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Richard L. DiMeola

Executive Vice President, Chief Operating Officer, Consolidated Cigar Corporation

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CA: You don't want to tell me what the blend is?

DiMeola: I don't want to tell you what the shape is.

CA: OK. All right, let me ask you a specific question. Is it true that you're coming out with a new brand, called Cleopatra, that is designed for the female market?

DiMeola: You know what a corona is?

CA: Yeah.

DiMeola: And you know what a Churchill is?

CA: Yeah.

DiMeola: Well, these are Cleopatras. It's a shape.

CA: In other words, you're coming out with a unique shape and size for the female market?

DiMeola: Right.

CA: And when is this happening?

DiMeola: Within 90 days.

CA: So this is a great opportunity to tell the world, because this issue is published in June.

DiMeola: I'll tell you this much. We see the increased interest among women in cigars. And we also see the increase in publicity surrounding women smoking. It's a natural. So when we talk to women, we find that they like small cigars and they like big cigars. Well, we already make small cigars and big cigars; so there is nothing to talk about. We said, why not create a cigar specifically designed for women? Now we have something to talk about, and look at all the publicity we're going to get. So we're going to take it and put it in one of our brands, Don Diego, and we're going to have the Cleopatra shape in the Don Diego brand; and it's going to be specifically pointed at women. You're going to see more and more publicity surrounding women smoking. Whether or not a real business can be built catering to women, I don't know. I believe that women are more occasional users of cigars than the young men today.

CA: The question is whether or not they want to be separated out, having their own cigar, versus smoking what everyone else does.

DiMeola: Whether they do or whether they don't, it doesn't matter to me. What matters to me is--I'm not interested in the business that I can get in Cleopatra shapes, per se. I'm interested more in the publicity we can get from it. I was talking to a reporter about the cigar business once and they asked me the same question about women, and I told them that I was creating the Cleopatra shapes and it appeared in an article--some obscure article somewhere--and we're already getting calls about it.

CA: So this will be sold through normal channels?

DiMeola: Yes.

CA: Last question before we wrap up. Montecristo--the largest-selling Cuban brand in the world. You have the rights to it. In the last few years you have introduced a Dominican version of it. One could argue that you're increasing your production radically, but in fact it's only available at a limited number of outlets. One could claim that you aren't making it available to the total market. A lot of people would like to try it. What plans do you have to accelerate the production and the distribution of the cigar--to be as widely available as a major national brand?

DiMeola: One of the problems, as you know, is making enough cigars. Our traditional brands that have been in the market for years have been increasing in volume tremendously. We have an enormous amount of cigars on back order right now, and the problem has been that once you increase production somewhere you decrease production somewhere else on specific brands. Our program is to try to increase the inventory levels of Montecristo and then to expand the distribution. We do not want to open new outlets for Montecristo without having an assurance that we can keep those new outlets supplied.

CA: When do you see that day coming?

DiMeola: I think that this year we can begin to expand it slowly.

CA: Are you talking about two or three years before it's available to tobacconists across America?

DiMeola: Availability like any major brand? I don't see it ever becoming available like any major brand. I think it's going to be an exclusive brand...but it will sell a substantial number of cigars.

CA: In 1995, how many Montecristos were sold to the consumer?

DiMeola: Under a half a million.

CA: For 1996, what are you budgeted?

DiMeola: Maybe a million.

CA: In 1997?

DiMeola: I haven't gone that far.

CA: You've been in the business for 40 years. You have lived in an industry which has gone through, in totality, enormous decline. You have been an executive in an industry which has been publicly denounced and beat up, and challenged on many social levels; and that has witnessed the cultural removal of cigar enjoyment--certainly when compared to 30, 40 or 50 years ago, when everybody who I ever meet, their father and grandfather smoked cigars. And now, of course, in California and New York you can't even have a nice meal and finish that evening smoking a cigar with your friend. It's pretty frustrating to the consumer--and to some of us, despicable. Where do you see the cigar market today from a social point of view, and what do you see happening in the next five or 10 years? Do you see more states like New York and California outlawing us--sending us into the streets? Do you see the pendulum coming back, where there's more reason and acceptance of cigar smoking? From your point of view, what do you see as the future for all of us?

DiMeola: I think there are more places where you can smoke a cigar publicly today than there have been in many years. When I started in the business, it was even legal to smoke a cigar on an elevator. We always tried to teach cigar smoking etiquette. And we always tried to teach the smoker not to smoke in an elevator when it was full. And to use common sense--and we're still preaching that in the cigar industry today.

In the '50s and the '60s, we all had restaurant programs to try to get humidors in restaurants, because we felt there were captive consumers there; if they forgot their cigars, they had to buy them at the restaurant, because everyone smoked after a meal. That's the best time to enjoy a good cigar. And we felt that it was brand-building when you had to buy from the restaurant, even if you were paying more money. It was your brand you wanted them to smoke as a sampling.

Then we saw this change to the point where every restaurant--and this is something I really didn't understand--most restaurants put it on their menus: No Cigar or Pipe Smoking Allowed. They were allowed to smoke a cigarette, but not a cigar. And it got to the point where--I mean this happened to me once--I was in a certain room of a restaurant, and I took out a cigar and I was just holding it. It wasn't lit, and some person in the other room complained that, "He has a cigar." But I'm not smoking it! "Well, he's going to smoke it," she said. That was the bottom.

Today, here we are in the city of New York, and it has a no smoking law in public places. I think of cigar bars--there are four or five of them in the city. As a result, the restaurateurs are suffering. Take a scenario where five or six people have a business meeting and then they want to go out to dinner. Well, if they're cigar smokers, they'll go to the cigar bar and they'll have a cocktail and smoke a cigar before dinner. Then they'll go have their dinner. Then they'll leave the restaurant and go back to the cigar bar for their coffee, Cognac and cigar; so a $600 bill becomes a $300 bill for the restaurant.

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