An Interview with Edgar M. Cullman Sr.
Chairman of the Culbro Corporation
Marvin R. Shanken
From the Print Edition:
Bill Cosby, Autumn 94
Edgar Cullman Sr., 76, has been a tobacco man all his life. Today he is the chairman of the Culbro Corporation, which is the parent company of General Cigar. General Cigar owns and manufactures Macanudo, Partagas, Temple Hall, Ramon Allones cigars and the Garcia y Vega machine-made brand. It also owns the U.S. rights to Bolivar, Cifuentes and Cohiba cigars.
Cullman was instrumental in overseeing the transformation of his family's company from a tobacco-farming operation into one of the largest premium-cigar manufacturers in the world. He was person-ally responsible for the decision to launch the Macanudo brand and he negotiated the purchase of the Partagas brand name. Marvin R. Shanken, the editor and publisher of Cigar Aficionado, sat down with Cullman in New York recently to talk about where the cigar industry has been and where it is heading.
Cigar Aficionado: Can you tell us how the Cullman family got started in the tobacco business?
Cullman: My great-grandfather, who was from Germany, dealt in tobacco there. With the great immigration of 1848, he came over here to the United States. His son, my grandfather, was born in the United States. At the age of 14 he went to work in the tobacco business buying Ohio tobacco. He was a fellow who never went to college and worked all his life. My grand-father, when he was about 20 years old, would go around selling tobacco. But he couldn't make enough money doing that so in the evenings he would play the piano; he was called "Piano Joe."
My father, who graduated from Yale in 1904, also went into the tobacco business. At that time, the tobacco business, especially the cigar tobacco business, was very respectable. My father was Joseph Cullman Jr. His father was Joseph Cullman, and my brother is Joseph Cullman III (the chairman from 1967 to 1978) of Philip Morris. Dad started in the tobacco business buying Havana seed, Connecticut broadleaf, some Cuban tobacco--actually very little--and tobacco in Wisconsin and Ohio. He also imported Sumatra tobacco from the Dutch East Indies. He would go to the auctions in Amsterdam for the wrapper tobacco from Indonesia.
C.A.: All the tobacco that your father and grandfather bought was for cigars?
Cullman: All for cigars. I forget how many...there were at least 400 cigar factories in those days. When Dad graduated from college there were more cigars sold than cigarettes. It was a business into which a great many respectable families went.
In 1906 or 1907 Dad and others started to grow tobacco in Connecticut. It was simply called Havana seed, or Cuban seed, that they brought from Havana and tried in Connecticut. It started off very slowly. Cigars were made of broadleaf wrappers, which are dark, maduro type wrappers; they still grow broadleaf wrappers today. When the shade wrapper began coming in, it was lighter, more appealing to the consumer. Then Connecticut shade began to be grown in quantities.
In the ensuing years, from 1910 or 1912 on, we continued to increase our acreage in Connecticut. And at one point there were almost 10,000 acres of wrapper tobacco growing in Connecticut. At the peak, there was 18,000 acres of all kinds of tobacco grown in Connecticut. And we became one of the large growers of wrapper along with American Sumatra, which also was a large grower of tobacco in that day.
C.A.: What was the reason that your father bought land in Connecticut rather than just buying and selling tobacco?
Cullman: His father thought he was crazy, but he said "I think we can grow tobacco in Connecticut." He liked the taste of broadleaf, which was growing there; he always thought it was great tobacco. So he started growing tobacco in Connecticut. We enlarged our horizons and at some point we grew about 1,100 acres. Then we bought General Cigar in 1961 and then we acquired American Sumatra. At one point, we grew 1,800 acres of Connecticut wrapper.
C.A.: You farmed or you owned?
Cullman: We owned and farmed 1,800 acres. And today the valley grows 1,000 acres altogether. The change has been rather dramatic.
C.A.: You mentioned that you bought General Cigar in 1961. How did your father go from being a grower to form a complete entrepreneurial company with brands and so forth. How did that happen?
