CEO, General Cigar Company
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Cullman: We sell a little bit, but not a significant portion.
CA: And what portion of Oliver Thrall's crop do you end up with?
Cullman: He makes offers of tobacco to us, and we buy what we like for Macanudo.
CA: Between these two operations, you're basically able to get what you need for Macanudo and other cigars. Of course, Partagas has a Cameroon wrapper, so it's not part of these operations?
Cullman: No, it's grown in Africa.
CA: Have you sold some of your agricultural properties?
Cullman: Yes, we sold bits and pieces here and there. And, we've developed certain portions of the land for real estate. We use about a thousand acres for the nursery business, but in general, we still have plenty of growing acres.
CA: Let's talk about some of your brands. You can't start a conversation about cigars without talking about Macanudo. Why does Macanudo enjoy sales that no other brand in America can match?
Cullman: I think there are several reasons, Marvin. The first is that for every cigar that is made for the Macanudo brand, we have attempted to create a consistent smoke. So every time you buy a box or buy a single cigar, you know what you are getting. We do that with a tremendous inventory of tobacco, especially with the filler and binder. We age that tobacco. It's like what goes on in the champagne industry. They'll take seven or eight years of vintages and constantly blend them so that the end result of non-vintage bottles is a very good champagne that is consistent every time. There's no aspect of vintage to it. It's the same thing with our tobacco. Tobacco is a product of nature. It is affected by the weather and other factors to create a crop that is very strong, very mild, or it can be a heavy crop or a thin crop. If you have enough tobacco on hand, you can blend it several years together so that the outcome is a very consistent product. That's the first step.
The second factor is that we have consistently paid attention to Macanudo both from a marketing point of view as well as a sales point of view. We have not de-emphasized in any way the importance of Macanudo. That's one of the reasons you see Macanudo much more widely distributed than any other premium cigar. We even have concerns that we've gone too far. We pushed the brand into areas where maybe it doesn't belong, where it doesn't fit the brand's image. On the other hand, we have allowed some people to try Macanudo that maybe would never have tried it before, because it's available in a small superette on the corner that an individual might go to but wouldn't necessarily go to the tobacconist in the mall. And so they see it there, and yes, it's expensive, but you know, relative to the price of beer or anything else, it's not out of the question, so they might try it. That's one of the reasons why we have a wider audience, because we have this wide distribution and we've pushed it. We have a sales organization unlike many of the cigar companies in the premium end. They work both on our domestically made cigars and our premium handmade cigars. They carry both in their cars and they are responsible for the distribution of both. That's one of the reasons that Macanudo is consistently out there.
CA: What about the brand's marketing or advertising?
Cullman: We have been very consistent. We have always been an advertiser. Even before Cigar Aficionado, we were advertising Macanudo in various publications. As the industry declined, we were less aggressive, but still we were out there advertising.
CA: I remember seeing Macanudo ads for years, especially the golf ads.
Cullman: Exactly. We had various slogans, including, "This is a moment for Macanudo." They were very consistent, and I think that's another example that explains the brand's success.
CA: During the recent boom of the last three or four years, how has Macanudo responded in terms of sales, demand, inventory? Where, for instance, is it's volume today versus 1992, and where do you see it in five years? It is my understanding that Macanudo is in the 15-million-unit range.
Cullman: Well, we've hit a completely new high for Macanudo. We reached a peak in 1986, and declined from then until about 1993. But Marvin, it is our policy not to talk about specific unit sales for our brands, so I can't give an exact number.
CA: But Macanudo has not only responded to market demand, you've also increased the number of sizes, as well as moved up the price to reflect increased cost, market demand and the aging of tobacco inventory.
Cullman: Well, we have introduced new sizes. I am smoking a Hyde Park, as an example. That's a new size to the Macanudo line. It was a response to consumer interest in heavier gauge cigars. Our best-selling cigar today is the Baron de Rothschild, but it's very rapidly being overcome by the Prince Philip, which is a much heavier gauge cigar. In any case, we have added sizes, we have subtracted sizes. During this incredible surge in the cigar business, we've actually taken sizes off and discontinued them so we can concentrate on the sizes that have the most interest from consumers. We have also, as you know, added the vintage line and this summer we'll be introducing a whole new look on the vintage line at the RTDA [Retail Tobacco Dealers of America] convention.
CA: Will you tell us about that?
Cullman: The concept is that we will be producing a limited number of four vintages: 1978, 1984, 1988, and then we'll be introducing a new vintage with 1993. And we'll be sending them out as a package.
CA: How many cigars in the package?
Cullman: The cigars will be packaged by vintage and in one size only. But the retailer can buy a package of four different vintages for sale in their store.
CA: What kind of production will you have on this new line?
Cullman: It's not huge, but it's still a couple of million cigars in all, including the 1993.
CA: Where were you able to get tobacco for that?
Cullman: We've held it just for this purpose. What really gave us the idea was when we did the Partagas 150 [Signature Series] and saw how successful that was.
CA: The filler, binder and wrapper, it's all almost 20 years old?
Cullman: There's very little tobacco that old. I don't how many boxes we're going to be making of it, but we will have about 50,000 cigars of the 1978, 125,000 of the 1984, 400,000 of the 1988, and the new vintage, the 1993, will be in excess of a million cigars over several years.
CA: How do they taste?
Cullman: These are wonderful cigars.
CA: Let's talk about Partagas. I assume Partagas has enjoyed solid growth for the last four years, so that now it is in the 6 to 8 million range of unit sales?
Cullman: That's right.
CA: Obviously the introduction of the Partagas 150 caused a lot of interest on the part of consumers and the trade and was a very successful introduction. How has it affected the awareness and the positioning of Partagas for the future?
Cullman: I think it was a real teaser. I mean, it was a unique package, it was as we said in the advertising, "Once they're gone, they're gone," and so it was a real boost to the Partagas image--it added a tremendous cachet to the brand.
CA: What is the strategy for Partagas in the future?
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