An Interview with Stanford Newman
Chairman, J.C. Newman Cigar Co., Tampa, Florida, the owners of Cuesta-Rey and Diamond Crown cigars.
Marvin R. Shanken
From the Print Edition:
Claudia Schiffer, Jul/Aug 97
(continued from page 1)
CA: Does that mean those factories stopped making cigars
for a while, or did they get tobacco from other places?
Newman: They tried to get tobacco from other places. We got tobacco, mostly wrappers, from Cameroon in 1962. But the price went up from $7 to $14 [a pound]. Nobody in Tampa or in the United States wanted to pay that much, because in Cuba they only paid $6 or $7 [a pound] for tobacco.
CA: Was this the first time the Cameroon wrappers were
Newman: That's right. There was no reason to use Cameroon tobacco when you could get Cuban tobacco. We used the top grades of Cameroon, because I thought that if we had something of quality, we could keep our market. It was not exactly a substitute. It had a different taste, but it was a very, very fine wrapper.
CA: Who went out to find the Cameroon wrapper?
Newman: Cameroon wrappers were being sold in Europe to the European manufacturers at that time. They started an inscription, actually an auction. Inscription is something where you put in sealed bids, but it's really an auction. They started that in about 1954 or '55.
CA: Where did the binder and filler tobacco come from?
Newman: The binders came from Connecticut, and we also got wrappers from Connecticut. The filler started coming in from the Dominican Republic and Nicaragua and some from Honduras. But what really changed the business in Tampa so rapidly was that Cuban cigar manufacturers after the embargo went to Nicaragua, the Dominican Republic and Honduras. They also started selling cigars in New York and California and Detroit and Cleveland and other places, like Miami. They made cigars larger than we did in Tampa and charged less money than manufacturers in Tampa could. And, you couldn't change the size of the machines in Tampa. Cigars started to be made, too, in Santiago, the Dominican Republic.
CA: What about taste and quality?
Newman: The quality was good because a lot of these people coming from Cuba had a good taste for tobacco, and they started to grow Cuban-seed tobacco in the Dominican Republic. Now, the Dominican Republic had the soil that was very similar, especially around Santiago, to Cuban soil.
CA: In effect, the Dominican Republic tobacco industry
began to evolve when the Cubans left Cuba and searched for new homes,
and began to practice their trade in a comparable climate. How were
the cigars different? And what was the reaction from people who had
been smoking Cuban cigars from Tampa all these years and now, all of a
sudden, had to smoke something different?
Newman: Cuban tobacco had its own distinct flavor. But the people couldn't buy Cuban cigars anymore, so they had to change their taste. Some of the Cubans brought tobacco seeds from Cuba into Nicaragua and Honduras and the Dominican Republic. It was a heavier, more aromatic type of tobacco. They started to grow the Cuban-seed tobacco, and the majority of the cigars that were made in those countries were made from that tobacco. But they didn't taste the same.
CA: What was the reaction from cigar smokers in America
when they were no longer able to buy Tampa-made Cuban cigars and they
were now given this alternative? Was there a good reaction? Was there,
you know, "This is not my cigar. It doesn't taste a bit like it," or
"Hey, this is nice"? What was the reception for the Dominican cigar?
Newman: The cigars that started to come from Honduras, Nicaragua and the Dominican Republic, the smokers accepted them because they couldn't buy anything else. Some of those cigars were better than others, especially the ones with aged tobacco. But those are the ones that even today people like better.
CA: Is it fair to say that the embargo, because it
permitted these Cuban-exile cigarmakers to set up operations in other
countries, triggered the beginning of the premium cigar market as we
know it today in America?
Newman: When they started to make cigars in the Dominican Republic and Honduras and Nicaragua, they were priced at the same prices that we were selling them in Tampa, 26 cents. However, they took the business away from Tampa because those new cigars were handmade.
CA: After the embargo, to the best of your recollection,
what was the first premium brand to surface and emerge as a premium
handmade cigar sold in America from the islands?
Newman: The first brands that came into the United States that were handmade were from the Canary Islands. One was Montecruz, brought in by the Dunhill people. And there was, I think, Don Diego. There may have been one or two others, but they were small.
