After The Gold Rush: Dominican Giants Roar Back
Leading Dominican Cigar Companies Take Back The Retail Shelves as Newcomers Struggle
From the Print Edition:
Sylvester Stallone, Mar/Apr 98
The American appeared slightly nervous as he waited for American Airlines Flight 621 to Puerta Plata, Dominican Republic. He wore jeans and a red-and-white checked button-down shirt with a London Fog raincoat as he sat in the lounge waiting to board the plane from New York. He was reading a book, Cigar Aficionado's World of Cigars, as well as a price list from a small Dominican cigar producer in Villa Gonzalez. He looked about 40 years old.
"Are you interested in cigars?" I asked.
"Yes," he said. "I am taking a trip to the Dominican Republic to see what's going on with the cigar business. I just made a lot of money on Wall Street and I was looking for somewhere else to put it. I heard there's a lot of money to be made in cigars."
He showed me a list with factory prices from an unknown manufacturer. "What do you think of these prices?" he asked. "It looks like cigars are about $1 to $1.30 apiece from the factory. That's pretty cheap considering most cigars sell for about $5 to $8 in the States to consumers."
"I wouldn't like to say," I told him. "But I will tell you one thing. Be careful. There are a lot of fly-by-night companies out there. Good luck."
Now in the airport of Puerta Plata, I see him hassling with his bags and trying to find transportation to his hotel. I'm catching a ride to Santiago with Wayne Suarez and Carlos Fuente Jr., both of Tabacalera A. Fuente y Cia., the well-established cigar manufacturer that makes Arturo Fuente, Fuente Fuente OpusX and other brands. "Where has a guy like that been for the last two or three years?" asks Suarez as he roars out of the airport parking area in his four-wheel-drive vehicle. "What rock did he crawl out from under? There have been guys like that arriving every other day here from the States to make their fortune in cigars, but it's all changing now."
The gold rush in the Dominican Republic cigar business may be coming to an end for many. Start-up companies are finding it increasingly difficult to sell their cigars in the U.S. market and to secure tobacco for production. Making it even tougher for them, well-established manufacturers are increasing production and market share at an impressive rate. Popular brands such as Macanudo, Partagas, H. Upmann, Fuente, León Jimenez, Fonseca and Davidoff are taking back the retail shelves.
It all spells bad news for many of the new cigar manufacturers on the island. "Just at the beginning of the year there were more than 140 factories in the Dominican Republic," says Hendrick Kelner, part owner of factories that produce such prestigious brands as Davidoff and Avo. "Now there are less than 100. I expect by sometime in 1998 there will only be two dozen."
"I have been to a lot of cigar shops in America recently," says Avo Uvezian, the cigar maven and founder of the brand bearing his name. "The retailers are all eliminating the newer brands and going back to the established ones. People don't want expensive cigars that aren't any good. Why do they want $8 or $10 cigars that don't taste good? They can count on the old, established brands--good cigars for $5 and $6."
Richard DiMeola, chief operating officer for Consolidated Cigar Corp., which produces such cigars as non-Cuban H. Upmann and Montecristo and Dunhill, adds, "It is going to be the shakeout period this year. It is the clear-out period. We have offers every week from people who want to make us cigars at 100,000 units a week or whatever and at cut-rate prices."
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