Reviving a Tradition
A Business Powerhouse in the Dominican Republic, Empresas León Jimenes Is Returning to Its Cigar Making Heritage
Juan O. Tamayo
From the Print Edition:
Danny DeVito, Winter 96
(continued from page 3)
They still talk about Fernando León on the factory floor, about his unsurpassed knowledge of tobacco and his cordial ways with the poor farmers of the Dominican Republic's prime tobacco-growing region.
Don Fernando could bury his nose in a bundle of leaves and tell where in the Cibao Valley the tobacco was grown, recalls Manuel Jaquez, a tiny and lean whippet of a man who has rolled cigars for the León family for 52 years. He could smell it when the leaf had grown in the shade of an orange tree, says Jaquez, when a farmer was trying to sell him leaves from different plots, when the leaves were too thin to bear the violent changes of curing. "When Don Fernando spoke, all the other cigar makers listened. He had the respect of his class, of his workers and of his clients. He is a real cigar man," Jaquez says about the tobacco legend, who at age 74 serves on the board of directors of Empresas León Jimenes, the cigar maker's parent company.
Today, the León Jimenes cigar factory is fastidiously clean and modern, a small but increasingly important cog in one of the Dominican Republic's richest family empires and most modern industrial complexes. Every concrete-block building is air-conditioned and appears recently painted. The lawns are manicured, streets are immaculately swept and there are signs pointing to, or explaining, everything from "emergency axe" to "tennis court."
Indeed, the complex has the shipshape feel of a U.S. military base, a far cry from the tumult of the surrounding city of Santiago de los Caballeros. But on the cigar factory floor, workers remember the days before all that progress and neatness, the days when Fernando León made cigars good enough to sell to Cubans.
After years of focusing its energy on far more profitable enterprises--beer, cigarettes and food--the León family is trying to revitalize its cigar roots as the oldest cigar factory in the Dominican Republic and the first to export to the United States. Chosen to blend tradition and marketing, the venerable old and the brash new, is Don Fernando's youngest son, Guillermo León, 36, a business administration graduate and fourth-generation tobacco man.
Guillermo León could not be happier. As a child, he remembers playing hide-and-seek in the drying barns of his family farm and accompanying his father on the rounds of neighboring tobacco farms. "We left at first [light]," he recalls, "ate when we could and had no set return time, just when we were done."
Soft-spoken, engagingly direct and unpretentiously friendly, Guillermo León favors casual American-yuppie clothes, cobalt blue sunglasses and four-wheel drive vehicles. He knows many of his cigar makers by name and has the factory make him half a dozen special cigars a day--the same size (7 1/2 inches by 50 ring gauge) and with the same darkish Cameroon wrapper favored by his father.
Highlighting the younger León's peculiar stand between tobacco tradition and business is the location of his office in the company's cavernous transportation repair warehouse, one and a half blocks from the cigar factory. León oversaw the transportation repair department until he was named last year to head cigar operations. A new office in the cigar factory is under construction.
León has lost no time in shaking up the cigar department. He upgraded the blends in the premium León Jimenes and lower-priced La Aurora brands, switched to a Connecticut shade wrapper on León Jimenes and ordered new cigar boxes and better artwork for the labels and bands. Even the family's trademark lion--león is Spanish for lion--got an overhaul, with the drawing of an older, black-maned lion replaced with an image of a much more youthful, golden-maned version.
León also found new U.S. and European distributors, stepped up León Jimenes' already strong presence in duty-free outlets at European airports and even developed a small cigar aimed at women and those no-time-to-waste Americans looking for something that smokes fast.
Customers have responded: the company's premium cigar sales rose from 2.8 million in 1994 to 3.5 million in 1995 and are expected to hit 6 million this year--about 2 million in domestic sales, 2.5 million in exports to the United States, and the rest in Europe and duty-free stores around the world. León Jimenes also has two deals to manufacture private brands, and back orders totaling more than 1 million cigars.
"We decided last year to pay more attention to cigars, to put the family hands on top of the business again," León says as he leads a visitor on a tour of the company's complex. "It's not that we had not taken care of the cigar side of the business. That was sacred, especially to my father. But cigars was a market that was dying, and we had other businesses."
As León said, it's not as though the family had been sitting on its collective thumbs. A business juggernaut with $325 million in annual sales, Empresas León Jimenes has come far from the day in 1903 when 23-year-old Eduardo León Jimenes founded a cigar factory with six employees in the Cibao Valley village of Guazumal. He bought most of the leaves from his father, a tobacco farmer, and sold most of his cigars from mule trains that he led from one end of the valley to another.
The factory was relocated to Santiago de los Caballeros in 1937, and the company first exported cigars to the United States during the 1950s. Its La Aurora cigars caught on quickly with the Cuban exiles who began arriving in Miami soon after Fidel Castro's Revolution triumphed on New Year's Day of 1959. Today, La Aurora remains a big seller in Little Havana restaurants, where aged exiles still gather to sip strong Cuban coffee, talk a little politics and complain about the rising cost of a good smoke.
"Miami is still a very good market for us," León says in between phone calls from New York asking about prices and visits from South Americans trying to open cigar shops. "Cubans appreciate a quality cigar at a good price."
