Cusano's Growth Plan
How former pension fund manager Michael Chiusano sequed into the cigar world and now plans to expand his 13-year-old Cusano cigar brand.
From the Print Edition:
Tiger Woods, May/June 2008
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Just as Chiusano preached diversity in his investment business, he sees that as the only route to success in the cigar business. "It's a fickle sector. For us to be able to sustainably participate, we need to be diversified. To grow brings up some problems—you either have to cannibalize one of your existing brands, or diversify."
For a small company, Cusano has impressive diversity. It's also innovative. Every cigar is bar-coded, a key to the company's success in convenience stores, which account for 3 to 4 percent of sales. (At a tobacco trade show dominated by convenience store buyers, Cusano is a huge player.) Chiusano also demands that a live person answer the phone, and answer it quickly. "I don't like it to ring more than twice," he says. DomRey's computer system links incoming calls to the outgoing package. Chiusano is energetic and virtually tireless, prone to rising early and firing off e-mails, and he says he often forgets which day of the week it is. (His brother says Michael often gets up at six on Saturdays, sends off e-mail and wonders why he's not getting replies—forgetting it's a weekend.)
In the warm January sunshine in the Dominican Republic, Chisuano is gung ho. His alarm clock corona is like another man's doppio shot of espresso. He walks through a recently replanted field of tiny tobacco plants in Jacagua owned by Jose Arnaldo Blanco, who will be providing Chiusano with tobacco for new projects.
He's thinking about the possibilities—the Dominican wrapper will come from here, maybe binder from there—while pointing out the different types of palm trees around the land. (He's an admitted tree nut.) It's a gorgeous place, part of the Cibao Valley in the shadow of short mountains, near Santiago Viejo, Old Santiago.
"This is a new area for us, really it's the next step back in controlling the process. Instead of buying the wrapper, we're growing the wrapper, which gives us control," he says.
A haggard white horse slowly pulls a small plow between the short rows of plants. It's 9 a.m. and Chiusano is partway through his second cigar of the day, a Cameroon-wrapped smoke. The cigar he's smoking is going to be dubbed Cusano Cameroon. "Remember Killer Cameroon?" Chiusano asks, referring to a brand he took off the market more than three years ago. "'Killer' attracted guys who wanted their heads blown off. The balanced guys who would have liked it were afraid of it. We still don't make anything to knock your head off. What we do is we make very good cigars for a certain taste. We're cooks—we love tweaking the dishes."
Another change is the formation of D.R. Global S.A. Cusano cigars are not only sold in 2,100 American stores, but also in several other countries, including Germany, Taiwan, Finland, Denmark, Holland, Mexico, even Romania. It's inefficient to send cigars from the Dominican Republic to the United States and then to international shores—D.R. Global, based in Santiago, will become Chiusano's global headquarters and manufacturing center, facilitating foreign shipments.
In early winter, D.R. Global was a concrete building with bare walls and empty rooms. It's built from concrete block, and it's big, 35,000 square feet, with imposing walls. A planned mezzanine would boost the space to 60,000 square feet. Chiusano walks through the space, the only light coming in from the open door and sparse windows, giving it a gloomy look that reminds a visitor of the mines of Moria from The Lord of the Rings. Chiusano is excited, like a guy showing a buddy the framework of a new house. Here's where the rolling gallery will be, he says, pointing to one room, there a cooler, there an office.
It's a good time to invest in a free zone in Santiago—many textile companies have left for cheaper labor areas, and buildings can be had inexpensively. Chiusano claims a "sweetheart deal" on the rent.
"It's huge," he says, his voice echoing off the bare walls, "but I've blown through four buildings already." His confident smile tells it all—he has big plans for the place.
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