Owner, MATASA, makers of Fonseca, Licenciados, Romeo y Julieta, Jose Benito, Cubita, Royal Dominicana, Credo and Casa Blanca cigars.
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Quesada: Yes, yes.
CA: Is it now pretty much acknowledged that the Dominican Republic is capable of producing a competitive quality wrapper?
Quesada: I would say so. Yes, sir.
CA: Everybody has a different point of view and I'm sure that you have spent many, many, many hours thinking about when the embargo ends. How do you think that will affect your business, a), and b), how do you think it will affect the cigar aficionado?
Quesada: We have to look at it hypothetically. If the embargo is lifted tomorrow morning, for the sake of argument, and Cuban cigars immediately begin to come from Havana, from Cuba, wherever, in the next 24 hours, it will affect everybody's business outside of Cuba because consumers will want to try the Cuban product. Initially, there will be a surge towards buying Cuban product instead of our product. That will settle down and I think we will be able to live with the Cubans and they will be able to become another cigar taste, another cigar in the market. They will live with the Dominicans, the Hondurans, the Mexicans, the Nicaraguans, and they will be just another cigar on the market down the road.
CA: Do you see the need or the plan where some of the Dominican or Honduran manufacturers might begin to buy Cuban tobacco in bulk and put it in their cigars to strengthen the taste, make it a little spicier, or be more in the style of a Cuban cigar, or do you think the taste will come closer together, or stand apart as they do now?
Quesada: I think you'll see everything. I think you will see Dominican brands remaining as they are, with the Dominican taste that the market has grown to like and to accept and that has made Dominicans the best-selling cigar in the market today. You will also see combinations with Cuban tobacco in leaf form going into blends of new products, or perhaps variations of the existing brands, where you make a private selection and you make a cabinet selection, and you'll also see perhaps some manufacturers going to Cuba and making Cuban cigars in Cuba. But I don't foresee that anyone will forsake their Dominican ventures.
CA: I would doubt that anyway.
Quesada: No, no, but I think that you will see everything happening in the market because there will be opportunity for 100-percent Cuban cigars, 100-percent Dominican cigars and combinations thereof.
CA: I can't quite imagine you going back to Cuba, where you'd need fields, cigar rollers and so forth, and all having to working with the systems and pay scales they have now. Wouldn't it be difficult?
Quesada: We were bitten once. We have no desire to be bitten twice. So before we do go back and put our money up and start ventures, we have to have assurances that we will be respected.
CA: It sounds like, at least for the nearer term, the only real practical road is buying bulk tobacco.
CA: What about making 100-percent Cuban cigars, but making them in the Dominican Republic or using the tobacco to blend in with what you're now making to make something either brand new or to have a different style?
Quesada: I feel the same way. Politics will not allow us to go back and start investing money right away.
CA: How will that situation affect the consumer? He's already flooded with cigars, half of which he's never heard of and all of a sudden he's going to have two Fonsecas, two H. Upmanns, two Montecristos, two Partagas?
Quesada: First of all, Cigar Aficionado has done a tremendous job in making the consumer a lot more capable of understanding the cigar world. I think that the consumer is able to discern and make distinctions between origins, between types of tobacco, between what creates a strength in a blend, what creates aroma in a blend. I think the cigar smoker would be most interested in these variations in these new adventures in taste and what the possibility of introducing Cuban tobacco to blends might afford them as a smoker. I think that would be a plus.
CA: You have a long-standing relationship with your growers. Have they been greatly increasing their production to keep pace with your growth or do you have to keep adding new growers all the time to supplement your increase each year?
Quesada: Dominican Republic three decades ago used to grow 1 million quintals [100 million pounds] per year of tobacco. In the 1970s, that dwindled and finally the crop at its bottom production was 200,000 quintals, one-fifth of what it was. All that land that used to grow tobacco lay fallow for a number of years because the prices weren't there for the farmers to grow tobacco. And the prices weren't there for us to sell tobacco in the world markets.
CA: Where did all that tobacco go?
Quesada: It used to go to North Africa, to Spain, the Canary Islands, North Europe...
CA: Used for?
Quesada: Cigarettes and short-filler cigars. The United States used to buy enormous amounts of tobacco in Dominican Republic for their short-filler cigars as well. Prices and taxes by the Dominican government made the production dwindle, and with the advent of the new cigar production in Dominican Republic, a lot of the land started to come back into production slowly, because the farmers had dedicated themselves to other things or they had moved to the cities. Their sons were studying to be engineers. But slowly, people from the old tobacco-growing families have come to those fields and started growing tobacco again in land that originally grew tobacco a number of years ago.
CA: But the tobacco that was grown a number of years ago, was it at the quality level that is used for cigarettes as opposed to the quality level for cigars?
Quesada: No, we were also growing Cuban seed and Olor seed at the time. Olor was one of the largest growing varieties in Dominican Republic. And Cuban seed as well. Crillo [cigarette tobacco] used to be the biggest of all. And all had dwindled because of lack of demand.
CA: After Cuba, what drove you to decide to go to the Dominican Republic as opposed to one of the other countries that grow tobacco?
Quesada: We first went to Dominican Republic in 1939. My great-uncle went to Dominican Republic in '39, and we used to buy tobacco from Dominican Republic and from Cuba and sell it to the Spanish monopoly. So we knew the country, we knew the people and we knew the tobacco, and when we left Cuba the family moved its operations to Dominican Republic--without any money, of course.
CA: When did the Dominican Republic begin the free zones?
CA: How important was that governmental action in attracting and maintaining manufacturers during this period of decline?
Quesada: It was important for two reasons. One, you could make cigars in a country that had a long tradition of tobacco and cigar-making. Two, you could bring in tobaccos from any part of the world duty free as long as you exported the cigars out again from the country. So, it afforded you a blend without having to pay duty for the tobacco. Also, you had labor, because it was a cigar-making country. So you had labor there to make cigars right away. So Dominican Republic was attractive for cigar-making back in the 1970s. There were two factories, local factories, and then Consolidated came from the Canary Islands. We established ourselves in Santiago. General Cigar and Fuente came later.
CA: So you avoid a duty on the tobacco you bring in. What about on the cigars that you ship out?
Quesada: There is no export duty.
CA: So you save the consumer a lot of money and, I assume, the theory there is that you're creating jobs?
Quesada: Exactly. And also bringing hard currency into the country, because we pay all the expenses in dollars.
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