Cullman: Let me go back a little bit in history. When I finished my service in World War Two, I said to my father that I wanted to go to work in the tobacco business. I never smoked. In fact, my grandfather bribed me that if I didn't smoke or drink by 21, he would buy me a car. He died when I was 20; I never got the car. I was very upset by that.
C.A.: You never smoked or drank until your twenty-first birthday?
Cullman: I was a very honest fella. When I said I wanted to work, Dad said, "you've got to learn the business." He wanted me learn how to roll a cigar and learn how to grow tobacco.
At that time, there was a cigar company in New York called H. Anton Bock. They made Bock Panatellas. It was a great little company on Second Avenue, between 65th and 66th streets. I would go there at 6 A.M. and set up at the bench. First, I learned how to sort the tobacco, how to shake the tobacco, the Cuban tobacco that came in, how to open up the bales, how to then case [moisten] the tobacco so you could use it. How to count the leaves. Then I had to sit down at a bench and learn how to roll a cigar. I never made money or my living out of that, but I learned how to roll.
C.A.: When was that?
Cullman: That was 1944. For three days a week I would be at the bench learning how to roll cigars and for two days a week I would go up to Hartford and help on the farm.
It was a wonderful life then because we saw all these characters from all over the country. Because they only used wrapper tobacco in those days; don't forget that all cigars were made with a natural wrapper. And today very few cigars are made with natural wrappers, except for high-grade cigars.
C.A.: Why did you decide to acquire General Cigar Company?
Cullman: Well I didn't like the fact that we were beholden to all of those cigar manufacturers. I felt that we ought to be more integrated, more independent and I thought the future of the business was in making cigars--not only growing tobacco. So in 1961 we put a group together and bought it.
C.A.: What did the General Cigar Company consist of in those days?
Cullman: Just cigars. White Owl was our leading brand, William Penn, Van Dyck and Robert Burns. Those were the major brands.
C.A.: Do you recall how big the company was in those days?
Cullman: I think it did about $30 million in sales.
C.A.: Was it profitable?
Cullman: Very profitable.
C.A.: Do you recall what you paid for it?
Cullman: I can't remember exactly what we paid for it. I think it was around $25 million.
C.A.: How old were you at this time?
Cullman: I was 43.
C.A.: Who made up the group of investors? Were they passive investors, family members, other tobacco people?
Cullman: Cullman Brothers put up some of the money. My family-in-law put up some of the money and some other group, friends of ours, who had been in tobacco and had stocks with us.
On the West Coast, the Haas family, who owned Levi Strauss, put up some of the money. And the Ford Foundation put up some of the money. That was our group.
C.A.: What was your strategy in 1961?
Cullman: I'll be very frank with you. I don't think we had a great plan. I think what we did have was the fact that we had bought a cigar business that was a very good business. We thought it was a good value at the time.
C.A.: With the acquisition, you were in the brand business but at the volume and price end, whereas today you are very much in the premium ends. What was the driving force that moved you from the volume end to the premium end?
Cullman: That evolved. I think what happened was I wanted to grow the business and we had a chance to buy Gradiaz Anis. They made Gold Label cigars. It was a premium cigar and when we bought Gold Label we upgraded our cigar business to much higher-priced cigars.
C.A.: From a nickel-and-dime cigar to a...?
Cullman: To a 25-cent or 30-cent cigar. We bought Gradiaz Anis and we also bought the Temple Hall factory in Jamaica. We bought that in 1969.
C.A.: You bought the Temple Hall factory that owned the Macanudo name?
Cullman: It owned Macanudo, but hadn't made Macanudos for the U.S. market. They only made Temple Hall.
C.A.: So Macanudo was pretty much a nonexistent brand?
Cullman: It had been produced but in minimal quantities for the U.K. market. Actually, the factory had made Macanudo and Montecristo during World War Two because at that time they couldn't make enough cigars in Havana.
