The El Producto Story
From the Print Edition:
Wayne Gretzky, Mar/Apr 97
When George Burns, Milton Berle, Sid Caesar, Ernie Kovacs and other top comics of the day gathered at the Hillcrest Country Club, the room would fill with laughter and cigar smoke. Everyone would be smoking the top brands. Everyone, that is, but George Burns.
"Come on George, try one of these Havanas," urged Berle and Co. "Live a little. Get rid of those damn Queens, and try something sweet and delicious."
But the patron saint of cigardom quickly turned down the Montecristos and H. Upmanns thrust in front of him.
Waving aside these premium cigars, Burns again emphasized his loyalty to a lifelong sweetheart. Taking out an ivory holder, he'd light an El Producto Queen, a perfecto-shaped cigar that Burns liked to call "my little lady."
"I'll never smoke anything else," promised Burns, a 10-a-day El Producto man. "I just love the taste of Queens. They never go out on the stage while I'm doing my act, and besides, I get them for free."
Burns remained true to his word. Until his death last year, the Sunshine Boy rejoiced each month when his shipment of 300 Queens, each packaged in a glass tube, arrived at his Beverly Hills home. "He'd act like a child at Christmas time, smiling ear to ear," recalls Sam Tuchten, the now-retired El Producto district manager who brought Burns those cigars. "He was in seventh heaven. But god forbid if the shipment was late. George would frantically call the company [Consolidated Cigar Co.], and send his butler to Beverly Hills' drugstores to buy all the Queens he could find."
That's where El Producto is still found: in undistinguished drugstores like Walgreens and Thrifty. Once a handmade premium blend of Havana and Puerto Rican tobaccos, enjoying such national popularity from the 1910s to the 1960s that even Elvis Presley was wild about El P's Altas and Diamond Tips, Burns' "little lady" has since become a pale shadow of her former self.
Now, machine-made El Productos have a short natural filler, while the wrappers and binders are produced from either reconstituted or homogenized tobacco, commonly called "sheet"--scrap tobacco ground into powder and held together with vegetable adhesives (only the Queens and Escepcionales have an all-natural wrapper and filler). The once hot-selling line of 14 shapes has been scaled down to nine shapes, and it's no longer Consolidated's "flagship" brand. Although El Producto still registers about $15 million a year in sales, the company's all-natural wrapper cigars far exceed that figure. Today, Antonio y Cleopatras reign as the company's leading machine-made cigar, with more than $30 million in sales, while El Producto has become the target of in-house jokes.
"The brand is now a poor stepchild," says Jim Colucci, Consolidated's senior vice president for sales and marketing. "El Producto was once a good, inexpensive cigar, a real strong regional seller. It just got really hurt when we started to use homogenized wrappers and additives. We then tried to dress her up a bit in the mid-1970s with new packaging--a fluffy-haired blonde in a flaming-red dress and bouffant hairdo. But modernizing the packaging never helped sales, and that blonde is still referred to as the company bimbo."
Yet George Burns can rest easy. Hoping El Producto will benefit from the "halo effect" of spiraling sales throughout the cigar industry, Consolidated is debuting a commemorative "George Burns Collection" of four shapes this spring that restores some of the brand's former luster. The cigars will have natural wrappers, either Dominican or Honduran filler, and feature the original turn-of-the-century packaging that pictured a serene-looking "little lady" sitting by a lake.
"We want to give El Producto a premium look with pretty cigar bands and return it to the time when George Burns was singing its praises on TV," says Colucci. "All our machine-made, natural-wrapped cigars grew over 20 percent last year, and in view of El Producto's proud history, we feel it can also be a big winner."
Hand-rolled and made with the finest Havana tobaccos during the first half of the century, El Producto has more than an illustrious past. Originally produced and marketed on Philadelphia streets by an enterprising Russian immigrant named Sam Grabosky, a grain broker turned savvy tobacco buyer, El Producto's hard-won success encapsulates the American Dream.
But first came "Mr. Sam's" rough introduction to the hotly contested Philadelphia cigar market. Landing in America in 1890, he struggled as a bunchmaker in a local cigar factory. "All thumbs" and unable to make bunches uniformly, Grabosky brought the bunches home, and his brother Ben worked through the night, making the cigars presentable enough to be sold. After a few years at the factory, Sam Grabosky became a tobacco broker. There was lots of money to be made in those days selling scrap tobacco, and Sam quickly acquired a reputation as a shrewd, yet honest, wheeler and dealer.
