The El Producto Story
From the Print Edition:
Wayne Gretzky, Mar/Apr 97
(continued from page 2)
"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."
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