An Interview with Carlos Fuente Sr.
A discussion with the head of Arturo Fuente Inc., one of the world's largest producers of premium hand-rolled cigars.
Marvin R. Shanken
From the Print Edition:
Jack Nicholson, Summer 95
Carlos Fuente Sr. has been in the tobacco business his entire life. His Cuban-born father started a factory in Tampa in the early 1900s, and over the years the family has owned cigar factories there, in Honduras and in Nicaragua. Today, in the Dominican Republic, he and his sons operate a huge cigar-making operation. In fact, the company, Arturo Fuente Inc., has become one of the world's largest producers of premium hand-rolled cigars. With a third factory coming on line this year in the Dominican Republic, the Fuentes had expected to produce nearly 30 million hand-rolled cigars in 1995.
However, the week after this interview, one of the Fuente's tobacco warehouses in the Dominican Republic was consumed by fire. Several tons of aged, high-grade filler and binder tobacco were lost in the early-morning blaze. The Fuentes acknowledge that the fire has set back their expansion plans for 1995, and it will slow the development of the new factory due to the loss of tobacco. It's the sixth fire in the Fuente family history; the previous fires destroyed factories or warehouses in Tampa, Honduras and Nicaragua. But the Fuentes said that the fire "would make them stronger" as they dealt with the adversity.
Three years ago, the Fuentes also attacked one of the long-standing myths about the Dominican Republic: You can't grow shade wrapper there. Today, the family has three vintages of shade-grown wrapper in its inventory, and, Opus X, the new cigar that carries the wrapper, will hit the market this summer. The project, conceived and directed by Carlos Fuente Jr., required a multimillion-dollar investment, everything from acquiring the land and the materials for a shade-wrapper growing operation to building three new tobacco barns for curing and aging. In the final analysis, the Fuentes already have changed the way the cigar industry thinks about Dominican tobacco.
In a wide-ranging interview about the state of the cigar industry today, Marvin R. Shanken, editor and publisher of Cigar Aficionado, asked Carlos Fuente Sr. about where he expects his brands to be five years from now. Fuente also talked about the extraordinary changes that have taken place in the cigar market, and his hopes for making Arturo Fuente cigars a top brand in every market in the world.
Cigar Aficionado: One of the most noteworthy events in the Dominican Republic's cigar industry is your courageous attempt to produce wrappers there. Could you tell us a little bit about the history of wrappers in the Dominican Republic and why you decided to experiment?
Carlos Fuente Sr.: There's been a history of people trying to grow wrappers in the Dominican Republic. We had always heard that a certain type of wrapper could be grown there, but we didn't need it at the time. But the Olivas [tobacco growers Angel Sr., John and Angel Jr.] were growing filler tobacco successfully in the Dominican Republic. In 1991, the Olivas grew another type of tobacco on one farm, a piloto Cubano, which was Cuban seed. My son [Carlos Fuente Jr.] saw the tobacco. It was mostly for filler and binder. But he saw the possibility in the tobacco.
As you know, we were raised off and on in Cuba, and we knew all about Cuban tobacco. When we went to Nicaragua, we used to love that type of tobacco, the Cuban seed tobacco. So when my son saw the possibility of the Olivas' tobacco, he recognized that there was a future in that type. He suspected that there was a good chance that--despite what everybody used to say and what everybody had tried before--we could grow wrapper there.
I have always been the type of person who told my sons and my daughters that in life, to be successful, you have to be able to do something that you really like--you have to try. And when he came to see me about the Olivas' tobacco, and told me about it, he was so excited. So naturally, I had to let him go ahead and try it.
My son is the one who decided to buy the farms, but he also bought the whole crop that year from the Olivas. Then he started the project, and after I saw the tobacco was growing, I figured, too, that it could be done. If my son had the love and care to grow the tobacco, then you have to be willing to invest the money. A lot of people have invested a lot of money in tobacco in the Dominican Republic, and lost a lot of money, and I guess they gave it up as a result. It's not that we knew more than anybody else. But the love and care that my son put into it have made it a success. Like I told him from the beginning, if he was going to grow wrapper tobacco, and make it successful, you got to give it what it takes. You can't grow tobacco for financial purposes, like a lot of people do, that they have to grow to resell it.
C.A.: Today, you own that farm? How many acres are planted to wrapper tobacco?
Fuente: This year it's over 65 acres.
