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The Change at C.A.O.

Now among the hottest of cigar brands, Nashville's C.A.O. began life as a pipe maker
David Savona
From the Print Edition:
Andy Garcia, Mar/April 2004

(continued from page 1)

A production problem on the original C.A.O. line—which now is available in limited form and is known as C.A.O. Black—led to the company’s first cigar success. “Our biggest hit was the maduro,” says Cano. “That was created in a snafu. We had a beautiful maduro, but it didn’t burn well, so we called it back. We had about 100,000 to 150,000 cigars we had to recall.”

The recall, along with product shortages, prompted the Ozgeners to look for an additional supplier of cigars. They eventually hooked up with Douglas Pueringer, owner of Tabacalera Tambor in Costa Rica, where Bahia cigars were made. Pueringer made the Ozgeners a spicy, black maduro, which they packaged with a red band that borrowed heavily from Cuba’s Partagas Serie D No. 4.

“That put us on the map,” says Aylin Ozgener, 31, Cano’s daughter, and the other vice president of the company. She’s a quiet woman with a surprisingly tough job—she hires and fires salespeople, and collects on accounts. “Our goal for sales is to get all our lines in the stores,” says Aylin. “To try to increase our shelf space.” That’s a decidedly tougher task than just a few years prior. C.A.O. has expanded its range of cigars dramatically. In eight years the company has gone from one cigar brand to seven major brands: Gold, Brazilia, Criollo, Double Maduro (or MX2) and three versions of L’Anniversaire: Maduro, Cameroon and eXtreme. The company also markets flavored cigars, plus has several specialty lines, including the reincarnated Black and a 65th Anniversary Cigar made to honor Cano’s 65th birthday.

None are made by Pueringer, who abruptly ended his business relationship with the Ozgeners by a breakup fax in 1999.  (He would later retire from the cigar business.) Pueringer’s move left C.A.O. in the lurch. “Seventy percent of our cigar sales were from the maduro at that point,” says Cano. But Pueringer’s surprise move turned into a boon for C.A.O., which found a replacement manufacturer in Nick Perdomo later that year. Perdomo began making the maduro blend, and soon after gave C.A.O. a Cameroon-wrapped cigar, which Cano had craved for years. The first samples barely made it to the industry trade show in 1999. “I brought 1,000 cigars in my luggage into Miami through the nothing-to-declare line,” says Tim with a smile.

C.A.O. added cigar brands through the years, and eventually expanded its coterie of cigar companies that made its brands: the Toraño family began making C.A.O. Brazilias in Honduras and La Aurora started creating the flavored cigars in the Dominican Republic.

In 2003, the Ozgeners made the shift from mere marketer to cigarmaker, buying two cigar factories in Central America, one in Estelí, Nicaragua, and one in Danlí, Honduras, to give it more control over the production of its cigars. (The term cigar factory is loosely applied here—each C.A.O. factory is inside a building that also contains a cigar factory owned by the Toraño family. In Nicaragua, the dividing line is invisible, about halfway through the rollers’ gallery. In Honduras, C.A.O. workers sit on one side of the building, Toraño workers on the other.)

The shift gave C.A.O. more control over its tobacco supply and quality control, as well as improving margins by cutting out a middleman. Soon after the move was made, C.A.O. switched production of its maduro brand from Tabacalera Perdomo to C.A.O. Fabricas de Tabacos in Nicaragua.

 The production of the C.A.O. and Toraño factories on both sides of the border is managed by Fidel Olivas, 49, and three of his six sons. Most cigar factory managers are Cuban; Olivas is Nicaraguan. “Fidel’s goal is to be known as one of the great Nicaraguan cigar men,” says Charlie Toraño, Tim’s counterpart from the Toraño family.  Olivas buys tobacco for Toraño and C.A.O., and the close working relationship between the midsized cigar companies allows them to get better prices on tobacco. “If we come across some great tobacco, we can buy it together,” says Tim. “It gives us more buying power.” His father seems slightly obsessed with establishing solid tobacco inventories. “You have to have a supply that can last you at least two years,” says Cano. Tim says he often catches Cano watching The Weather Channel, worrying about damage to planted crops. “ ‘Who cares about the Midwest?’ ” says Tim, doing another Cano impersonation. “ ‘What about Ecuador?’ ”

New brand launches are practically an annual event for the Ozgeners, but the lines tend to stick around. “A lot of cigar companies replace lines if they don’t work for them—that’s not our intention. We believe in each product,” says Tim. “The Gold—most companies would have just ceased that line. We worked hard to relaunch that line. When you come up with a great blend, our objective is not to abandon that blend. It’s really easy to sell what’s new and what’s hot, but you also have to remind people about a great blend.”

The Ozgeners are marketers, and seem unafraid to test the boundaries of normal cigar advertising. Early ads featured nude women smoking double coronas. The current ad campaign shows the three Ozgeners decked out in black. Tim looks like a club hopper, with his scruffy goatee, shaved pate and a cool scowl as he blows on the lit end of his cigar. His sister is goth chic, replete with black lipstick. Cano, wearing a suit, is looking on from the left, appearing somewhat bemused.

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