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CAO--A Family Affair

CAO Offers Pipes, Humidors and Cigars. But Founder Cano A. Ozgener's Most Important Product is His Children
Shandana A. Durrani
From the Print Edition:
Michael Douglas, May/Jun 98

"Number seven, gentlemen, number seven," she calls out, trying to be heard over the din of voices and music. It is a November night at New York's Marriott Marquis hotel and Aylin Ozgener-Sherman of CAO International Inc. is handing out the company's signature cigars at the Cigar Aficionado Big Smoke. She appears at ease, but Ozgener-Sherman is anything but relaxed.

"I think I work harder for him than I would anywhere else. I have to keep on my toes constantly because I would feel very guilty if I slacked off," she says, as she hands a CAO Gold Robusto to a cigar aficionado with a No. 7 ticket. "It is a joy to work with him. I don't want to give him an ego, but he is a genius. He is an incredible entrepreneur. I go to him for as much advice as possible. I've learned how to work with people from him."

The "him" is her father, Cano (pronounced JOHN-no) Aret Ozgener, the founder of CAO, a Nashville-based company that is known in the tobacco industry for its cigars, meerschaum pipes and handcrafted humidors. The 26-year-old Ozgener-Sherman is the national sales manager for the company, which is celebrating its 30th anniversary this year.Cano Ozgener's home office is a testament to his Turkish background and his company's history: handwoven Turkish carpets grace the floors, and glass and wood cabinets display his collection of vintage meerschaum pipes. Seated behind his seventeenth-century French desk, Ozgener leans forward, steeples his fingers and discusses the past three decades and the close working rapport that he has with his two children, Aylin and Murat, his 28-year-old son, who is CAO's national marketing manager and a stand-up comic in Los Angeles.

"I am very happy that my children are working in this," Ozgener says, "[However,] I would not suggest to anybody that they take their daughter or son and make them work for them. It is the wrong thing to do. In our case, it is working because of the chemistry. I employed Aylin because she can do the job. The fact that she is in the family made it better. The same thing [goes] for Murat."

It is obvious that the Ozgeners share a special bond. They constantly tease one another and laugh with each other, especially when Murat imitates his father. But don't be misled by the carefree attitude: when it comes to the company, the trio is serious.

"Business is business; CAO is my business. It is another one of my children," Ozgener says. "We don't feature any product that has problems. I am not after numbers. We don't have stockholders to satisfy, so that takes a lot of pressure off. An important thing is longevity and CAO has shown that. It is really important to a consumer and tobacconist. But it takes time and money."

It was those ingredients, as well as dedication and hard work, that catapulted CAO from a small-town player in the tobacco business to a global company, distributing products from Canada to Malaysia.

"It is critical for us to have long-range views and to remain strong in the industry," says Aylin. "We haven't been around like Davidoff and some of the other companies have. It is your product and you are trying to get people to try it; that is why we work so hard on PR and promotions."

Ozgener's interest in tobacco began on the banks of the Bosphorus. Born on January 19, 1937, Ozgener was raised in his birthplace of Istanbul, Turkey, by his Armenian parents. His father was a jeweler, his mother a homemaker. He studied at a Jesuit French grammar school before being accepted into the American-run Roberts College in Istanbul, from which he received a bachelor's degree in mechanical engineering in 1960.

As a student in Turkey, Ozgener enjoyed smoking pipes, especially those made from meerschaum, a white, clay-like magnesium silicate. But it wasn't until he came to the States to study mechanical engineering in 1961 as a Columbia University graduate student that he enjoyed the pleasures of a cigar. He and his friends would go to the movies in New York's Times Square, but first they would stop at a tobacconist to pick up cigars. "Of course, they were Cuban cigars, pre-embargo Cubans," recalls Ozgener. "At that point we took the cigars and went to the theater and smoked our cigars while watching the movies. Nobody objected. Things have changed so much since that time."

In 1961, he met a fellow Columbia student and Turkish immigrant, Esen Sever. They fell in love and married in New York City three years later.

After receiving his master's degree in 1962, Ozgener worked for two years as an assistant to Columbia engineering professor Theodore Baumeister, who was a cigar and pipe smoker. While cowriting a mechanical engineering handbook, Baumeister and his young apprentice would savor cigars. Ozgener began to love the aroma and flavor of the tobacco.

Graduating from Columbia in 1964 with a professional engineering degree, Ozgener was recruited by DuPont to work in the firm's Kinston, North Carolina, plant. It was during his stint in the textile division at the age of 27 that he came across some imperfect Turkish meerschaum pipes. In his spare time, he decided to use his engineering abilities to improve the pipes.