C.A.: What does that acreage represent in terms of potential production? When the crop is harvested, what will that represent in terms of potential cigars?
Fuente: This year we are growing about 30 acres shade for wrappers and the other 35 acres sun-grown to get binders and things like that. Of the 30 acres of shade-grown, after sorting out the top grades, you can probably get, roughly speaking, about 1,000 pounds to an acre, and half of that, 40 to 50 percent, would be wrappers. That's depending on the crop and things like that. It's hard to figure the exact amount, but we've been seeing about 40 to 50 percent of good wrappers [per acre] from that farm.
C.A.: At one time, your competitors thought the wrapper venture was just folly, but it is now drawing serious attention. Do you have plans to sell this wrapper ultimately to other cigar manufacturers in the Dominican Republic, or is it primarily for the Fuente family?
Fuente: It's for the Fuentes.
C.A.: Has there been talk of the other manufacturers getting into wrapper farming because of your new success?
Fuente: I'm sure that they will. Once we come out in the market--and it is going to be successful--there will be no doubt about other operations starting up. I'm sure if they are not already experimenting by now, they will be. Of course, when we first started, we used to have a lot of friends come and tell us we were crazy, that it couldn't be done. A lot of people tried to discourage us. But when we set our minds to do something, we put all of our effort into it.
C.A.: In the area where you're growing this wrapper, I assume that there are other properties that could be developed. Is land availability an issue here?
Fuente: No, definitely not.
C.A.: It's really a question of whether or not others are willing to make the investment and take the time to be competitive. What is there about this wrapper that makes it special? You've been buying Cameroon wrappers for many, many years and you buy Connecticut wrappers. But you are clearly going to be shifting a certain amount of your production over to this wrapper. What is there about the taste?
Fuente: It's a different animal; it's a completely different taste and color and texture. What the wrapper reminds me of is something that I used to see before the embargo--in many ways, not all. That's what really tricks me, because it reminds me of Cuban tobacco way back then. But it's still a different animal, and to me, it's better.
C.A.: Is there a different aging process or a different fermentation process?
Fuente: No, we still do everything using the old manufacturing methods. We still do things the old way. We still do our curing and everything much the old way.
C.A.: What is your investment in the Dominican wrapper operation?
Fuente: We just purchased more land. We already built eight tobacco barns, and we are going to build more tobacco barns. We even have an option to buy another property there, about another 25 acres. We already own 85 total acres. [20 acres are not cultivated.]
C.A.: What is the game plan in terms of which of your cigars will end up having the Dominican wrapper?
Fuente: The Opus X.
C.A.: Strictly the Opus X?
Fuente: For now, it is. For now, that's the purpose.
C.A.: Won't there be excess production?
Fuente: Then we might make other brands with the wrapper. But right now, the main goal is the Opus X.
C.A.: The future for the wrapper is really undecided?
Fuente: No, we haven't decided yet what else to put out in the market. We won't change the classic Fuente line. We won't change anything that already exists. We are big believers not to change anything that does well. I was taught by my father, if it's good, if you're successful, don't touch it. So, we will not change anything.
C.A.: Either it goes into Opus X and Opus X flourishes or you might have an additional brand or two with the same wrapper. Is that right?
Fuente: We probably will have other brands that will get the top grades of wrapper like the Opus X. Then we have other lower grades that will probably go in other cigars, other brands.
C.A.: There are people in the tobacco trade, in the cigar trade, who come from Cuba. In your particular case, your family was involved in the cigar trade since the turn of the century. Could you give a little background about your family's origins?
Fuente: My parents were from Cuba originally. And my father's father used to grow tobacco in Cuba, manufacture some cigars and sell both cigars and tobacco in Cuba. Even on my mother's side, her father had a cigar factory, a small one that used to be called a buckeye. After the war [the Spanish-American War of 1898], they started coming to the States. My father moved to the States and was there in the early 1900s. Naturally, with his background in tobacco and his history, he went into the cigar business. Ybor City [now part of Tampa] was the cigar capital in those days, and my father worked in the cigar factories there. In 1912 he and a few friends were able to start a factory that was named A. Fuente and Company at that time.
Fuente: In Ybor City. It really started in the West Tampa area. But during one of my father's trips, in the mid-1920s to Cuba buying tobacco, the factory burned down.
C.A.: In Tampa?
