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Home > Magazine Archives > July/Aug 03 > Q&A: An Interview With Ashton's Robert Levin
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Q&A: An Interview With Ashton's Robert Levin
By David Savona
(Continued)
Q: Tell us about your business relationship with the Fuentes.
A: In 1992, Ashton was becoming fairly successful. I wanted the Fuentes to make them, and they wanted to have an interest in Ashton. So they became partners in Ashton.
Q: They became a minority owner of the Asthon brand?
A: Yes. And it's been a great partnership.
Q: What happened when you took your company public?
A: We put everything together under Holt's Cigar Holdings; then they became a partner in everything, because we had to put all the companies [the wholesale, mail-order and retail business] together.
Q: What percentage do they own?
A: Now they own 35 percent of the company.
Q: Do you own any part of Tabacalera A. Fuente?
A: No.
Q: Tell me about going public.
A: I got caught up in the frenzy, and at the time the reason behind going public was to get the capital to make acquisitions and to grow. And a lot of the European companies came in and were paying outrageous dollars, and killed those plans. When they came in, they were paying 10 times what I thought certain companies were worth. We couldn't participate in that game, and we didn't.
Q: Looking back, was going public a good decision?
A: It was a learning experience for me. In hindsight, my personality did not go well with being a public company. I wasn't very fond of the quarterly reports, and a lot of things you have to go through to be a public company, You had to do a lot of things that I just didn't like doing. It puts undue pressure on you to try to do better every quarter. Long-range plans didn't really mean anything.
Q: Does the cigar business lend itself to being public?
A: I don't think so. Anything to do with tobacco does not lend itself to being a public company -- the cigar business especially. The cigar business is a small business, and it's a slow growing process. Unless you make an acquisition, you're not going to make huge jumps in growth these days. And in this environment, it's going to be very hard to grow at all. But you work and you do your best, and you'll grow. I didn't enjoy being head of a public company. It's very nice being private again. But it was an experience.
Q: Were you a target?
A: I had some inquiries, but I never pursued them, and I don't know how serious they were. Because of the Fuente involvementÖ
Q: Did that eliminate some potential suitors right off the top?
A: Oh, I'm sure it did. But I'm not sure anybody was that serious.
Q: Tell me about your newest cigar, La Aroma de Cuba.
A: I wanted to come out with a different type of cigar at a different price point. It's expensive to make cigars in the Dominican Republic, so we needed to go somewhere else. Also the Fuentes are really maxed out on production. I can't get any more VSGs, I can't get more maduros. They didn't have the production capabilities to do a new brand.
Q: So where did you end up?
A: I'd been talking to my friend Jim Colucci [of Altadis] for quite a long time, and I had been doing business with Flor de Copan [in Honduras] before Altadis bought the factory. I would buy a lot of their seconds, in bundles. And I thought it would be a good place where I could have a brand made. The name La Aroma de Cuba came from a Cigar Aficionado article. I read an article you guys did a long time ago on Winston Churchill. When Churchill was stationed in Cuba in his very young days, one of his favorite cigars was La Aroma de Cuba. So when I researched it, it had just disappeared off the face of the earth. I registered the name, and I'd had it for a long time, five years, before we came out with the brand. And I got a hold of an old label from the original La Aroma de Cuba, which was a beautiful label.
Q: Is that the original Cuban artwork?
A: It's a combination of the original Cuban artwork with another old label; our designer put both of them together. It's very similar to the older label, with a few additions.
Q: Is the wrapper from the factory's farm in northern Honduras?
A: It's a Cuban-seed wrapper that's grown in Honduras, but it's grown by Plasencia. Flor de Copan does grow wrapper, but they don't have enough of it to put on a brand. It's a very small farm. I wanted to use their wrapper, because it tasted great, but they just don't have the quantity to come out with a brand. And they don't have any big leaves to put on larger cigars.
Q: What's the rest of the blend?
A: It's Honduran and Nicaraguan filler, and it's Honduran binder, and it's all Cuban-seed tobacco. It starts at $3.70 and goes to $5. The packaging is beautiful and the cigar is excellent.
Q: How was the reception to La Aroma de Cuba?
A: La Aroma de Cuba has been accepted extremely well, and it was a pretty big hit at the RTDA [Retail Tobacco Dealers of America] show when we introduced it [in 2002]. Our problem, fortunately, is we can't get enough product. We're really behind. Hopefully we'll catch up in the next three or four months, but the demand has outpaced the supply.
Q: How many do you think you'll be able to sell in 2003?
A: We're hoping for a million.
Q: That's a fast start.
A: We're way behind that now. The shipments haven't been coming in as we planned. It's a great cigar, and it's very reasonably priced.
Q: Let's talk about some of your other cigar brands. Do you still make Premium Dominicana?
A: No. I learned a few things with that. We rushed something out because we were a public company. That was the main reason to come out then. We didn't have the right name, we didn't have the right packaging, and that was really rushed to market before it was ready.
Q: You felt the pressure to get something new to the market?
