CEO, General Cigar Company
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Cullman, 50, has been preparing for this job his entire adult life. After graduating from Yale University in 1968, he went through stints in the Army and then Manufacturer's Hanover Trust Co. as a management trainee. He joined General Cigar Co. in 1974, and became senior vice president for cigars and tobacco in 1976 and later that year, the executive vice president for marketing. He became executive vice president and chief operating officer of General Cigar in 1978 and was appointed in 1980 to president of the division as well as a member of the board of directors of Culbro. In 1983, he was named executive vice president of Culbro and took over as president the following year.
Cullman's rise to the company's top job couldn't have come at a more challenging time. But his strategy is simple: keep the company at the top of the cigar industry. He discussed his plans for Culbro, and General Cigar, in a wide-ranging interview this past June with Marvin R. Shanken, editor and publisher of Cigar Aficionado magazine.
CIGAR AFICIONADO: This year begins a new era for Culbro. How would you articulate your father's contribution to the company, and has the transition been difficult?
Cullman: Well, first let me say the transition wasn't difficult. The decision was one that he knew he had to make. It was just a question of when. He knew that it was going to happen, and he knew who was going to be taking over. That's made it easier. For his achievements, you've got to go back to 1961, when my father first bought in to the General Cigar Co. He bought a controlling interest at that point. It was really the culmination of his love of tobacco and the cigar industry. Over the years, he added a lot of businesses, many of which are not part of Culbro today. But the cigar business is still part of Culbro and it has been his vision all along and his love. He realized that if he could put all of those efforts against a business that was less difficult than the cigar business, he might have made more money. He might have been more successful, but at the end of the day he wouldn't have been as happy because he loved the cigar business. For him, it's been difficult to separate what is business and what is personal interest. If there's a legacy that he passes on to me, it is that if you hang onto it long enough, and you believe in it, it comes back.
Look at what is going on today in the cigar business. I pushed to de-emphasize the cigar business in the '80s and early '90s. We were struggling. You couldn't shed assets fast enough to maintain any viability. It is remarkable what has happened. So if there's a legacy here, it's to follow your heart and the things that you really believe in. You can add tremendous value in that kind of situation. That's what he has done all of his life.
CA: When you joined the company in 1974, what was your attitude towards cigars, and has it changed?
Cullman: I knew very little about cigars except through my father's discussions at the dinner table or other places. In 1974, after getting discharged from the Army, I had spent about three years with what at that time was Manufacturer's Hanover Trust Co., which is now Chase bank. I knew very little about the cigar business or the tobacco business, but I enjoyed smoking cigars, I enjoyed the legacy. The family legacy.
It was reassuring to know that I was entering a business that was not necessarily started by my father or even by my grandfather, but started really by my great-grandfather. That gives you a certain feeling of a place that you belong. And I felt right along that I belonged. I started working in Puerto Rico, where we were sorting Connecticut wrappers. I learned the process from A to Z. I lived down in Puerto Rico. My wife was pregnant with our first child and very upset that I wasn't home, but we lived through those first years. It was a real learning experience.
CA: How long did you do that?
Cullman: It wasn't that long. I spent from 1974 to about 1976 in a training mode in various positions throughout the company. I was in Puerto Rico. I was in Kingston, Jamaica; Tampa, Florida, where we had an operation; and in Philipsburg, Pennsylvania, where we had a cigar factory. I was moving from our handmade factories to our machine-made factories. Throughout, I was learning everything about the cigar business. From tobacco growing and processing through cigar making.
CA: After that "training program," what happened in the next two or three years?
Cullman: My father constantly pushed me to do things. Just as I was getting comfortable understanding something, he would push me on to something else. I became head of the Connecticut operation, which was at that time the real estate business, the nursery business and the tobacco-growing business. All three divisions reported to one person, who was also head of the tobacco business; that influenced the emphasis that was given to the other two businesses. I was a sort of King Solomon who sorted out the needs of the various businesses. I learned a lot about the nursery business and the real estate business. From there, I went on to be president of General Cigar. I also had been head of all tobacco operations, where I worked with Alfons Mayer [the head tobacco buyer for the company].
CA: How big was General Cigar in terms of revenues when you became president in 1980?
Cullman: Less than half of what it is today. Our peak year was in 1969 when revenues were around $250 million. In the late '70s, it was struggling at around $50 million. But we've been growing rapidly. In 1994, revenues were about $88 million and climbed to $124 million in 1995, and in 1996, we expect at least $135 million.
CA: Let's go back for a minute. You are the fourth generation in the business. How did it start?
Cullman: My great-grandfather, who came from Germany, started in tobacco and later wrapper tobacco for cigars.
CA: When was the peak of Culbro tobacco farming operations in Connecticut?
Cullman: Well, I guess there were several golden eras. My grandfather started growing tobacco around 1910 in the Connecticut River Valley. That was when Connecticut Shade was introduced to the Connecticut valley. Prior to that he was dealing in tobaccos from around the world such as Indonesia and other countries.
CA: In an earlier interview with your father, he said that Culbro, at one point, had about 1,800 acres of tobacco?
CA: Today, how many acres do you own of wrapper tobacco land, and of that, how much is being farmed?
Cullman: We still own about 5,500 acres of land in Connecticut, but most of it is not available for tobacco now. I shouldn't say most of it. A good portion of it. We have about 330 acres that we're growing this summer.
CA: Isn't that substantially lower than in the past?
Cullman: Way down.
CA: But with the demand for large-leaf Connecticut wrappers growing so rapidly, why is the farming operation getting smaller and smaller?
Cullman: It actually has increased in the last three years. It was down to about 200 acres, when we hit our lowest point. The biggest problem is that every acre costs at least $25,000 to grow. It's just a risky and expensive business. We're able to today, because of our involvement with the grower Oliver Thrall, to have access to a lot more tobacco than we had before. Thrall is one of the growers in Connecticut who used to be with Windsor Shade. He has broken away from Windsor Shade as of last year. We processed tobacco for him in the Dominican Republic. And our agreement is such that we have first pick of certain tobaccos that he grows.
The real demand is for tobaccos for premium cigars, not for domestically made cigars. What we used to do is sell a significant portion of our tobacco to English buyers and use some of the rest for ourselves and for domestic cigars. The higher primings, the tobaccos that had more guts, were used for Macanudo. But we really are not in the business of growing tobacco for other manufacturers.
CA: How many acres does Thrall farm?
Cullman: He farms about 300-plus acres.
CA: But unlike Windsor Shade, you're vertically integrated.
Cullman: Yes, in that we use a lot of the tobacco we grow.
CA: And what you don't use for yourself, the higher quality tobacco, you sell primarily to the English market?
CA: It's not sold to other cigar manufacturers?
Cullman: We sell a little bit, but not a significant portion.
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