Fuente: Yes. He lost everything. That was the end of the factory there. He went back to working as a foreman in other cigar factories. When he had the factory in 1912, he had partners. When it burned down, he said that although he wanted to go back into the business, he would not do it unless he did it as a family business; he would do it strictly for himself.
In the 1940s, he was able to start up a factory again, and he started it in the back of the house with my mother and him and my grandmother. We are such a close family that every night my sister and my uncles--the whole family--used to come over after they got off work and make cigars. My father was only interested to sell enough cigars to make a living. He was never interested in any big factory.
But naturally I was born into that family, in the same house, so I was always in the factory. I remember that the first chore when my brother and I came home from school was to roll 50 cigars before we could go out and play. As the years went by, I was always in the factory. I guess I had the feel for tobacco also, and that was my love. In my first trade, I was a baker. But even when I used to work in the bakery, I would still come home and work in the cigar factory.
C.A.: What caused your father to leave Cuba and come to America?
Fuente: I guess everybody was trying to better themselves after the war, and they all started leaving Cuba. My father's brothers and sisters came to the States, and I guess they brought him because they were having a hard time in Cuba. So he came to Tampa. And he always said that it was his home after a few years.
C.A.: Where were you born?
Fuente: I was born in Tampa.
C.A.: Did you ever live in Cuba?
Fuente: I used to spend a lot of time in Cuba. I have always wanted to go back to Cuba and open a factory. We were all of Spanish descent. We all lived in Cuba, and our home was Cuba, even though I was born here. I didn't learn English until I started school. There was nothing but Spanish spoken in my house when I was young.
C.A.: Despite all your success in the Dominican Republic, do you foresee expanding into Cuba if the embargo is lifted?
Fuente: I'm sort of different, I guess. I don't really give it a second thought. I think the end of the embargo would be good for the Cuban people because they are going through such hard times. To end the embargo, I think it would be the best for everybody. As far as me personally, it doesn't make any difference.
We owe a lot to the Dominican Republic. Our company has done in 15 years there what it has not done in all its history. It wouldn't matter if Cuba were to open tomorrow and the embargo is lifted. We might go back to Cuba and open something and do something there, but we would not leave the Dominican Republic. No way.
C.A.: I wasn't suggesting that you would. But what form might your involvement take? Would you expand there, or would you just buy tobacco there?
Fuente: We will buy tobacco and we will blend it with Dominican tobacco.
C.A.: You have a number of different brand names using Arturo Fuente as the basic identification. The classic Arturo Fuente brand is still your bread and butter. Can you tell me the number of cigars you sell under that name and the price range?
Fuente: It runs about $1.95 now to $3 something.
C.A.: The wrapper is basically from Cameroon?
Fuente: With the exception of three different sizes, all Cameroon wrappers. The Chateau Fuente line is Connecticut shade. The Chateau is in the same line as Arturo Fuente, but it has a cedar sleeve, and it's a Connecticut shade wrapper. All the rest of the Arturo Fuente line is Cameroon wrapper.
C.A.: How many millions of cigars do you sell under that brand name?
Fuente: The entire Arturo Fuente line last year sold over 10 million cigars.
C.A.: Then you have the Hemingway. What's the price range?
Fuente: It starts at $2.65 suggested retail and it runs over $8 for the Hemingway Masterpiece.
C.A.: The wrappers are all Cameroon. How many cigars do you sell in that brand line?
Fuente: That's a little over a million.
C.A.: Then we move up the line to the Don Carlos. What is its price range?
Fuente: There are three Don Carlos that sell for $5.75, $7 or $8.
C.A.: Cameroon wrappers?
Fuente: Cameroon wrappers.
C.A.: What's the approximate volume of Don Carlos?
Fuente: Well, that's a very limited volume. We have just two cigar makers on that. We have tremendous demand for those cigars. If we went out and filled the demand for it, we would run out of tobacco, because it uses tobacco from a 1984 crop. Naturally, that is a limited supply. So we just use it in a very limited way.
C.A.: When you say it's tobacco from 1984, you mean blended with its younger vintage as well, yes?
Fuente: The only tobacco that is younger is the wrapper. All the filler and binders are from the 1984 crop.
C.A.: When are you going to run out of 1984?
Fuente: That depends on how many cigars we make. The demand is forcing us to make more. We're going to skip the 1985 crop and then go to 1986. From all of the tobacco we've grown ourselves, we have saved a substantial amount of tobacco. But we have gone through, my son and I, more than expected for the Don Carlos.