CA: What about Macanudos?
Newman: Macanudo, I think, started out in about 1964. I remember that my friend Martin Annis in Tampa told me that he'd gotten a call from Edgar Cullman [Sr.], on vacation at his home in Jamaica. He wanted to know if he should buy a factory called Temple Hall that was making about four million cigars a year. He asked Marty, who was already working for the General Cigar Co. at the time, whether he thought he could sell the cigars. Marty said, "Go ahead and buy it." So, Cullman bought the Temple Hall factory. Now, there were no Macanudos sold in this country at the time. There were a few Temple Hall cigars sold, there were some other brands that were sold by Faber, Coe & Gregg. Most of the Macanudos at that time were sold outside of the United States.
CA: Was Royal Jamaica around at this point?
Newman: Royal Jamaica came in a little bit later. That was a family by the name of Gore, who made them in Jamaica.
CA: Tell me how your relationship with the Fuente family
Newman: In 1980, I saw what was happening to the whole industry in Tampa. It was clear to me then that these people from Nicaragua and the Dominican Republic and Honduras were taking some of our business. It wasn't critical for us because our business was so strong. We were able to sell some of our machine-made Cuesta-Reys, especially our Cuesta-Rey '95s, because the quality was so good. We were the only ones at that time using Cameroon tobacco. We were able to sustain our brand. Still, we were looking to have our cigars made in Nicaragua, or in the Dominican Republic, by hand. After making a survey, I realized there was no way that I could have cigars made unless I'd run the factory myself. I was a little frustrated about that because I never found a factory that I could connect up with.
In 1986, Carlos Fuente [Sr.] was running a factory in Tampa for himself. He had also set up shop in 1980 in the Dominican Republic. Just prior to that, for a couple of years, he had been manufacturing in Nicaragua and he got burned out there from the revolution. So, he went to the Dominican Republic in 1980 with a couple of cigarmakers and he started a factory down there. I'd known him for about 20 years. I thought he was always one of the finest cigar manufacturers, even though he was small at the time.
When he came to me in 1986, right after I had bought out my other family members, he walked in and he said that he would like to close his factory in Tampa, and he'd like us to make cigars for him. I said, "Well, of course, let me see what the prices would be." I did that, and realized I couldn't make any profit on the deal. So, I said to him, "I'll make them on one condition: if you'll make cigars for us." And he said, "Well, I'll do that."
I was looking for somebody to make cigars who I could really trust. And if there's any person in the world that I'd known who I could trust, it was Carlos Fuente. And so I said, "Well, let's sit down and make four or five shapes, and let's get a blend that you think will sell, and we will put them in bundles." I had a brand that we'd bought when we acquired Cuesta-Rey called La Unica. We weren't using the label, so I said, "Let's put this in bundles of 20 cigars of five sizes and we will sell them to 300 or 400 cigar stores. In six months, if we see it's successful, if people like them and they like the blend, we'll take the brand off the market and we will start slowly changing Cuesta-Rey to hand-rolled, and have you make it for us."
The La Unicas were so good that today, I think they are the largest-selling premium cigar in bundles. We never took them off the market because the brand was so good. One thing that always impressed me with Carlos was that he had the same feeling for the business that I did, that he believed in large inventories. And all the money that he made from 1980 till 1986, he put into tobacco. All his profits that he made. Because he felt that he could only make a good product if he had aged tobacco, and I know that you can't make good product in cigars unless you have an inventory.
CA: What kind of volume did you do with La Unica in 1996?
Newman: La Unica can be much bigger, but, of course, it's like all the other cigarsæwe can only make several million of them, and we just keep them down, but we've increased the prices like every other manufacturer. When we first put La Unica on the market, we labeled it La Unica Primeros because all the cigars that were in bundles on the market at that time were seconds from factories. And, I wanted to make darn sure that we could charge more than what the bundles go for. These cigars are primeros.
CA: So La Unica are not seconds.
Newman: No, they're firsts. They're primeros, and that was the thing, and I wanted to put them on the market. I didn't want to have any cigars with bundles. At first I didn't like the idea of having bundles. I wanted to take them off the market, and I planned to, but it became successful.