"I was not happy with the quality of Turkish meerschaum. The tobacconists were not happy with them. So I used to take the meerschaums and change the stems, make modifications and work with the carvers to improve them," Ozgener says. "One day, Chauncey Dean Jr. [of Beehive Tobacconist] in Wilmington, Delaware, asked me where I got the meerschaum, that he had never seen such quality, and I told him that I had modified them. So he ordered a dozen or two from me. Then he introduced me to Bill Fader [owner of Fader's tobacconist in Baltimore and now executive director of the Retail Tobacco Dealers of America (RTDA)] and Bill Martin [the late owner of W. Curtis Draper tobacconist in Washington, D.C.], and that was how CAO was formed." The two tobacco veterans helped him make contacts in the industry and sell his products.

Ozgener kept his engineering job as he built his company. He worked constantly; his vacations from DuPont were spent attending tobacco conventions, which left little time to relax with his wife and two young children. Finally, in 1977, he left his engineering position to devote more attention to his growing business and to spend more time with his family. The tobacco business was slow then, but he doesn't regret his decision. "I couldn't handle both of them at the same time. At the time the pipe business was still a small business and I was making a beautiful salary at DuPont," he says. "Then in 1980, the tobacco business started to decline. We were not really making money. We went into a dormant situation. Then we just waited for the market to come back again."

In the meantime, the cigar industry came back with a bang. To capitalize on the increasing popularity of cigars in the early 1990s and because he believed a market for quality humidors existed, Ozgener launched his own line. In 1992, he purchased several dozen nineteenth-century wooden jewelry and writing boxes at an antiques convention and converted them into humidors, lining them with Spanish cedar and installing his own state-of-the-art humidification system. The humidors were an instant hit at the RTDA convention.

Because well-maintained antique boxes were rare and expensive, Ozgener began to create humidors from scratch. Employing Nashville-based artisans Todd Boyce and Lanie Gannon, Ozgener introduced his Boyce and Lanie humidor collections in 1993 and 1997, respectively.

"My commitment [with the humidors] was to bring up artisans who live in this country," he says. "I didn't want to go to another country, because these people [here] need employment and if my generation doesn't provide that for them, then who will?"

In 1993, Ozgener entered the cigar market. After learning the art of cigar making from books, people in the industry and trade shows, Ozgener enlisted the help of Honduran cigarmaker Nestor Plasencia and Nicaraguan tobacco grower Carlos Toraño. The trio worked for more than two years developing and modifying a cigar that would bear the CAO initials. The company introduced its Honduran cigar line to tobacco retailers at the RTDA convention in 1995.

"I was one of the first people to go to Honduras [for cigars]. Everybody was trying to [set up] production [in] the Dominican Republic and there were really good rollers in Honduras," Ozgener says. "We were getting samples from Nicaragua, Honduras and the Dominican Republic and we were testing these on what I call my 'young Turks,' people between the ages of 25 and 40. The cigar movement is generated by the young people, therefore, I wanted to make a cigar that was acceptable to them. We tried different cigars; we modified them and we found that the taste of the cigar from Honduras was the one that everybody agreed on."

When it came time to manufacture the cigars, Ozgener says, "I went with Plasencia because he had the production [capability] at the time and he had a good organization. He had the correct vision for us."

In 1996, CAO introduced its Nicaraguan cigar line. The CAO Gold Robusto, made at Plasencia's Estelí, Nicaragua, factory, has scored highly in Cigar Aficionado ratings (it received an 89 in the August 1997 issue). While some experts have judged the Gold to be superior to his Honduran line, Ozgener vehemently opposes any such distinction. "The fact that it is called 'Gold' doesn't mean that the Nicaraguan is better than the Honduran," he says. "The tastes are different. It is like if you have espresso and a regular American coffee. To me both of [the cigar blends] are my cigars, are my children, and it is like comparing one child to another."

Comparing is something that Ozgener doesn't like to do, especially with his children. While their father speaks about CAO's history, Murat and Aylin sit attentively, cracking jokes or contributing to the conversation from time to time. When asked if there is any competition between them or if their father compares them to each other, both emphatically deny any friction.

"He [Murat] works part-time for CAO and part-time at comedy and I have a greater role in the office," Aylin says.

"It is really refreshing to work with your father when you are 2,000 miles away," Murat quips. In a more serious vein, he adds, "I am a little removed from the office so I am a little more independent. But whenever he or Aylin come out to Los Angeles, I always take them around so that people get to see what we are all about. We are not about egos, we are not about showing off. We are just trying to be who we are and do something that represents the product the best we can."

From an early age, Murat and Aylin helped their father in his business. As they watched their favorite television programs, the two youngsters attached stems or CAO stickers to pipes. When they were older, their father took them to visit the meerschaum carvers to observe them at their craft. They learned how a tobacco business operated, which would help them when they joined their father's company.

"When I started working full time in 1996, I helped mainly in sales and I helped with shipping--whatever needed to be done," Aylin says. "In a small company that is growing, you really have to play a part in many different categories. I grew to love the industry--the cigars and the people. I love working with retailers and distributors. It is good because you are mixing business with pleasure."

