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A Conversation with General Cigar's Dan Carr

David Savona
From the Print Edition:
Joe Mantegna, July/August 2011

(continued from page 1)

Q: But you buy from other brokers as well?
A: Absolutely.

Q: How much do you spend on tobacco in
a year?
A: (Laughs.)

Q: It must be sobering.
A: For us it’s not just the number. Because of our size, we’re the first ones. We go in there, we look at the tobaccos, we taste the tobaccos, we select the tobaccos we pick the tobaccos. We’re not just going in there buying a couple of bales. There’s times we’ll buy crops, there’s times when we buy things to experiment. We have flexibility.

Q: And you have deep pockets.
A: Which helps us do that. The benefit to the consumer is we’re bringing different things to the market. And again, if I’m one person, one brand, I can’t go and travel around and look at things and try things—I have to make sure my business is running. We have some differences.

Q: You grow tobacco in Connecticut.
A: A.J. Thrall [a family of tobacco growers in Connecticut] does most of Connecticut.

Q: You own fields there?
A: We own fields, but we haven’t grown in Connecticut in a number of years.

Q: So General still owns fields, but the tobacco is grown by the Thrall family.
A: Yes. Our relationship with them goes way back.

Q: I’ve seen some of your warehouses. You have tremendous amounts of tobacco. Are there other varieties you haven’t used, stuff we haven’t seen before?
A: Absolutely. That’s the fun part of the business. That’s the library.

Q: What is that?
A: We have a library of different tobaccos that come from different regions, different areas. We can select from different parts of the library at different times to create different tastes, different blends. For a blender, they’re like kids in a candy store.

Q: So what’s your favorite cigar?
A: I get to smoke just about everything. I love anything with Ometepe in it. [General uses some tobacco from the Nicaraguan island of Ometepe in many of its brands, including Punch Upper Cut and Macanudo 1968.] I’m a big Macanudo 1968 fan. It depends on the day. It kind of makes the job fun. This is a funny industry. You do it all the time. It bleeds over into your personal life.

Q: Can you take me through the process of making a new cigar at General Cigar? How does it go from someone’s mind to the consumer’s hand?
A: I’ll give you the short version. We have a whole innovation team. They meet quarterly. You’ll have people from sales, marketing, leaf people, you’ll have consumers, and we’ll come up with ideas and concepts. And we’ll put them out to consumers and test them. We’ve created over the last three years a whole consumer tasting group, which is in the thousands. This is another way for us to not only work internally with people who have been with us 45 years or more, but we also utilize consumers who are extremely passionate. We’ll give them the same samples that we smoke. We might ask them how much would you pay for this? And we might go through 200 blends. It’s a long process for us. We’re only going to market with things that have been tested.

Q: Do all of your cigars go through such a lengthy process?
A: Yes. What we don’t want to do is take up valuable shelf space of a customer with stuff that isn’t going to work. We want to make sure we do our pre-work ahead of time.

Q: What do people want in a cigar today?
A: We think three things. The first one really is the consumer saying I want a well-balanced, flavorful, extremely well-constructed,  high-quality cigar at a great price. The second thing we’re seeing is, the consumer today is looking for something new. With Mac Vintage, we put broadleaf on it, we put a metal ring on the cigar. We’ve been back-ordered on it. Hoyo Reposado is another way we’ve looked at the aging process, introducing cedar and doing a whole new experience for consumers. If you look at La Gloria Cubana, what’s going on with the Serie N line, there’s packaging and construction innovation. You take a look at those types of things and you start to try to match it to an occasion.

Q: In 1996, every new cigar seemed to be $10. The bargains were the old established brands. Today you’re seeing lots of very interesting, superb cigars at a good price point. That’s good for consumers, but not necessarily good for companies.
A: It’s harder, because tobacco prices continue to go up. Given the inventory of tobaccos, the library of tobaccos, that we have enables us to make wonderful cigars at great price points, and we’re going to match up to where the market is. And we’re going to make sure where we see opportunities. We’re not filling the market with something we already have. We’re coming out with something that doesn’t exist.

Q: Where do you find these niches? Cigar shops are crowded. Is it tough to get new cigars into cigar shops now?
A: Yes, at the last IPCPR [International Premium Cigar and Pipe Retailers trade show], if you took extensions and brands, there were a couple of hundred new items. And the average tobacconist carries 600 to 800 boxes. That’s one-third new. What we’ve been trying to do is be very targeted and come in with things that have been tested. We’re trying to come in with things that fit the consumer need or void.

Q: Is your portfolio somewhat fluid then? You’re putting new things in. Do you have to take things out every year?
A: We look both ways. If something isn’t relevant it doesn’t make sense to tie up capital and resources on it.

Q: Have you taken things out recently?
A: Yeah. We do it relatively quietly. We will always have the products available to the customer who wants it.

Q: You mean via a catalog?
A: No, we’ll ship it to retail. If a retailer has a consumer and that’s what they buy, we want to make sure we honor that. But we can.

Q: So what am I missing in the General Cigar story?
A: The one thing that I learned, business-wise, is you can have wonderful assets, but at the end of the day it’s all about the people. Through different things that the Cullmans have built, the legacy that they’ve brought to General Cigar over the 50 years, you complement that with the different acquisitions that we had, El Credito, the UST acquisition, which brought in Don Tomás and Helix, you take it into C.A.O. as well as Plasencia. We really have amassed some of the most talented and most experienced people in the cigar business, which makes my job extremely easy. If you look ahead and you say most of the challenges are behind us, but again we’re in a challenging industry. This is where I’d want to place my bet. I’m very optimistic about the future. We can lead upon tobacco, cigar-making, cigar master, technology and research, even on how we plan the business. We want to make sure that we’re helping our customers grow, and that we’re introducing as many consumers as we can into the industry. Our portfolio competes on every price point, every flavor and every taste. And we think we can do even more with the brands.

General's Cigar Factories

General Cigar Dominicana, Santiago, Dominican Republic
Major brands made there: Macanudo, Partagas, Cohiba, La Gloria Cubana, Bolivar, Havana Honeys (flavored) and Flavours by C.A.O. (flavored)

Honduras American Tabaco S.A. (HATSA), Danlí, Honduras
Major brands made there: Punch, Hoyo de Monterrey, C.A.O. Brazilia, C.A.O. Lx2, C.A.O. Mx2, C.A.O. Italia, Don Tomás, Sancho Panza and Helix

Scandinavian Tobacco Group Estelí, Estelí, Nicaragua
Major brands made there: C.A.O. La Traviata, C.A.O. La Traviata Maduro, C.A.O. Gold and C.A.O. Cx2


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