CA: How did Cuesta-Rey become part of your company?
Newman: Cuesta-Rey was a brand that was started in Atlanta in 1884 by Angel Cuesta Sr. He'd come from Spain. In 1886, he moved his factory operations to Tampa, when Tampa was being established as a cigar manufacturing city, and at that time, the Chamber of Commerceæthey called it the Board of Tradeæwould build a cigar factory and all the houses around it for the workers if they could get somebody to lease it for five years. And the Cuestas started a factory, in 1886, in Tampa. The Cuestas and I got to know each other pretty well, and when my father passed away, in 1958, I approached them about buying their business. We made a deal and it worked out very, very well.
CA: Did you buy the brand name, or the business?
Newman: We bought the business. We bought the tobacco. We bought whatever equipment we needed, and anything that had a Cuesta-Rey name on it. They had some other brands, White Heather and La Unica, and some other brands. Now, Karl Cuesta wanted to also give me some brands that were registered in Cuba, like El Rey del Mundo. And Karl said, "Just pay me for the labels." And I said, "I'll buy them, but I'll throw them away. I'm interested in just having one brand." We had the Rigoletto brand, which was our high-priced brand. We changed it to a medium-priced brand and we made the Cuesta-Rey the premium brand.
CA: How big was the Cuesta-Rey business that you
bought in 1958?
Newman: At that time, it was maybe four or five million cigars.
CA: And revenue would be?
Newman: Not too much. Most of their cigars were on the cheaper end of the spectrum.
CA: Was it a good buy?
Newman: Cuesta-Rey was a name that had been established all over the world. The label had not been hurt like a lot of other brands that had once sold for 30 cents, and were now selling for 10 cents. The brand was never hurt, and that was one of the reasons I was interested in it. But another reason I was interested was that there was a Cuesta-Rey made in Cuba, but the government never registered the trademark. I knew we had an opportunity because Cuesta-Rey was one of the few brands that was being made in Tampa with a Cuban brand heritage that could be sold all over the world. The factories that are making Hoyo de Monterrey, H. Upmann or Partagas in this area can't sell these brands all over the world. So, in the last two to four years, we started to sell our products in the Pacific Rim.
CA: When did you decide to create the Diamond Crown brand?
Newman: In 1990, I decided I'd been in this business for so long that I wanted to create something different. The largest ring gauge cigar was about 50; there were a few 52 ring gauges. I thought we could make one that was 54 ring gauge. So we created five sizes, from 4 1/2 to 8 1/2 inches. All 54 ring gauge, all the same blend. The only difference was the size of the cigar. And at that time I talked this over with Carlos Fuente Sr., and Carlito [Carlos Fuente Jr.] to see if we could make something that was very special. What I wanted to do was to take Connecticut wrappers that were several years old, and keep them for about five years, and take this wrapper and re-sweat it, you know, open up the bales again and re-ferment it so that the harshness would disappear from the leaf. I wanted to take filler tobacco that was four or five years old and, combining the two, make a cigar that was special, even if it would take me two or three years to do it. So, after three years, new cigars were coming out that were more expensive. I had wanted to have the most expensive cigar on the market, and by 1994, there were so many new cigars coming out with bigger ring gauges, as big as 54, a few of them, and some of them were as expensive. Now, by the time we got them out, our cigars were still expensive. Today, they sell from, I think, between $8 and $16. We started a year ago in California. No place else. We thought we'd have a lot more cigars. We have two teams in the Fuente factory. The people were being paid by the day instead of by the piece, and they only made about 75 cigars a day. We thought we'd put out that way maybe 150,000 cigars. But then lo and behold, as we started out in California, we lost one of our teams. Somebody came in there and [took] not only ours but some of the people that were making some of the Fuente cigars, and these were some of the best people. They stole our cigarmakers and they made them supervisors in some of these new factories. So, instead of making 150,000 we made, maybe, close to 100,000, and that's about what we're making today.
CA: In 1996, you shipped how many Diamond Crowns?
Newman: About 100,000.
CA: In 1997...
Newman: We won't be shipping any more [than 1996]. We hope to ship the same.