"I got into the business basically to pay off a debt on a car I totaled," Murat says, half-joking. "When it came time for me to go to college, I wanted to be an actor. The school that I wanted to go to was USC, in Los Angeles, because that is where the film industry is. They accepted me as one of 25 auditionees out of 500. I was out there and going through my training. I finished and then my father asked me, 'Why don't you go visit Gus' Smoke Shop' [in Sherman Oaks, California]? And the owner of Gus' would say, 'Cano, what are you doing sending me this guy in shorts who would rather be surfing?'"

But there has been no time to surf. The business has grown tremendously in the past five years. Today, CAO employs 15 people in its Nashville office. Approxi-mately 50 people craft humidors in Tennessee and almost 300 people make meerschaum pipes in Eskisehii, Turkey, for CAO. Cigars are the biggest chunk of the company's business, at 50 percent, with humidors at 40 percent and pipes at 10 percent.

Cano hopes to expand the enterprise even more. "We are optimistic and expect our cigar business to grow 30 to 100 percent [in the next two years]," he says. "I am an aggressive person. I prefer to double it and I think it is possible. There is some resistance to humidors because there are so many good, quality humidors out there and, of course, humidors don't burn, so you have a finite [market for] them. But there is a potential in growth for both meerschaum and briar pipes."

The Ozgeners would eventu-ally like to distribute their own brand of pipe tobacco. But for now, they are concentrating their energies on a 30th anniversary cigar, to be unveiled at the RTDA convention this August in Nashville. They won't say too much about the brand except that it will be a full-bodied limited-production cigar.

"We are considering a few factories at this point," Ozgener says. "There are a number of factories that can make good cigars. It has a high-quality wrapper and an interesting binder and filler. To me, puros [cigars made from the tobacco of a single country] are not important. My purity comes from the best flavors. If I can find a wrapper from Cameroon, and I am not saying that it is from Cameroon, and combine it with Nicaraguan filler and Honduran binder, then it is OK. What I am after is exceptional-quality tobacco, and that is why I have been working very hard the last few months."

CAO has also been working hard at public relations and promotions. Its PR campaign has been so successful that CAO humidors have appeared in such movies as Silent Fall and The American President, and one of its meerschaum pipes was used in The Freshman. The company's cigars were featured at high-profile events such as Fox Sports' parties for the 1997 Major League Baseball All-Star Game and the 1998 NHL Hockey All-Star Game. In addition, CAO crafted custom-made humidors expressly for the 1997 National Basketball Association champion Chicago Bulls.

"It was a joint idea [between Bulls management, ring manufacturer Jostens and CAO]. This was the first time that the championship ring was offered in a humidor," Ozgener says. "One of my ideas was to make humidors with team logos on them. [Jostens] said, 'Let's have samples [of humidors] and we'll see about something.' They presented the idea to the Bulls [and they accepted] and then we worked with the ring manufacturer and the Chicago Bulls organization. We even put cigars in the humidors for the team."

CAO promotes its products in other ways as well, but not always with unanimous approval. The company received some flak for its controversial ad campaign, which features cigar-smoking semi-nude or all-nude women models, hands and legs strategically placed. While some people in the business don't like the campaign, Cano Ozgener defends it.

"We wanted to be on the cutting edge," he explains. "I gave him [David Ravandi, the ad designer] free opportunity. He came out with the first version of the advertisement and I showed it around the office, and almost everybody didn't like it. Aylin hated it and my wife threatened me with a divorce. Only two people liked it: Murat and me. We went with that ad. And we got unsolicited remarks like 'Your ad is beautiful.' When that happened, it was an eye opener."

Though CAO may push the boundaries with its advertising, it will never compromise its integrity, says Aylin. "We have stringent quality controls," she says. "We have been in the humidor business for about seven years now, and if you look at a humidor we made in the beginning versus now, it's a real difference. And the cigars, too. From our first batch until now there is a definite improvement."

The commitment to quality has made CAO a success, accor-ding to Cano. Now 61, he looks back on his life with pride and a sense of accomplishment. "To be able to do something that you like as a business is great. I have my son and daughter working with me and young people working for us, so I am contributing something to the younger generation and I am contributing something to this country also."

His children share their father's sentiments. "We have always believed in supporting people," Aylin says. "Even at those times when sales were downhill and the tobacco industry was in need of something to help boost it, he would still support the carvers. He never put anybody out of business and did not fire anybody. That is something that I respect and something that I learned: not to get into something just to make more money, but to help the same people that have helped you."

Murat adds: "When I go and try to push products, it almost isn't about making money, it is about wanting to continue this thing that my father started. When I talk about my father and how he started this company, I feel a degree of pride. Some people say, 'It is cool that you feel this way about your father.' I am proud of what he started and I want it to be strong. It is great when you have that sort of feeling and a sort of reciprocal feeling, too, in a family business."

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