C.A.: Was the Temple Hall factory mainly a supplier for other brands or for its own brand?
Cullman: For their own brand. They also made export cigars for British American Tobacco (BAT).
C.A.: Was Temple Hall a well-known brand in those days?
Cullman: Not very. It was a very small factory, very unimportant. They made Creme de Jamaica.
C.A.: Let's stay for a minute with Macanudo because that's a brand that most American cigar lovers know. You bought this factory in 1969. Today it's the largest-selling premium cigar brand in the United States. How did it happen?
Cullman: We worked very hard on our blend. We wanted to have something unique. We grew our own tobacco for it. We picked special tobacco for it. We grew our own wrapper tobacco.
C.A.: Where was the tobacco for Macanudo from in those days?
Cullman: The Dominican Republic, Jamaica and Mexico.
C.A.: And the wrapper was from Connecticut?
Cullman: Yes. From day one. But the wrapper we had from Connecticut was a special wrapper. It was a special seed, specially picked, specially processed, and we didn't use tobacco unless it was aged at least two years, sometimes three. We preferred three.
C.A.: So part of your product strategy was to produce a cigar with an aged wrapper at a time when few other premium cigar makers were into aging.
Cullman: Yes. There weren't many premium cigars such as ours at that time. All of a sudden we knew we had a really sweet wrapper. It had a taste we could rely on because it was blended after an extra year of curing to make that tobacco sweeter. It appealed to the American consumer. It just took off; we couldn't make enough of it.
C.A.: As a matter of curiosity, is the taste of the Macanudo cigar today much different than 20 years ago?
Cullman: There's very little difference.
C.A.: The formula, the blend, is pretty much the same?
Cullman: Pretty much the same. There have been little changes because Jamaica doesn't grow any tobacco anymore. Which is a great pity. We would like to see them grow tobacco again. But the main body is tobacco grown in the Dominican Republic and some in Mexico.
C.A.: So you had a well-made product. Today you have a great brand name with extensive distribution. How did this come about?
Cullman: We concentrated on better restaurants and distributed cigars to the best restaurants. And the cigars seemed to sell there. We did quite a bit of advertising. We were the first who really had a very strong advertising campaign on Macanudos.
C.A.: What year was this?
Cullman: This started in the 1970s. We started to advertise Macanudo very strongly. And we continue to do that.
C.A.: TV, magazines, billboards...?
Cullman: Mostly magazines, newspapers and in the end we had some on radio. We have never run on TV.
C.A.: Did you have an advertising slogan?
Cullman: "The ultimate cigar."
C.A.: When was the first milestone in the development and the success of the brand in the marketplace? At what time did you realize that this cigar brand was something extraordinary?
Cullman: To be very frank with you I don't know. We added a few sizes here, a few sizes there, and it took off. And it just never stopped. It kept growing and growing and growing. We continued to make it that way, and it has been the most rewarding experience in my life: the success of Macanudo.
C.A.: Even the name may have been a hindrance then--Macanudo--whereas today you take it for granted.
Cullman: In Spanish it means the greatest, the best, the most wonderful. It was very special.
C.A.: Is Macanudo a product success, a distribution success or a marketing success? It is without question the largest-selling premium cigar in the United States. What was it that made the difference that put Macanudo head and shoulders above the premium-cigar-brand crowd?
Cullman: Consistency. It is a most consistent product. It was always the same. We were very careful about the ingredients, the aging of it and not putting it in the market until we were sure it was right. There was a lot of quality control in Jamaica.
C.A.: Consistency is not easy to accomplish because a cigar is an agricultural product. Even though you may have a certain blend, nature is going to play tricks on you and is going to deliver you something that may not be the same from year to year. How do you maintain the taste?
Cullman: It is very expensive. You have to have enough tobacco so that you can always blend it. You never rely on any one crop. You have to be sure that you have enough crops so that you never notice any change in the blend. So each "crop" of cigars is full of many different crops.
