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Interview: Frank Llaneza of Villazon

A discussion with the president of Villazon & Co., makers of Hoyo de Monterrey and Punch.
Gordon Mott
From the Print Edition:
John Travolta, Jan/Feb 99

(continued from page 18)

CA: In 1992, when it started, you were making how many cigars?

Llaneza: We were making 60,000 cigars a day then, and it's more than doubled. That doesn't mean we might be making just 60,000 cigars a day again next year. If the big inventory that's sitting in warehouses today bounces out on the market, we might have to cut back. It's impossible to keep a person from buying a pretty-looking cigar that he can buy for almost nothing, next to a cigar that has a higher price. We don't know how that's going to affect our production. I'm seeing it now in the industry statistics. There is a drop now. And there is an increase in the cigars at the $2 category. It means there will be pressure on the big-name brands. There's no way to curb it. The only way would be if one of these warehouses caught fire.

CA: But don't you think people will stop buying those $2 cigars if they're not good?

Llaneza: I guess they will. But it's still tougher in the market today.

I don't want to mention names, but there is one company that is in its second go-round with their cigars being discounted on the market. What I've noticed is that the retailers and jobbers have humidors filled with branded cigars, and they have a lot of other cigars. How do they work it? Do they just say, "Let's get rid of these cigars," so they can get back to customers coming in and seeing only products that are competitive, high-quality products? It will get back to that.

But it's going to be tough. No one can make cigars as cheaply today as they used to because the cost of raw materials and labor has gone up. The standard of living in Honduras where we're at has quadrupled because of the industry boom. I don't think you're going to reverse that. The only possibility is some reduced or nominal prices on the tobacco itself so you can be competitive.

CA: Has the boom changed the industry in bad ways?

Llaneza: Don't be foolish. That's like telling me, when I first started, that I wouldn't know what to do with four machines in Ybor City, and Mr. Oliva said, "Make a nickel cigar." People were telling my father that his son was going to ruin the factory: "You're going to go down the tubes, you won't even be making those 3,000 or 4,000 handmade cigars anymore." But Mr. Oliva was right, and I said, Get me the tobacco and I'll start making those cigars. Hell, I was young then. I had to be the mechanic, put the scrap in the machines, working them day and night. Before you knew it, you wouldn't believe how many customers we had. It kept me in business. And that's what happened in the last few years.

CA: So, it's been good.

Llaneza: Yes, man. I can go fishing now. I can fly on General Cigar's private plane.

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