CIGAR INDUSTRY SMOKIN'; STOGIE SUPPLIERS NOT MEETING U.S. SHOP OWNERS' DEMANDS.

Byline: Elliot Blair Smith The Orange County Register

The cigar, says San Francisco writer Barnaby Conrad, ``is the urban man's campfire.'' But industry winds threaten to turn that glow into a brush fire.

Soaring prices for tobacco leaves from the Dominican Republic and Honduras and a scarcity of name-brand product in the United States have combined to leave many retailers' shelves bare at the very height of the cigar's popularity.

Manufacturers of premium cigars - priced above $5 - no longer accept new wholesale accounts. Existing distributors' supplies are rationed. Many retailers reportedly are doubling their orders, hoping to get half.

Consequently, the newest cigar-shop owners often must buy product from other retailers, tacking on surcharges to make a profit. A medium-price cigar with a suggested retail price of $7 can be found marked up to $17.

As a new tobacconist, C&K Cigars owner Kevin Doyle acknowledges, ``It's really, really hard to get name-brand cigars.''

``You're fighting to fill your shelves,'' agrees Chris Zawalski, co-owner of the Board Room, which is down the street from C&K in Long Beach.

Make no mistake, the cigar craze never has been bigger.

Wholesale revenues rose to $1.25 billion last year, led by a 66 percent surge in the sale of premium cigars.

Cigar shops and ``bars'' - where men and women mingle in smoke-filled rooms - have ushered in a new appreciation of the benefits of leisure and hospitality. Mail-order business is booming. And four cigar manufacturers have made initial public stock offerings since August.

But the supply-demand imbalance has spawned a ``gray market'' for salesmen who hawk cigars out of their cars and a ``black market'' in contraband.

Last month, Newport Beach police announced the arrests of five suspects in an alleged crime ring that burglarized 25 to 40 tobacco shops throughout Southern California. Police said the bandits were equipped with automatic weapons - including laser-guided submachine guns - and shopping lists of popular cigars that could be sold to other tobacco establishments.

``It was like a jewelry-store heist,'' grouses Kerrie Aley, co-owner of the Romeo et Juliette tobacco shop in Newport Beach, which was burglarized in October and again in February at an estimated wholesale cost of $41,000. Aley and her husband, Allan Songer, also own a Romeo et Juliette shop in Seal Beach.

Notwithstanding such rogue elements, the ``pernicious weed's'' comeback has been as bright as the flame of a butane lighter.

Just five years ago, cigar salesman Waldo Baker of Huntington Beach feared he was in danger of losing his job.

U.S. cigar sales had fallen by 3.3 percent annually since Lyndon B. Johnson was president, bottoming in 1993 at $725 million.

``Stores were closing. It looked like a business that was going downhill,'' says Baker, 72, the Southern California field-sales manager for Phillips & King International, a major independent tobacco distributor.

But celebrities such as Arnold Schwarzenegger, Madonna and Demi Moore put cigars back in the spotlight by flaunting convention: imposing a personal vice in the face of popular virtue.

Hollywood's proclivities were copied by trend-conscious young professionals. The cigar industry became more than mere puffery.

Today, Baker is burning tire rubber - about 3,000 miles each month - to keep up with burgeoning tobacco sales from San Diego to San Luis Obispo.

While enjoying the cigar's success, Baker nevertheless wrestles with saying no to his customers more often than he can say yes. ``A great part of the day you're putting out fires with angry people,'' Baker says.

The cigar's comeback has inspired entrepreneurs in the Dominican Republic and Honduras to open dozens of factories in recent months, often mere tents staffed by untrained workmen, manufacturers' representatives say. Dozens more such factories reportedly are being built.

As a result, an increasing number of badly made, foul-tasting cigars has rotated into the U.S. market, threatening to turn off the young cigar-bar crowd before it becomes turned on.

Tampa, Fla., wholesaler Erick Newman, president of J.C. Newman Cigar Co., says: ``In some ways our industry is becoming a victim of its own success. The dramatic resurgence in cigar smoking has simply overwhelmed all available material and labor resources.''

(Cigar manufacturers have avoided being singed in anti-tobacco litigation against cigarette makers, though the National Cancer Institute this year plans to issue a report describing health-related research into cigars. And the journal Science has reported links between cigar smoking and lung cancer.)

Romeo et Juliette owner Aley says she isn't certain whether she was lucky or smart to get into the tobacco trade in 1993 at the outset of the cigar surge. She started buying supplies six months before opening the first store in Seal Beach, and horded supplies for a year before opening the second store in Newport Beach in August.

Today her walk-in humidors are larded with thousands of premium cigars. But scarce brands are laid out stingily, occasionally one per box.

``Certain cigars I can sell in one day,'' she says. ``I would rather have it on the shelf - limit it - that allows more people to try the cigar.''

Ultimately, do Americans have the lung capacity to sustain the cigar's popularity?

Yes, says C&K's Baker: ``The cigar business is here to stay.''

He is seconded by Edgar Cullman Jr., chairman of New York-based General Cigar Holdings Inc., a manufacturing giant that owns such brands as Cohiba, Macanudo and Partagas. Cullman calls 1997 ``a whopper of a year.''

Maybe, says Romeo et Juliette owner Aley, who argues that too many smoke shops are imperiled by the lack of access to established brands and the store owners' vulnerability to purchasing bad cigars at premium prices.

``They sign leases and then they find they can't get product,'' she says. ``It's a weird market. But it's going to correct itself. . . . You're going to see it in the next six months. You can only cut the market so many ways.''

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Photo, Chart

Photo: Christopher Zawalski, left, and Gary Roth Jr., owners of the Board Room cigar shop in Belmont Shore, celebrate their grand opening with Mursuli Specials.

Knight-Ridder Tribune Photo Service

Chart: (color) LIGHT MY FIRE

Knight-Ridder Tribune Graphics Network