An Interview with Ernesto Perez-Carrillo
Owner, El Credito Cigar Co., makers of La Gloria Cubana, La Hoja Selecta, El Rico Habano and Dos Gonzales cigars.
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CA: And, you still don't have someone answer the phone?
Carrillo: I gotta get Americanized.
CA: Isn't it time, then, to have a staff, to have an organization?
Carrillo: [laughs] Yeah, I think so. I think it is time to get something like that.
CA: I gotta believe you're working day and night. And it's impossible; it would seem to me that it would be impossible for one man to do it all himself.
Carrillo: Right. It is impossible. And I do have a few people that work with me, but I do need more help. To delegate more...
CA: You need an organization! Not just rollers; you need salespeople, administrative people, a billing department...
Carrillo: That's right. It's time that I do have that because it is getting out of control.
CA: And with the numbers you're talking about, I always thought that the most serious flaw that you had was that you grossly underpriced your product. Therefore, you didn't have the margins to invest in a staff to manage a growth of the business. And I'm not sure that in the past four years you have created the organization you need in order to build your company; this is 1996, the beginning of 1997; you're going from a million to 7 million. Doesn't it scare you?
Carrillo: It scares me to a point, but you know I haven't really given that much thought to building an organization. And I have to build one; like you said, I can't do it all by myself. Just traveling back and forth takes up a lot of time. And you do need good people to help you. I just hadn't been able to find the people that I need in administration.
CA: Do you plan to expand at all in Miami or will all of the expansion take place in the Dominican Republic?
Carrillo: The expansion at this time will take place in the Dominican Republic. If I were to expand, of course, if I get cigarmakers in Miami, I'll keep expanding. The situation there now is that there are so many new cigar factories opening up that it becomes very difficult.
CA: Let's be real about this. Do you in your heart feel that you are able to maintain the high quality, when you have almost a boutique operation in Miami, now that you are in a commercial-size factory in the Dominican Republic? Is there any change in the quality of the product in your opinion?
Carrillo: Well, you know, I'm not just going to say this because I opened up in the Dominican Republic. The cigars are going to sell. We've had a lot of success with the Dominican cigars. That's not a problem. Because there's more space there, there's more labor. I think we can improve the cigars in the Dominican a lot faster than at the factory in Miami. For the simple reason that we have the space, we have the manpower, and it's cost-effective.
CA: Is improving quality in the Dominican Republic a function of buying better quality tobacco or training more proficient rollers?
Carrillo: It's a whole process, a whole process that comes from the time that you get the tobacco to the time that you make [the cigars]. For instance, in the Dominican we have four supervisors checking all the cigarmakers--how they're folding the leaves, how they're rolling the leaves, all this type of thing. In Miami, we can't find a person that we would call a supervisor to do this type of thing. Because there's not really someone that's experienced enough in what I want them to do. I think in the Dominican we'll be able to improve a lot in the way the cigars are made. There's room for improvement in the Dominican Republic; you're working with people who want to work and need to work and are anxious to do a good thing and make a good product, because their livelihood depends on the cigars that they're making.
CA: Has the quality of the cigar in Miami suffered because you're in the Dominican Republic 20 days a month?
Carrillo: No. Because, these people, Cuban cigarmakers, first of all, they're very professional, they're very proud of what they're doing.
CA: How do you handle quality control at the two locations?
Carrillo: In the Dominican Republic, we have four supervisors; we have five more people that check the cigars after they're made. In Miami, we have one person checking the cigars because of the low volume.
CA: What about boxes? I hear there's always a shortage.
Carrillo: That's a big problem.
CA: Do you ever have the cigars ready but can't ship because you don't have the boxes?
Carrillo: Right now, in the Dominican Republic, we must have over a million cigars ready to be shipped, and we're not shipping anything because we just don't have the boxes.
CA: Where do you get the boxes from?
Carrillo: We're looking into different places, a cigar box company opening up in the Pisano free trade zone, called Mantis. There are three other people that want to start up box companies this year. Hopefully, we'll be able to get a lot more boxes. That's a big problem right now in the industry.
CA: What about boxes in Miami?
Carrillo: First of all, they only make wood boxes at a very high cost. They're expensive. What I want to do next year is change all La Gloria Cubana, El Rico Habano and La Hoja Selecta to a colored box. I found they're easier to make. I like them better; they're prettier with the colors and stuff. And they're not as expensive as the cedar boxes.I think there's going to be a problem with cedar down the road. So much now is being used to make cigar boxes, there's going to be a problem with shortages.
CA: Are there any problem areas other than the boxes at this point? Is shipping a problem?
Carrillo: Cellophane is becoming a problem now because of the demand. Cigar molds are also a problem. We have now about 20 people that should have started working with us about a month ago and we're still waiting because we don't have enough molds or presses. The thing in the Dominican Republic is that people are just going haywire and they can't keep up with the demand for anything.
CA: When do you see the cigar boom slowing down to a more normal growth rate than the staggering numbers that we're experiencing today?
Carrillo: I think that the only thing that will slow it down, and I think it is very important for the tobacco growers to be aware of this, is the pricing factor. Unfortunately, we've come into a situation that is unique. I think the only thing that will stop this boom is the prices of cigars. I mean, really, people can't afford to pay 10, 12, 15 dollars for a cigar.
CA: How much is your most expensive cigar?
Carrillo: Six dollars.
CA: What size it is?