A Century Mark
With Their Cuesta-Rey Brand Booming, the Newman Family Celebrates 100 Years of Cigar Making
From the Print Edition:
Ron Perelman, Spring 95
Finding an open window on the nearly empty third floor of M & N Cigar's headquarters in Tampa, Florida, isn't an easy task. Company president Eric Newman keeps moving boxes aside, shifting old packing crates around a floor that once throbbed with the pulse of cigar-making machines and pushing on rickety, old frames that won't budge as he searches for an exit onto the roof. Finally, he finds a window that opens and steps out into an unseasonably warm afternoon.
"That U-Haul building over there. That was the Gold Label cigar factory," Eric says, pointing above the treetops across Interstate 75. "Over there, in Ybor Square, is the former American Cigar Company. And, there, that's the old Hav-A-Tampa factory; the Ybor Gold microbrewery is in it today. And back over on the other side is the old Perfecto Garcia factory." The litany of competitors, now long gone from the Tampa area, echoes off the boarded-up face of the M & N clock tower and across the rough, rocky, tarred-roof surface just below a large neon sign: home of cuesta-rey cigars. Despite the bleak implications of the checklist of shuttered factories, the outlook inside the Newmans' building is upbeat: they're still here and still making cigars.
Stanford Newman, the 78-year-old patriarch and company chairman, proudly repeats the same theme: "How many businesses are still going after 100 years?" He answers his own question, with a wry smile, more than once during two days of interviews and conversations. In fact, the family business, started by J. C. Newman in Cleveland in 1895, is thriving today, riding the crest of the cigar-industry boom. Stanford's sons Eric, 47, and Bobby, 44, the executive vice president in charge of sales, are committed to building the family business, and there is already talk about the next generation joining the company by the turn of the millennium.
In many ways, Tampa is home in name only to M & N's flagship Cuesta-Rey brand; the premium hand-rolled cigar is now made exclusively by Tabacalera A. Fuente, owned by the Carlos Fuente family in Santiago, Dominican Republic. La Unica, a bundle brand, is also hand rolled at the Fuente factories, and the other M & N cigars are hand rolled at Nestor Placencia's factory in Honduras. Of course the company's machine-made cigars, Rigoletto and Luis Martinez, still churn out of the Tampa factory at a rate of about 75,000 a day.
Evidence of a long business history, and of much change, is plentiful in the Tampa factory. There are empty rolling galleries and unused spaces on the third floor; there's a room stacked with burlap-covered bales of short-filler tobacco--waste from Tabacalera Fuente in Santiago, Dominican Republic, that will go into M & N's machine-made brands here. In other rooms, sunlight filters through windows, which age and dirt have stained yellow. Crates of packing material sit around, waiting for use. In other rooms, ancient cigar-making machines--some more than 50 years old--clank away monotonously under the watchful eyes of veteran operators. Only about 12 machines are working on any given day, a far cry from the 1950s, when the factory rolled out tens of millions of cigars a year. Deep in a far corner of the basement, Andrew Gordon still "cases" or dampens aged tobacco leaves, which he sways to the sound of rhythm and blues pounding from a boom box and readies for use.
Despite the shuttered factories nearby in the decaying Tampa neighborhood surrounding it, there is a palpable vibrancy in the building. About 150 employees, many of whom have been with the Newmans since they opened the factory in 1953, occupy the premises; most are involved in administration and distribution. The three-story, blocklong building also houses Fanco, M & N's five-year-old joint venture with the Fuente family. Fanco distributes all of M & N's cigars and a good percentage of Arturo Fuente's in the United States. The Newmans recently invested $250,000 in a state-of-the-art computer for the distribution warehouse. In 1994, the distribution division company shipped between 35 million and 40 million cigars to the marketplace: more than 13 million machine-made items from M & N and more than 23 million to 25 million imported cigars from Arturo Fuente, including all the M & N hand-rolled brands. Stanford Newman, citing the competitive nature of the information and the privately held status of both M & N and Arturo Fuente, Inc., refuses to divulge gross revenues.
Bobby Newman, who oversees all the company's sales and manages a national sales team of 20 people, says the Fanco alliance is the best thing that has ever happened to the Newman family. "We think they are just the best manufacturers in the world, and they think we're pretty good at what we do on the sales and marketing end." The partnership, in conjunction with the sales boom, has meant endless hours of work. Bobby can't remember a weekend since 1986 when he hasn't worked at least one day. In the beginning when the debt service from the buyout was a heavy financial burden, "it was like having a gun at our heads." Bobby talks about working the equivalent of two or three jobs, which is one reason the venture with the Fuentes has gone so smoothly: they share the same work ethic. They even share a joke about it, which is "that when we shave and cut ourselves, we bleed tobacco juice, not blood," Bobby says.
For Stanford, the elder Newman, today's successes are sweet vindication. Nine years ago, he was ready to sell out. There simply wasn't a big enough pie for his brother Millard's son, plus his own two sons. No one was happy. They set a mutually acceptable sales price, and Stanford gave Millard six weeks to come up with the money; if Millard couldn't, Stanford would buy the company. Six weeks passed, and Millard said the only way he could get financing was to put his rare collection of 15 antique Rolls-Royces up as collateral, which he wouldn't do. Stanford quickly put together the financing, bought his brother's third of the company and, with some more financial wrangling, bought out his two sisters' one-third share. He won't reveal the purchase price, but admits, "it was several millions of dollars."
At the time of the buyout, the Newmans' business needed a new direction, according to Stanford. The company was selling machine-made cigars almost exclusively, including the highly successful Cuesta-Rey 95, but he saw premium hand-rolled cigars from the Dominican Republic entering the market at a price that was not much higher. "There was no way we could compete," he says. The alternative, Stanford says, was to go head to head with machine-made cigars like Hav-A-Tampa. "I knew how to do that, too. But, as my father was always telling me, you stay in the quality business and learn to stay in your niche. You can't be all things to all people. So we stayed on [the quality] track."
While Stanford had explored several options before 1986, he still wasn't sure whether he should opt for Honduras or the Dominican Republic. Then he ran across Carlos Fuente Sr., the owner and patriarch of Tabacalera A. Fuente. Fuente wanted the Newmans to manufacture machine-made cigars for him, and Stanford agreed, but asked the Fuentes to make a hand-rolled cigar for him. Over the next six years, the Newmans transferred all Cuesta-Rey sizes to hand-rolled production in the Dominican Republic. "I went down there and saw what kind of a person he was, an extremely honest person with a lot of integrity. I've told him 'if I only had two dollars left in the world, I'd give you one of them.' " It didn't take long before the Newman-Fuente alliance grew closer. The Fuentes started making most of the Newmans' hand-rolled cigars, and the Newmans integrated the Fuente brands into their existing national sales and distribution network through the Fanco operation.
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