C.A.: How many years of inventory of tobacco for Macanudo and Partagas do you hold today?
Cullman: That's very confidential.
C.A.: Is it different today than it was 10 years ago?
Cullman: I would say that it is probably somewhat different--like everything, it changes. The tobacco changes, but we think we control what we grow and buy in Dominican, which is very fine tobacco and very much like Havana tobacco--as much as it can be. We grow it there and it is grown for us.
C.A.: How large is the Macanudo brand?
Cullman: It is quite large.
C.A.: Can you give me an approximation? I hear numbers around 10 million.
Cullman: That's on the low side.
C.A.: Has it peaked?
Cullman: Of course not.
C.A.: About how much of Macanudo's production comes from Jamaica today?
Cullman: Eighty percent is produced in Jamaica and 20 percent in the Dominican Republic. The division was only done to protect ourselves from any difficulty we might have in any one country.
C.A.: When and how did you end up owning the Partagas brand name in the United States since it is one of the original Cuban brands?
Cullman: Ramon Cifuentes, who was the owner of the family-owned Partagas brand of cigars in Havana, came to work for us when he got out of Cuba. He associated himself with us by selling wrapper tobacco. This was about 1963 or 1964. He did all kinds of odd things for us, as did (Benjamin) Menendez. A lot of the ex-Cubans came to work for us. We got to be good friends.
In the mid-'70s, we were talking about what to do aboutPartagas cigars. I think he got disillusioned that he was never going to go back to Cuba.
C.A.: So he owned the brand. But he thought for the first 10 years that he's going to go back, Castro is going to be ousted, and he would have his factory back. And then he realizes that...?
Cullman: May never be. So, around 1974 I said, what do you think about selling the brand? That's not a bad idea, he said. So we discussed the selling of the brand, and I talked to his uncle, his brothers and his nephews in Spain. Then I had a talk with the people who worked at General Cigar. They said, you can't do that, we are going to do business with Castro tomorrow. We are going to recognize Cuba. And I said, it's not going to happen that fast. I made my bet that we could own the Partagas brand, make it a brand and nothing would happen in Cuba.
C.A.: At this point, were any of the other Cuban brands being sold in America under separate ownership?
Cullman: No. This was the first one as far as I know. I don't want to categorically say that, but I think we were the first. [Consolidated Cigar had had a relationship with the Montecristo brand before General Cigar bought the Partagas Brand.]
So we negotiated a deal and we bought them. We started making the Partagas brand. They took off unbelievably. We priced it a little bit higher than Macanudo and made it with a Cameroon wrapper.
C.A.: From the product standpoint, the distinction was in the wrapper, a little bit higher pricing, the package, which was the same as it is now and the same distribution system. Did you market it? Did you spend money advertising it?
Cullman: Yes. The packaging is the same as in Cuba. We mar-keted it. We spent money advertising it with Ramon Cifuentes in the ads. It started to grow so fast that we had to decide whether we could expand in Jamaica or whether it was wise to have another place to make these cigars. At that point, we had our shade operation in Connecticut and our tobacco-sorting operation in the Dominican Republic. So we spoke to the officials in the Dominican Republic's free zone and they welcomed us.
We started making Partagas cigars in the Dominican Republic in the late 1970's.
C.A.: You have had the Partagas brand for approximately 20 years and it continues to grow?
Cullman: Yes. It continues to grow. Macanudo No. 1, Partagas No. 2 in the United States.
C.A.: How big is Partagas today?
Cullman: It is reasonably large--about half of what Macanudo is.
C.A.: Tell us about how you acquired the American rights to Cohiba, which today is widely regarded as the No. 1 brand produced in Cuba?
Cullman: We didn't buy it. We just registered the brand name in February 1981 and began marketing it in a limited way.
C.A.: You have been sitting on it. Why have you not promoted it, taken advantage of its universal appeal and great demand?