CA: So, in other words, are you saying that for the near
Newman: We hope to be back to about 150,000 a year and more. But it's very difficult down in the Dominican Republic because they're stealing our people. They're paying $15,000 Dominican, as much as $1,500 American, to try to steal the better cigarmakers from the Fuentes. I think they've lost 90 workers this year. It's difficult.
CA: Is there a plan to ever get this to a million?
Newman: Oh yes, yes. There will be a plan once this situation settles down. This may be another two or three years. The Fuentes are training people, but the whole situation, I think, is difficult.
CA: Do you have tobacco set aside?
Newman: We certainly do. Not millions, but we have tobacco aging for the Diamond Crown.
CA: Can you get up to a half a million?
Newman: Maybe eventually to half a million, but I don't think we'll do any more than that. It may take two or three years. And the plans were that we were going to sell the Diamond Crown on the West Coast and come east, and a Fuente Fuente Opus X was going to go from the east to the west. The Fuente Fuente Opus X--I think they're only sold up to the Mississippi River today, although they're probably black-marketed all over.
CA: How do you build a business that's so strapped from a
production side? What goes through your mind?
Newman: Well, my way of thinking is that the Fuentes are the best manufacturers by far, and have the best value of any cigar manufacturer in existence because of the way they make their cigars, and the way they run their [business]. They don't have anything that's fancy; their overhead is very low. And they're so good because they live there. And the theory goes back to when I used to go to Cuba; I used to know that the best tobacco was kept in Cuba by the Cuban manufacturers.
CA: How old are you now?
Newman: I'm 80.
CA: Eighty years old! You spent your whole life in the
business. You've seen the rises and the declines and the most recent
resurrection, if you will. Things have never been so good. You have
your kids in the business today. But you can't get enough product to
really allow your business to rise to the level that the market
wants. Is this very frustrating to you?
Newman: It is, but we're hoping that it will alleviate itself. I think in time--it may take a year or two--it will alleviate itself, because I think this competition for tobacco, the competition for labor will stabilize sometime. It will certainly be more stable on the popular brands. But it will not stabilize for the new brands, which are destabilizing the market very bad down there. They're paying a lot of money for tobacco, and they're paying for tobacco that some of it is good, but some of it's very new, very green. They say that when they go out to sell the cigars, it's young tobacco. I think a lot of these things will level off.
In the meantime, the Fuentes are building a fifth factory. They have one factory that has, I think, 200 or 300 learners [apprentices] in there. The other people in the businessæGeneral Cigar, has a similar amount of learners, Consolidated has learners. And, I think if the main brands become more plentiful, it will stabilize the whole industry. But, as I say, it is frustrating right now. But, I'm real happy to see that in the computer in our factory, for our distribution system, that we sell to 2,000 or 2,500 retailers, and every time we get a shipment in from the D.R., they get some cigars.
CA: What made you go into the humidor business? What was
the thinking behind that?
Newman: We have bought and purchased from Reed & Barton over the years, humidors that we put in 20,000 restaurants. We had our better sizes of our Cuesta-Rey [cigars], our numbers 1s, 2s and 3s, the more expensive ones. [Selling cigars to restaurants] was one of the ways we marketed them. And we had them make humidors so we could give them to the restaurants. But for the past two or three years, we had lost most of our restaurant buiness because the owners often couldn't sell cigars in the restaurants. We hadn't done very much business with them recently. About two years ago Reed & Barton said to us they were beginning to get requests for humidors from jewelry stores and department stores. They wanted to know if they started to sell humidors, whether we would go into the business [distributing them]. And, at that time, I, and Eric and Bobby, conducted some surveys and talked to a lot of retailers: "If we had humidors, would you buy them?" They'd be made by Reed & Barton. "Oh, of course we would, because when we place orders with people from this country, from Italy, from Spain, we don't get the humidors. We place them at the RTDA [Retail Tobacoo Dealers of America convention] in July or August, and they come in in January or February." I got the idea that we would keep the inventory, and if people wanted to buy one, or if they wanted to buy 10, that it would be a very good idea. And we've been very successful because Reed & Barton goes back to 1824. They've made jewelry cases and cases for their silverware.
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Clifford Brown — independence, ky, usa, — May 14, 2013 3:47pm ET
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