C.A.: Are there other factories that have 10-year-old tobacco in inventory?
Fuente: I can't really give an honest answer on that because I really don't have any interest in what anybody else does. I don't even smoke anybody else's cigars. I have a lot of friends in the industry, and I might be with one of them and they open a cigar and I'll smoke it. But I was never the type of person that would buy a cigar of anybody else's just to see what they are doing. My main goal is just to make the best cigars possible.
C.A.: Obviously, Don Carlos is very small.
Fuente: We only have two cigar makers on that line and total production is about 300 cigars a day.
C.A.: So annually, you're talking about--?
Fuente: To be honest, I haven't even figured it out. You have to figure a couple thousand cigars a week. About 100,000 a year.
C.A.: As the cigars get more expensive, I assume they benefit from the process that selects higher quality leaves.
C.A.: Is Opus X on the market? Have you started to ship? Or when are you shipping?
Fuente: We're waiting for the packaging to come in from Europe. We are on the third crop now. We like to age our tobacco a minimum of three years.
C.A.: But you expect to release Opus X this year?
Fuente: Maybe May or June.
C.A.: Of 1995?
C.A.: The real news is the Dominican wrapper?
C.A.: The binder and the filler?
C.A.: Is there anything unusual or unique about the blend? As, let's say, compared to the Hemingway or the Don Carlos?
Fuente: It's a totally different animal.
C.A.: What's the price range of the Opus X going to be?
Fuente: Well, I don't think we have sat down and figured it out exactly, but it's going to be expensive. I would assume over seven bucks.
C.A.: But you said that you have some other cigars that go as high as $9?
Fuente: The Hemingways.
C.A.: Wouldn't the Opus X likely be priced above that?
Fuente: Yeah, but we're going to have different sizes. I think it will probably be over $10 for the big cigars.
C.A.: So, $7 to $10, but not much more.
Fuente: Maybe as high as $12.
C.A.: $12? You're starting to get into the next price category. How many different sizes of Opus X and what sizes do you plan?
Fuente: We plan to come out with six or seven sizes.
C.A.: This year?
C.A.: In 1995, forgetting about shipments for the moment, just in terms of production, how many Opus X cigars do you expect to produce?
Fuente: I don't have that figure. We're just going to start making them. We're not going to rush it, and I think production is going to be limited to begin with.
C.A.: Are we talking about 20,000, 50,000, half a million?
Fuente: I don't think we'll hit half a million. Maybe next year we might get to the half a million mark. I don't think this year we will probably make more than 100,000, maybe 150,000.
C.A.: How many will you be releasing this summer into the marketplace?
Fuente: I think that's very hard to say. We haven't sat down and figured it out yet.
C.A.: But do you know how many cigars you are going to release?
Fuente: Oh, yeah. We'll probably release about 50,000 cigars.
C.A.: The dramatic change in the market for premium cigars apparently has placed pressure on the most successful producers, and in fact, many of them can't supply demand. How large are your back orders?
Fuente: We are concerned because we want to be able to provide the market with what we really want to provide. But our main goal is not to release cigars until we feel that it's right. I'd have to sit down and figure back orders. What we are doing is making cigars and shipping cigars. We are running five, six months behind, and we still have orders that we haven't filled. I think if you sit down and do the back orders, it runs over 4 or 5 million.
C.A.: You have over 4 or 5 million back orders?
Fuente: If you figured it. I haven't done that because nobody gets what they order. We're shipping a third of what the retailers order and, in many cases, not even that. We had a customer yesterday who was telling me that for three months they haven't received some sizes of cigars. And it's not that we're not making them.
C.A.: In 1994, what was your total production of cigars?
Fuente: What we manufactured or what we shipped?
C.A.: What you manufactured.
Fuente: We manufactured close to 26 million. We shipped a little over 24 million cigars.
C.A.: And in 1995, what will your production capacity reach with your new capacity?
Fuente: We plan to go to 28 to 30 million.* That will depend on the new factory. We just started the new factory in January and our production is starting to kick in.
C.A.: Don't you have the largest manufacturing company of handmade cigars not just in the Dominican Republic, but in the world? In your total operation, you also manufacture cigars for other brand owners. In particular, you produce Cuesta Rey for the Newmans. In recent years, you've also combined your sales operations with them.
Fuente: Yes, sales.