After the assassination of Dominican dictator Rafael Leónidas Trujillo in 1961, the León family began to expand its operations in the Dominican Republic. The Leóns broke the Trujillo family's monopoly of the cigarette industry in 1963 with a factory making such brands as Aurora, Perla, Premier and Apolo. Six years later, the family signed a licensing deal with Philip Morris to manufacture Marlboros for the Dominican Republic.
The family then went into beer, building a brewery in 1983 to make Bohemia beer, a local brand. The venture was so successful that in 1986 the company bought the National Dominican Brewery, makers of the Dominican market-leading Presidente beer, from U.S. interests. The breweries now make Heineken and Löwenbräu under license and produce two local brands besides Presidente, Bohemia and Malta Morena.
Today, the family's umbrella Empresas León Jimenes controls 98 percent of the Dominican beer market, 89 percent of cigarette sales and 50 percent of cigar sales. Its impact on the domestic economy is so great that the company paid $148 million in taxes in 1995--a whopping 8 percent of the nation's annual government budget. The firm employs 4,000 employees--including 2,000 in beer, 1,200 in cigarettes and 375 in cigars--and operates a fleet of 600 vehicles.
The breweries just underwent a $300 million renovation and expansion program and are exporting 100,000 barrels per year of Presidente to Miami, New York and New Jersey, with plans to expand soon to more U.S. markets.
Two shifts of workers make 18 million cigarettes a day for the domestic market alone, unless you count the massive smuggling of Marlboros to Haiti, the Dominicans' neighbor on the island of Hispaniola. León Jimenes and Philip Morris each owns 46 percent of the cigarette operations.
And, thanks to a massive domestic distribution network, with salespeople visiting 40,000 stores each week, down to the smallest grocery in the most remote village, a new food division is already selling 13 tons of Tang drink concentrate per week.
Other León family members own book and magazine pub-lishing firms, printing plants and graphics shops. Despite their wealth, none are active in the Dominican Republic's often turbulent politics.
"This is a family of straight arrows," says one admiring competitor in the cigar business. "They like to make money but they avoid politics, educate their kids here instead of the United States and treat their workers better than most."
The United Nation's World Food Organization gave León Jimenes a prize this spring for the program of low-cost harvest loans and assistance it offers to more than 500 tobacco growers in the Cibao each season. The aid promotes small-scale private farming that stands at the root of successful economic growth, the organization says in its citation.
All factory workers get free uniforms, pay half the cost of two daily meals at spotless cafeterias, get two free car washes per week in the company parking lot and can take home up to 30 packs of free cigarettes per month. And, although they can't take home cigars, they can smoke as many as they want at the factory.
"If you're lucky enough to land a job here, you're set for life," says one security guard at the Santiago complex, with 130,000 square meters of land and 50,000 square meters of buildings. "Everyone here has a list of brothers and cousins they want to bring in." Little wonder the cigar division, smallest of the León Jimenes enterprises and probably the least profitable throughout the '70s, '80s and early '90s, lagged somewhat when U.S. cigar sales began soaring in 1993.
Don Fernando, who had worked in tobacco from the age of 15, retired from active management in 1991 and joined his brothers Eduardo, Guillermo and Jose on the board of directors. Jose is now president of the company. Fernando's son Guillermo, the youngest of five brothers and two sisters, is one of five León cousins active in the firm's management.
León Jimenes today has 53 cigar makers, a training center for 50 apprentices and ambitious plans to use its corporate muscle to buy the best leaves, manufacture good cigars and promote them. "We will always be around to offer what the market wants," says Guillermo León.
"Guillermo wants to recover León Jimenes' position in the cigar market. It's a matter of family pride to him," says marketing assistant Giuseppe Schiffino. La Aurora, made with Cuban-seed piloto and a Cameroon wrapper that imparts a mild taste typical of Dominican cigars, is sold in 10 sizes ranging from a 30-ring, 4-inch Fino to a 50-ring, 7 1/2-inch Double Corona. The premium León Jimenes cigars have a bit stronger blend and come in nine sizes, including a glass tube holding a 42-ring, 6 1/2-inch Cristal.
While other Dominican cigar makers have focused their efforts on the booming U.S. market, León Jimenes has done well elsewhere because of Philip Morris' presence in airport duty-free shops around the world. One out of every 12 León Jimenes cigars is sold in a duty-free store, and another 500,000 cigars are sold each year in direct European sales, mostly in Germany, Denmark, Switzerland and Italy. "Working with Philip Morris is a truly advantageous deal," says Guillermo León.
Tourism doesn't hurt, either. Millions of European and Canadian tourists visit the Dominican Republic each year to enjoy its white sandy beaches, broiling sun and quality rums. While they can all buy cigars at the airport on their way home, if they want to light up a few while lazing on the beach, it's probably going to be a León Jimenes. Most of the Dominican Republic's other cigar factories are in-bond operations, which means they import leaves and export cigars virtually duty-free, but are not allowed to sell locally.
Some of the tourists, about 70,000 each year, make their way to the León Jimenes complex in Santiago for a tour of the cigar and cigarette operations. At tour's end, there's a free Presidente beer or glass of Tang, served at tables topped with glass cases displaying the various León Jimenes and La Aurora premium cigars. They are all on sale, of course, at the air-conditioned cigar sales shop just next door.
"We make top quality cigars," says Guillermo León. "And we know how to sell them."
Juan O. Tamayo is a foreign correspondent with The Miami Herald.
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