And the boy, Anto Mahroukian, now 27 and president of JM tobacco Company, delights in recounting the story.

    "It was my dad's borthday in 1994," Mahroukian recalls. "I bought him an expensive cigar. I don't even remember what it was, but it cost about $18. He smoked it and he liked it. He asked how much I paid for it, and when i told him, he was shocked."

    John Mahroukian - the "JM" in the company's name and on its cigar bands - saw an opportunity with cigars selling for such a premium. The elder Mahroukian owned a jewelry factory in the Dominican Republic and told his factory foreman to check out the local cigar factories and ship him some samples.

    "He found a factory that would make private label cigars for us and my dad ordered 10,000 cigars at about a buck each," Anto recounts.

    Still, John Mahroukian wasn't quite sure about his pending business venture. "We had a bunch of cigars, but no name and no band," Anto says. "And dad was a daily cigar smoker. That's why he'd say after he ordered the cigars that if we didn't even sell one stick, he had enough cigars for the rest of his life at a dollar apiece."

    The name the Mahroukians gave their new cigar was Espanola, which initially wholsaled for about $6 each. And that brought the younger Mahroukian to the cigar industry. 

    "I jumped right into the business out of high school. Originally, I went from store to store and dropped off samples," Anto says. "As soon as I'd give it to one guy, the next guy wanted to have it. Nobody could keep it on stock."

    Things have changed some in 10 years, given the vagaries inherent in cigar manufacturing. 

    Today Espanola is available only in limited quantities, although Mahroukian says the cigar is in the process of being repackaged and relabeled. In the value-priced category, JM Tobacco manufactures and markets hand-rolled, mixed-filler Cuban sandwich brands such as JM's Dominican, JM Dominican Classic, and flavored Island Delights and Alma Sweets. 

    Mahroukian chortles at the irony of his early days in the cigar business. "I couldn't smoke one, but i was raving about the Espanola - telling retailers that is was the best. We had 10 accounts in less than two months., and we had to reorder. This time we doubled up."

    Within a year the company had sales representatives in Colorado, Texas, Ohio, New York, Illinois, and Northern California. But at about the same time, JM began to suffer the same fate as other manufacturers new and old during the boom years as the damand for premium, hand-rolled cigars began to far outstrip the supply.

    "We were getting frustrated," he says. "People wanted our cigars, but we couldn't get them fast enough. And as time went on, we realized the quality of the cigars was going down, and we were getting shorted a number of sizes. For a while, the factory in the Dominican Republic was sending us sizes that we didn't even order."

    In 1997, JM Tobacco Co. bought its own factory in Tamboril, hired rollers, and bought its own tobacco so that production could be more closely controlled.

    That proved problematic because the cigar boom essentially was over, although cigar production was still at record highs in the Dominican Republic and manufacturers were still competing for competent rollers. Those shortages corrected as cigar sales returned to normal proportions and the end of the cigar boom worked its way back through the production chain.

    But that led to another problem - an oversupply of cigars. "After the boom came the bust, and we ended up in a bind," Anto says. "We had a lot of tobacco and enough rollers to make cigars, but we couldn't compete with the prices that a lot of companies were charging."

    As Anto enrolled in 2000 at the University of Southern California's Marshall Business School to study marketing, JM Tobacco's future looked bleak. "At about that time i found myself at my desk practically doing nothing - no phone calls and hardly any sales," Anto recalls, "we had an inventory of 100,000 cigars and we needed to generate some cash."

    After the opportunity to sell 50,000 cigars in inventory to a single customer who wanted to establish his own private label, father and son made a decision - rather than close up shop, they would change their focus. 

    "We realized we could sell cigars on a mass scale," Mahroukian said. "We realized that the more cigars we made, the better the margins we would make. The idea was to come up with a less expensive cigar that wouldn't kill the customer if they were buying three or four at a time. The daily cigar smoker became our target market.

    "We decided to market a punch-cut, bundle-type cigar with a band in a box, and to get into different markets - convenience stores and other locations instead of just the traditional smokeshop, which had been where we were focused.

    "It was a risk. Everybody else was closing and selling inventory, and we bought more uncured tobacco, got a warehouse, and to reduce cost, started curing it ourselves."

    JM Tobacco also closed its original factory in Tamboril, D.R., and opened another three times as large in the Duty Free Zone in Licey, which helped reduce costs.

    The strategy worked and the company has grown steadily since, occasionally introducing new varieties of cigars - a maduro version of JM's Dominican debuted last January - for their 1,500 to 2,000 active accounts. JM Tobacco distributes directly from its warehouse in Los Angeles, while Crossline Distributors and Lil' Brown Smoke Shack - both located in Washington state - also distribute JM Tobacco's brands.