C.A.: Is that strictly in the United States or all over the world?
Fuente: In the United States.
C.A.: Given your relative size, what prompted you to merge your sales operation in the States with the Newmans?
Fuente: We thought carefully about it. Our brands had been growing constantly. But in the early '80s, we were struggling a little. I had a call one day on the phone from a sales manager who had been a big part of our company. When I first met him I knew he was the person that was going to help us to grow, because he was well liked in the trade and was very knowledgeable. So even though our company was growing he said a lot still had to be done to increase sales. We used to do all the sales from Tampa with Fred Zaniboni and Linda Portugese and other people, including my brother in Tampa.
Then, around 1986, I went to see the Newmans. My son and I were living in the Dominican Republic at that time, and our sales force back here kept telling us that we needed to do more. It just happened that we were still manufacturing cigars in Tampa, too, some other machine-made brands. So I asked the Newmans if they would make our Tampa-based brands, and they said yes, but they asked us to make some handmade cigars in the Dominican Republic for them. That's how it got started. From 1986 to 1990, we saw that there were also possibilities to use their sales force.
C.A.: So from 1986 to 1990 you were producing Cuesta Rey?
Fuente: Not Cuesta Rey at first, but we made other brands for them, like La Unica. We started with that brand and when we were very successful with it, they started bringing in Cuesta Rey. Then, when we saw the sales force that they had, and that they are wonderful people to work with, and that they are hardworking people, and that they are a family company, like we are, I saw the possibility of working more closely together.
I also thought it was time for the Newmans to come out with handmade cigars. It all has just turned out to be the best thing that we've done, to go with them and the sales force and to use their sales ability. They put us in a lot of places we weren't in before. The more spread out you are with a brand, the more possibility that good things will happen. It's turned out to be a very good thing for the Newmans and for us.
C.A.: You're saying that it's a very successful relationship and both sides are pleased.
Fuente: We are together in the sales aspects. We're still with Linda and Fred. They are watching the Fuente brand. And the relationship has been marvelous.
C.A.: From my personal experience, it's two great families. You couldn't have picked better and they couldn't have picked better.
Fuente: Thank you.
C.A.: It's one of those marriages that work.
Fuente: I feel the same thing.
C.A.: After your own brands, what would be the largest non-Fuente brand that you would produce: Cuesta Rey?
Fuente: Cuesta Rey is one of our biggest customers. The Newman's Cuesta Rey line and La Unica line are our next largest brands.
C.A.: You also have other brands that you produce. How many years have you been producing Ashton?
Fuente: The Ashton line? Time goes by so fast, I don't keep up with time! I think the Ashton, we have been producing it now for about five years.
C.A.: Given the rapid recent rise in demand and the scarcity of cigars, wouldn't you be better off just producing your own brands?
Fuente: I can understand that everybody thinks so, but it doesn't really work that way. We have about 1,000 people working on the manufacturing side, and the point is that you have to keep people working all the time. If you have problems like the supply of Cameroon wrapper for our brands, you have to have work for the rollers. The day that you can't produce some size of Fuente, you've got to keep on producing other things. It may be a different brand, different wrapper, different tobacco, and that's how you've got to keep up with the production.
C.A.: So you don't look over your shoulder and say: "Gee, I wish I had that tobacco production for Fuente." You basically say: "This helps to balance on a long-term basis our production necessities, our employee obligations"?
C.A.: How many rollers are there at Fuente?
Fuente: We have nearly 500.
C.A.: Do you have a problem finding and training rollers? Is there much of a turnover? Is that a problem area in production because it's such a highly skilled area?
Fuente: At one time it was hard, but it isn't to us anymore. We have been training people since day one in the Dominican Republic. We've always trained people, and we have done so many things for our people that they want to work for us. We have our doctor in our place. We give our workers hospitalization even though hospitalization there is usually provided by the government. On top of that, we give our workers buses and transportation. We do so much for the people, that we don't have problems.
C.A.: Is it an hourly wage or piece work?
Fuente: It is mostly piece work.
C.A.: Cameroon tobacco is obviously critical for your cigar production. Knowing that there have been several crises in Cameroon in the last couple of years, how are you able to find and have enough Cameroon wrapper to meet your needs?