"My father sold so much tobacco to this company called 44 Cigar, his attorney advised him, 'Sam, you have such a big stake in 44, you better manage it to protect your interests,' " recalls 81-year-old Marvin Grabosky, Sam's last surviving son. "Along with Ben, he eventually did manage that company, and they built it up real fast. They soon had enough money to consider other ventures, to start their own cigar making company."
While ambitious, and devoted to supporting his relatives, Grabosky had little interest in starting a cigar company. Philadelphia was then a hotbed of competing cigar manufacturers, and many had gone belly-up. But one afternoon in 1905 in a store that bought labels from defunct cigar companies, Grabosky discovered the El Producto label. The tobacco dealer offered him the rights to the brand, as well as labels, boxes and bands, for $11.
Grabosky was apprehensive at first. But when he was shown a few boxes of cigars marked with an El Producto logo, he quickly became excited by the prospect of reviving a failed line. The sale was consummated, and with brother Ben's help, along with two other investors, Sam formed the GHP Cigar Co. to give El Producto new life.
That iffy venture began with a joint investment of $50. The partners purchased a few cigar tables and other production equipment. But after enlisting family members as rollers, they still faced one key problem. There was little money left to buy raw material.
The short and stocky Mr. Sam, though, was respected by other members of Philadelphia's cigar making community. A quiet but compelling figure, known for his tailored three-piece suits, avid card playing and fairness in all his business transactions, Grabosky didn't have to fast-talk possible lenders. With only a handshake, he got leaf dealers to extend him credit. Years later, when discussing his rise to prominence in the industry, Grabosky said, "I was amazed that, even with my having so little money, the dealers came to my support immediately."
But Grabosky needed more than money to survive in the early 1900s. To distinguish El Producto from the scores of other 5-cent smokes made in Philadelphia storefronts and small factories, this keen-eyed judge of tobacco leaf had to offer cigars that truly lived up to such names as Bouquets and Escepcionales.
The filler for both cigars was a mixture of Cuban and Puerto Rican tobaccos, wrapped in Connecticut broadleaf binders and shade wrappers. Besides the fat and pointed Escepcionales (Grabosky's personal favorite, which sold for a then-pricey three for 50 cents during the 1920s), GHP also offered thin panatelas and blunts at 10 cents apiece and coronas at 15 cents each. What made these cigars unique was their consistent, nutty taste.
"That uniformity, my father's insistence on always blending the tobaccos the same way, insured El Producto's success," says Marvin Grabosky. "The taste of most cigars fluctuated back then, constantly becoming either too mild or robust for the mainstream smoker. But by blending light- and dark-colored tobaccos from higher and lower lands, my dad sold a cigar that was much different than anything on the market."
Starting off by renting a two-story downtown building near the 2nd Street "cigar market," GHP moved a few blocks down to a four-floor factory, and then to a factory at 3rd and Brown. While facing stiff competition from such cigars as the 5-cent Bayuk Phillies and the 10-cent La Palinas, the company grew so quickly that, by the First World War, it had 36 factories in Pennsylvania, New Jersey and New York. By 1915, that nutty-tasting uniqueness had made El Producto a Philadelphia phenomenon.
Grabosky filled his factories with tobacco, convinced that any oversupply would protect the company against "all the vagaries of nature." The chief buyer of leaf for GHP, he often traveled to Cuba and Puerto Rico, and on these expeditions "Mr. Sam" was always prepared to dazzle crop growers. He was a tough negotiator, quick to raise his voice in bargaining sessions. And, according to his grandson, Jack Grabosky, he'd seal a deal by unbuttoning his shirt and paying for tobacco with gold bars that were strapped around his waist.
While Grabosky "knew exactly what to look for when judging the color and grain of tobacco," according to Jack Grabosky, he was even more savvy when it came to using modern-era promotional strategies. Though initially averse to advertising on the newfangled radio, he quickly overcame this reluctance, and hired "Doc" Kinett, a University of Pennsylvania communications professor, to shape a broad-based marketing campaign. This cutting-edge promotional effort, begun around 1920, produced radio jingles, billboards and newspaper ads, as well as films shown at in-house company meetings that featured pointers on displaying and selling cigars.
