Owner, MATASA, makers of Fonseca, Licenciados, Romeo y Julieta, Jose Benito, Cubita, Royal Dominicana, Credo and Casa Blanca cigars.
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Quesada: About a million and a half.
CA: Romeo y Julieta?
Quesada: About one million.
CA: And Credo?
Quesada: 1.2 million.
CA: Jose Benito?
CA: Royal Dominicana?
Quesada: Royal Dominicana has no numbers, Marvin, because we just can't make it.
CA: In terms of priorities, don't you have a lot of horses here? Where are you going to put your emphasis in the future?
Quesada: At MATASA, I cannot take resources away from Casa Blanca or Licenciados or Romeo y Julieta to put into Fonseca or Cubita, because these are brands that brought me to where I am today. The loyalty that I owe to the owners of those brands is the same I owe to myself. So whatever tobaccos we have ready for these cigars will be split among them. We plan our crops and we plan our warehousing for these brands in particular. The major limiting factor has been mostly the Connecticut-seed wrapper.
CA: Is that the only thing holding you back?
Quesada: Yes, sir.
CA: But haven't plantings expanded in Connecticut and Ecuador, so that there would be more material available?
Quesada: Yes, sir, but when you talk about premium cigars, a lot of the wrappers that you buy do not qualify for that particular level of production.
CA: What happens to that? Binder?
Quesada: Some go into generic brands, or bundles, or smaller, lesser known brands, regional brands.
CA: In the Dominican Republic last year, there was a huge surge in the price of tobacco, and a huge surge in what new factories were willing to pay for rollers. Has the dust settled? Where are things now? You hear stories about a number of factories that have closed, of rollers that left where they were and now are trying to get their old jobs back. Are tobacco prices rolling back? What's really happening in the Dominican Republic regarding handmade cigars?
Quesada: In January 1997, we lost--and when I say we I mean, Arturo Fuente, Davidoff, General Cigar and MATASA--thosefour factories lost over 350 cigarmakers. That occurred in the period between Christmas vacation and the January opening of those factories.
CA: In a two-week period.
Quesada: In a two-week period, these 350-odd cigarmakers were taken away by new companies starting to make cigars in Dominican Republic. But we had been training people for two years before that event, so we had been replenishing and getting ready for a situation like this. Nevertheless, when you substitute a cigarmaker with a trainee, your output does come down a bit. We saw a dip in our production numbers in the first four or five months of this year. Then we started coming back on line with the addition of more trained people. As of today, the cigarmakers are starting to come back. After the RTDA [Retail Tobacco Dealers of America] convention in August, some of the new ventures, some of the new factories, found that their product wasn't selling as easily in the market today as it was maybe six or eight or 10 months ago. They have cut back production, therefore, letting go of a number of the cigarmakers that were originally taken from us.
CA: Have there been many of the new factories closed down?
Quesada: I don't have an exact number on that. We do know that the cigarmakers are coming back to the factories looking for jobs, so therefore we assume that there has been a cutback. Whether it's a total shutdown or a severe cutback in production that is occurring, I don't know for sure.
CA: What seems to be the attitude of the manufacturers? Are they welcoming back their former employees or basically saying, You went for the dollar, good luck.
Quesada: No. We are being selective, because a lot of the cigarmakers that left in January, left under less than good situations. But we are taking back a lot of the old cigarmakers. They are starting as new personnel in the factories, but we are taking them back.
CA: Looking at the major brand that you own, Fonseca, in terms of image, in terms of sizes, in terms of geographic distribution, what is your sense of where you want to take it in the next three years?
Quesada: I would have wanted to have taken it three years ago to a level of sales that would have been triple or quadruple the number that I have today. And that is still my goal. I feel that the quality of the product is there. I think that it has a market. Unfortunately, I could not produce the cigars that I needed without hurting other brands that we manufacture or lowering the quality of the brand. Therefore, we have been keeping at the level that we spoke about earlier.
CA: Which relationship began first? Mike's, J.R. or Hollco-Rohr?
Quesada: Hollco-Rohr was the very first.
CA: How did it come to pass that you ended up manufacturing Romeo y Julieta?
Quesada: Mr. Wally Frank, who had purchased the Romeo y Julieta brand from the family here in New York, was looking for manufacturing facilities in three countries: Honduras, Mexico and Dominican Republic. I was approached by the Hollco-Rohr Co. and I interviewed with Mr. Frank. I told Mr. Frank that I thought it was a mistake to have a brand in three different countries. And if that was the case I didn't want to get involved in that project. To have two countries already would have been a difficult situation. Three countries, I was out of the project. It was finally kept down to two countries, Honduras and Dominican Republic, and eventually Honduras was discontinued and Dominican Republic stayed.