar industry at the beginning, to now being one of its most recognizable ambassadors, Kaizad has turned Gurkha into one of the world’s preeminent cigar companies.
by Jon Shakill