Richard L. DiMeola
Executive Vice President, Chief Operating Officer, Consolidated Cigar Corporation
From the Print Edition:
Arnold Schwarzenegger, Summer 96
Richard DiMeola, 61, has witnessed firsthand some of the most dramatic changes in the cigar industry. He was working for the largest importer of Cuban cigars to the United States when the Cuban trade embargo was imposed. He oversaw the growth of what became the top selling pipe tobacco in America in a stint at Lane Limited. And he helped rebuild the reputation of Dominican cigars, starting in 1984 after he joined Consolidated Cigar Corp., which today manufactures or imports to the United States Montecristo, H. Upmann, Don Diego, Royal Jamaica, Montecruz, Primo del Rey, Te-Amo, Las Cabrillas and a variety of bundle cigars. DiMeola also has spent as much time on the road as any executive in the industry, talking with people at cigar dinners and cigar stores. His perspective spans nearly 40 years, from the glory days of Cuban and clear Havana cigars in the 1950s to the unprecedented boom in cigar sales in the 1990s. This past January in New York, Marvin R. Shanken, editor and publisher of Cigar Aficionado magazine, explored with DiMeola the complexities of the cigar industry.
Cigar Aficionado: Can you recall Consolidated Cigar Corp.'s annual sales and the number of premium cigars it produced when you joined the company in January 1985?
DiMeola: The company produced 13 million premium cigars in 1984. I remember that because I had researched it before going to see Ronald Perelman, the owner of the company, for what was really my job interview. I remember he asked me, "How many cigars do you think we sell?" I said, "Well, Ronald, I already know you sell 13 million." He said, "Oh, I wish you didn't know that." I know now that he was trying to test me to see my knowledge of the industry. I guess he wished that I hadn't done the research. That's how I remember the number--but it wasn't all sales; some of it represented shipments.
The previous management--just to go back briefly--was Gulf & Western, which had owned Consolidated for years and wanted to divest it. Mr. Perelman wanted to buy it. The deal fell through. Five managers then bought it. They started fighting among themselves--went to court. It was a mess. The court said that three of them could buy out the other two, but then they couldn't raise the financing. Then Mr. Perelman stepped in and bought it, but prior to that, when the five managers were running the company, they were doing things that weren't necessarily good for the long-range benefit of the company, in my opinion. For example, they fired all the premium salespeople in the United States. They turned the distribution over to about 24 so-called importers. This happened in 1983. These importers saw dollar signs in front of their eyes, and bought a lot of cigars in order to handle their newfound distribution. So there was a lot of pipelining going on. Therefore the business was propped up by their pipelining. Then in 1984, they put in two dealer incentive programs to keep that business propped up. So the 13 million done in '84 were not [all] real sales; they were shipments, and a lot of that was pipelining.
CA: What were the real sales?
DiMeola: I don't know. I can tell you that in '85, the business dropped to $7 million. We were probably selling cigars in those days for around 75 cents wholesale.
CA: So it went from $10 million down to $7 million--something like that.
DiMeola: Something like that.
CA: In terms of the brands that made up the 13 million premium cigars--what brands were part of that group in 1984?
DiMeola: Montecruz, Don Diego, Primo del Rey, H. Upmann. There may have been a couple of other smaller ones. Prior to Theo Folz [Consoldiated's CEO] coming on board and my joining, the five managers of the company wanted to make as many cigars as they could using machine bunches.
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