A: I was under a lot of pressure to get something out. There was a shortage of cigars everywhere, shortage of tobacco and cigars, and it was hard to come up with a product, and too rushed. The care and attention that you have to put into it just was not done. That was a good cigar, but everything was rushed.
Q: How has your business evolved?
A: When I first started Ashton, everything was being done out of the retail store. But as we grew and grew and grew, we needed some infrastructure, so we rented 8,000 square feet and we had a warehouse. And I'd spend half my day at the retail store, half in the office. And as you grow, the people you hire make or break your company. We were lucky enough to have people who do a great job and made it possible for the company to grow. I hired Mike Pitkow, who really runs the day-to-day operations; I knew Michael from college, he's an old friend. And we started a sales force in '96 or '97. We have 11 salesmen now, who cover the whole country, and I feel they're the best sales team in the whole industry. They are excellent people, hard-working. Manny Ferrero is our vice president of sales. He is the spiritual leader of the sales force -- he gives them the passion and the integrity they need to be out there on the road. Chip Goldeen, he's the national sales manager. We have a great crew. We have very little turnover. We have really good people top to bottom, and that's what makes the company work.
Q: How many people do you have now?
A: We have 71 people.
Q: And when you started working for your father?
A: Five or six.
Q: What size was the business when you took over?
A: About $600,000 a year.
Q: How big a company is it today, in terms of dollar volume?
A: We're private so we don't really give out our revenues.
Q: How do your sales today compare to your biggest year?
A: We're growing every year.
Q: It's bigger now than during the boom?
A: Yeah. When we were public we did $29 million. It's a slow growth. It's the wholesale business that's driving the train.
Q: Will it also be your most profitable year?
A: No. We're expanding; we're going to double our space. We've been here for five years, and we convinced the owner next door to sell us his property and the building next door.
Q: When you first created this joint headquarters and warehouse, did you think you'd have enough space?
A: I thought we'd be here forever. I thought it would be plenty of space. But what I need is more warehouse space. We need more people space, but it's the warehouse space where we're really crunched.
Q: Six years years ago, you said your business was split evenly. What's the breakdown now?
A: More than half of the business is now wholesale. The retail is about 7 percent of the business; mail-order is 30 percent, a little less.
Q: What about the Internet?
A: That's part of mail-order. The catalog drives the Internet business, but more people are ordering online. I think it's replacing the phone.
Q: You have all these cigar brands that are doing well. Do you see adding more in the future?
A: There's going to be an addition this year, hopefully for the trade show. New Ashtons, with a Cameroon wrapper. I've always wanted to have a Cameroon wrapper. Rick Meerapfel is one of my best friends. I met him through the Fuentes years ago, and I've always wanted to have Cameroon wrapped cigars using Rick's tobacco.
Q: What are you going to call it?
A: We're batting names around. I'm not sure. And there's going to be a new size of Ashton Cabinet, the same size as the VSG Tres Mystique; we're going to call it Tres Petite.
Q: Let's talk about the cigar market. How was 2002?
A: It was a great year for us. We introduced La Aroma, Ashton was still growing, and we came out with the Ashton little cigars made in Europe -- I'm astounded at how they're selling. Quality always rises to the top and wins out in the end. If you have a quality product, it will rise to the top.
Q: So what effect does a tough economic climate -- higher unemployment, bad stock market -- have on cigar sales?
A: We're still growing; it hasn't hurt us that much, but I think it does hurt. I can tell by our mail-order sales and some of our wholesale accounts, say in New York. We had a great year despite what's going on in the economy.
Q: What about all these smoking bans?
A: I think it has to affect us. We haven't felt it yet, but I think we'll start to feel it.
Q: Are you worried?
A: Yeah. I think we're still going to grow, but I think if a guy is smoking five, six cigars a week, and he lives in a place like New York now, he might only smoke one or two cigars a week. And it's going to affect everybody.
Q: How is 2003 so far?
A: January and February were excellent. March was soft, but April came back like gangbusters. But we don't know yet the effect of all the antismoking legislation. Boston just went into effect the fifth of May, New York was April, so we haven't really seen the effect yet.
Q: Why the soft March?
A: It was a combination of the economy and such a strong January and February -- you have to tail off a little bit.
Q: Do you think cigar sales are somewhat immune to economic
problems?
A: My father always told me that. Years ago, he said that generally in recessions and depressions, cigar sales remain. It's an affordable luxury in hard times. But I think, definitely, that the economy has an effect on luxury products, and cigars are luxury products.
Q: About 20 years ago you sat down and created a cigar brand. That cigar forever changed the nature of your business. Where do you think this company will be in 20 years?
A: I have no idea. My son, Sathya, shows some signs of interest; he's a senior in college. My daughter, Meera, is a sophomore, so it's too early to tell.
Q: Would you like your son to take over?
A: If that's what he wants to do, he can do it. He's already spent time with the Fuentes in high school, he's worked with the salesmen out on the road, and he's worked in the retail store for years. He's seen every part of the company. If he shows interest and he wants to do it, that's great; if he doesn't, that's fine too. But the world's open to him -- whatever he wants. So things are alright.
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