Fuente: Cameroon wrappers have been a problem in the past year, but our supplier is the Meerapfel family in Belgium. We work very closely with them and we have a very close relationship. I believe that there are only two manufacturers getting enough of the real Cameroon from Africa. And they have been able to supply us, not for all of our needs but very well. The problem is that though we are getting Cameroon, it's not all usable. So you have to sort all of the tobacco again and again, even after someone has gone to the trouble of resorting it. We still are having trouble, especially with the larger size Cameroon wrapper.
C.A.: Is there light at the end of the tunnel?
Fuente: We don't sleep some nights thinking about it. We don't know what's going to happen, or what's going to be done.
C.A.: Do you have inventories for this year and next year?
Fuente: Yes. We don't know the exact amount we have for production. If you want to go by the bales we have for this year and next year, we're OK. But the problem, like I just saw last week in the Dominican Republic, is the yields from those bales. We're getting some Cameroon tobacco that we have sorted from 170-pound bales and found that only 20, 30, 40 pounds is usable. Some bales have usable tobacco up to 50 or 60 percent. But down the line, you don't know exactly how much usable tobacco you have. That's why we are so careful with production. No matter how much we have in back orders, we can just produce so much.
C.A.: How much aging does a Cameroon wrapper get, between the time that you receive it and the time that you use it on a cigar?
Fuente: At least two years.
C.A.: And then once you make the cigar, how much aging before you are willing to ship it?
Fuente: That depends on the size. We always age certain cigars at least 30 days. Hemingways are aged six months. We don't release one Hemingway cigar until it's been in the aging room six months. Don Carlos is aged for a year.
C.A.: Given the fact that you age the Cameroon wrapper for a minimum of two years, right now you don't have a problem, but might you have a problem next year?
Fuente: It could be that next year we will have a problem. I mean, we have a problem now because you have to replace what you're using, and that's a problem. You have your inventory, and you see your inventory falling off.
C.A.: What are your options?
Fuente: Change the wrapper.
C.A.: Change the wrapper or reduce your production?
C.A.: Is changing the wrapper a serious consideration?
Fuente: We have thought about it, but we have other ideas now. As I said, we are big believers not to change. But a lot of people manufacture cigars, and they are forced to change from time to time. We will just come out with new Fuente brands. And we're already going to start making a Fuente with a different wrapper. But we're going to have a little different packaging. We're going to tell the consumer about this type of wrapper. So when they buy it, they know it's still going to be a Fuente, but it will be different. And when we have the Cameroon tobacco, we'll still produce the classic Fuente.
C.A.: That way the consumer will expect a different taste in the new cigar.
Fuente: Yes, and that it is a different wrapper. But they'll know it still is going to be a Fuente cigar.
C.A.: But it will have a slightly different taste?
Fuente: Oh yes, definitely.
C.A.: If it's not a Cameroon wrapper, then the next question is, will it be Connecticut or Dominican?
Fuente: Probably it's going to be Connecticut for now. We're going to come out with more Connecticut wrapper cigars.
C.A.: Or is there another area of possibility?
Fuente: There's another area. I believe that from all of the wrappers I've seen or dealt with, there's no finer wrapper than a Dominican wrapper. So there will be a possibility down the line that some cigars can include a regular Dominican wrapper. It also depends on what happens in Cameroon.
C.A.: When will you know?
Fuente: In the next crop, when it comes out.
C.A.: Which is when? Wintertime?
Fuente: By wintertime next year. If the volume is there, then there is nothing to worry about. But we are still going to come out with Connecticut wrapper cigars. We have been successful with certain sizes using Connecticut wrapper. So actually, we are just going to come out with other sizes. We had the idea of maybe putting foil on half of the cigar, so when the consumer buys it, they know that it's not the regular one. It's still a Fuente, but a little different taste. If the Cameroon ever comes back, we're going to continue with the Cameroon.
C.A.: It seems like you have a lot of irons in the fire here. What do you see happening in the next few years for your company? You are beginning a very bold, extraordinarily innovative introduction with Opus X, which has unlimited potential, or limited only by your ability to produce it. It is priced at a level that is very attractive. Do you see anything beyond Opus X? How is A. Fuente going to be different five years from today? Is it more of the same, or are there other things on the drawing board? What are the dreams?
Fuente: As far as I can see, I think we have hit the top of the line now. We've done about as much as we can be doing. The Opus X farm is beyond my dreams. I think this is really the top of what anybody can dream; it's beyond that.
C.A.: Aren't you accomplishing decades of work in a few years?