America had rarely seen such a sophisticated, full-pronged ad campaign, and those promos made El Producto the top seller in major markets such as Chicago, Boston and New York. By the First World War, when El Producto was battling Dutch Masters for supremacy, Ben Grabosky supervised about 20 salesmen in each of those cities. While sales figures are unavailable, one family member insists, "These men worked their tails off. El Producto was so popular, even a [brand] like Life-Savers hooked their star to us. They ran newspaper ads next to ours, saying 'Make the Next Smoke Taste Better.' "
El Producto's success allowed Sam Grabosky to become a major philanthropic figure in Philadelphia and, as his son Marvin says, "to set up all his children (six sons and three daughters) in big houses." But success was tempered by tragedy; in 1918, his son Jack, a salesman, fell victim at age 23 to the great flu epidemic. The loss left Sam brokenhearted, and while continuing to be GHP's master blender, ever found in the company's humidor rolling sample cigars, he lost a bit of his fervor for the business.
GHP's fortunes still soared in the Roaring Twenties, and by 1926, El Producto had established dominance over Dutch Masters in several key Northeastern and Midwestern markets. Rather than continue that losing fight, Dutch Masters' parent company, Consolidated Cigar, chose another strategy: it offered to buy GHP for $11 million.
Though Grabosky was still mourning the loss of his son, he was not eager to relinquish control of his cigar business. But by this time he recognized that cigarettes were gaining new popularity, and that increasingly vocal women were growing more critical of cigar smoking. His son Harry, a recent graduate of the Wharton business school, also urged him "to get into something new." After weighing all of these factors, along with his love of cigar blending, Grabosky finally decided to accept Consolidated's hefty offer.
Under the terms of that agreement,which allowed GHP to function as an independent subsidiary with its own salesmen and production facilities, Grabosky was prohibited from starting another manufacturing company. But acknowledging his expertise in the selecting and buying of tobacco leaf, Consolidated hired him to supervise the purchase and blending of El Producto, Dutch Masters and their other Cuban-Puerto Rican cigar, La Palina.
"El Producto was my dad's baby, and he continued to help it grow until the 1930s," says Marvin Grabosky. "But he also wound up buying tobacco and making the blends for all the Consolidated cigars. He just had this knack for reading the market, knowing what to buy and when."
Yet a new--and stormy--era was beginning for El Producto. Consolidated issued yearly store displays (with the long-standing slogan, "For Real Enjoyment") in the late 1920s and instructed salesmen on how to set up cigar store cases with a "fine three-way lineup" of Puritanos Finos, Bouquets and Blunts. During the Depression years the company also implored employees to show a "fighting" spirit to counter lagging sales. But since the GHP Cigar Co. existed as a separate production entity under the Consolidated umbrella, with its own distinct sales force, that fighting was taken to nasty extremes over the next three decades.
Bitter in-house rivalries developed, as the Dutch Masters and El Producto salesmen used various tricks and strategies to snare retail shelf space. "It was all-out war between us, and we were out to kill Dutch Masters by whatever means necessary," says Lew Myers, who began selling El Productos in the 1940s and, like his father before him, stayed with the brand for 40 years.
"We owned places like Philadelphia, New York and Boston," says Myers. "To keep it that way, we'd take sharp pencils and put holes in Dutch Masters cigars. Made it look like [mites] had gotten into them. We'd also put our boxes on top of theirs, bury the Dutch Masters in store cases. We did all sorts of unsavory things, and they did the same to us."
During this battle for market share, the El Producto forces focused on urban areas. Some regions had specific preferences: "The 48-ring guage Escepcionale did nothing in New York," Myers says with a laugh. "Yet in Texas, where guys liked big cigars, that all-day sucker was king." Dutch Masters, meanwhile, became a more "national" smoke during the 1940s, easily found from California to Florida in the nation's smaller towns.
To solidify that national appeal in the 1950s and '60s, Dutch Masters lined up Ernie Kovacs, Danny Thomas and Sid Caesar to do TV spots, while the now machine-made El Productos were promoted by George Burns. But even as these two rivals slugged it out, budget-minded executives cut corners by utilizing "sheet" instead of natural binders, and generally gave both brands an unmistakeable uniformity.
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