Fuente: I can say I owe it to my son. He has dedicated himself to this project. I have to give all the credit to my son. It's his baby, I've left it up to him, because I always taught my kids that they've got to do in life what they like to do if they want to be successful. I always told my son that if he would go to college, the day that he would come out of the college--both of my sons, I told them--that I would give them a part of the company. I'll never forget the day my son graduated from high school. The first thing he told me when he came out in cap and gown: "Dad, do you still feel the way you've always promised?" I told him, what? I didn't even know what he was talking about. "That if I go into college, I can go into the factory later?" And I told him yes. He said, "I'm going to college." And so he did. And after he came out of college, I kept my promise. He was just a teenager, so I used to send him down to the Dominican Republic and work the farms. I wanted him to have a real knowledge of the tobacco.
And I'm very proud of him, and I can say today that my son knows tobacco better than I do. When he came with this idea about the farm--at that time he didn't know it was going to be Opus X--it was a very expensive venture. I knew the possibility could be there, so naturally I told him: "This is your baby. See what you can come out with it." So, for this farm, he has the credit. I can't take the credit. I've got to give him what is due.
C.A.: Of the approximately 10 million cigars, what percentage goes to the United States, and how much goes to the rest of the world?
Fuente: The United States is our largest customer. I don't know what percentage. I would say 95 percent.
C.A.: About five percent of your exports are non-U.S. directed, to Europe and the rest of the world. Do you have a marketing strategy to make Fuente a world-class, global brand, or will it always be primarily an American brand?
Fuente: We would like to see the brand become global, but our first commitment is to the United States, because that's where our brand started. We would like to expand, but it depends on the production, it depends on the tobacco.
C.A.: Given that many brands are distributed worldwide, especially the Cuban ones, do you have an active plan to develop other markets? Has the demand in the United States market made the expansion less of a priority?
Fuente: We have calls from all over the world; we are in different parts of the world right now, but in small ways. We have calls from Spain and a lot of different places which want to give us contracts. But we tell them to go away, because our main concern right now is the United States. With our demand in the United States, there is no way we can meet it in other places. That's why we started the third factory--so that we can meet the demand, and eventually go worldwide.
C.A.: This is a question that I'm sure concerns most of the producers in Honduras and the Dominican Republic: When the embargo ends, what impact, if any, will this have on a) cigar consumption in America and b) how it would change, if at all, your position in the American market?
Fuente: I don't think that it's going to change anything with the consumer in the American market. I personally don't feel that Cuba will ever be what it was. I don't think anything will be ever the same as it used to be.
C.A.: But when the embargo ends--
Fuente: When the embargo goes, I think that sales would probably drop for our brands because everybody is going to be buying Cuban cigars. I think that people are going to smoke them to find out about them. I remember in the good days of Cuban cigars, the most that was ever imported was 25 million cigars. There were several factories in Ybor City, and one alone used to manufacture 80 million cigars using Cuban tobacco. What may happen is that producers in all these countries will probably buy Cuban tobacco and then make an even better-tasting cigar.
C.A.: And, of course, there's the point that Cuban production is so low--not even able to meet the demand outside of America--that there won't be that big a supply coming in. When people ask me, I tell them that not every cigar smoker wants the strength and power of a Cuban cigar. Americans have been smoking milder cigars. There's also the issue of price. Of course, as your Opus X gets up to $10 or $12, all of a sudden, you're in a new ballgame with prices approaching Cuban cigars. I happen to think when the market opens up, the number of consumers in America who smoke cigars will grow, and those companies that produce the very highest quality cigars, wherever they're from, are going to prosper. And those people who have never delivered high quality or a price value relationship, of which there are a number, they are going to have a tough time.
Fuente: I think that even people who have quit smoking will probably go back to buying a Cuban cigar again.
C.A.: Just for the memory?
Fuente: I think for the first six months, it's going to be a mess out there in the market. I think that a lot of people are going to try Cuban cigars. A lot of people are going to say that it's not their taste because they are not used to that taste anymore. But a lot of people are going to smoke Cubans.
C.A.: There are so many complicated issues, such as brand ownership, that even if the Cubans sell tobacco to you and others, could it be a long time before cigars with Cuban tobacco reach the market?
Fuente: It's a mystery what's going to happen. All I know is that now, today, our business is a different animal. With the consumer trade, it's been a fantastic experience.
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