Cullman: We have been sitting on it; we can't do all the brands at one time. We make a few Cohibas now.
C.A.: I understand they are available, but you are not really out in the market in force. Can you speak about the plans you have for Cohiba?
Cullman: They are available at special places: Dunhill and a few other places. We have no big plans at the moment. We are looking over what we should do. We are very conscious of the fact that should Cuba open, we want to have a position with Cohiba. What that would be we are not sure today. We will probably do a little more with Cohiba next year. But we haven't formulated all our plans on Cohiba.
There is a proliferation of new brands in the United States, whichI think is a great thing for the premium cigar business. Cigar Aficionado has done a lot to promote those brands and give them an opportunity.
C.A.: What you're saying to me is that in 1995 there will probably be something coming forward on Cohiba?
Cullman: I think there will be.
C.A.: Macanudo is your No. 1 brand, Partagas is your No. 2 brand. When we speak to manufacturers today they speak to us in terms of back orders. Can you tell us how many cigars are back ordered at this moment for Macanudo and Partagas?
Cullman: I think it is about a million cigars on back order total.
C.A.: Coming back to Connecticut for a moment: there has been a tremendous cutback in wrapper-tobacco acreage to 1,000 or 1,100 acres, of which there are really two operators in this market: yourselves (Cullman Bros.) and the Windsor Shade Co-op. With the tremendous recent growth of premium cigars, many of which use Connecticut wrappers, is it likely that the amount of acreage for planting is going to increase?
Cullman: I think it will increase a small amount, but not a great amount. What might prompt it to increase more is if Connecticut shade achieves a stronger position in Europe. At the moment, the only cigars that are wrapped in a natural wrapper are premium cigars and a few of our cigars like Garcia y Vega.
C.A.: I hear that there is not enough "A"- quality Connecticut wrapper to meet the growing demand in the premium cigar market and that there is also a serious problem with Cameroon wrappers, which is the wrapper of Partagas. Is there a serious problem getting large-leaf Cameroon wrapper? And what is being done about it? And what are you going to do if you can't get the wrapper?
Cullman: Yes, there is a problem in Cameroon in Africa. That's been a problem for us for quite some time. We expect that we will get more tobacco because there has been a little bit better organization in Cameroon. And while there is no certainty, we believe that Cameroon in the coming years will provide enough wrappers for us. We only want the very best, and they want to be sure to sell it to us because we pay the highest price by far for our wrappers for Partagas; no one else pays the same price. Nowhere near!
C.A.: Do you buy these at auction or under long-term contracts?
Cullman: We used to buy at auction but now the auction process has stopped. Now we buy under negotiation. There are certain people who are growing tobacco there that are supplying the money to the Cameroons.
C.A.: Is there a shortage in all Cameroon wrappers of quality or is it particularly large-leaf Cameroon?
Cullman: Particularly large-leaf and the type of tobacco that we like.
C.A.: Is that the reason Partagas No. 10 is in short supply?
Cullman: Yes, and some of the other new Partagas Limited Reserves.
C.A.: Right now you don't see any solution to the problem?
Cullman: We haven't seen one yet. We are looking for it.
C.A.: If the production of Cameroon doesn't increase, would you then look at other sources, other countries for Partagas wrappers?
Cullman: Well, we always have to look at other sources, but like anything else, people like a certain taste and this wrapper has a certain special taste that people like. We are going to try to protect that. We are encouraging the people who are supplying the money to grow tobacco in the Cameroons to grow more for us. I think they will. Right now there is a problem.
C.A.: Let's talk about a subject that is somewhat controversial but something that every cigar lover asks about or thinks about and that's the whole issue of Cuban cigars and the Cuban trade embargo. I don't want to put words in your mouth. But on one hand, I have heard you say that under the right set of circumstances, the tobacco grower in Cuba makes the best cigars on earth. On the other hand, you are very adamant on the position that Americans should not buy or smoke Cuban cigars because it is against the law--and therefore it is un-American. Will you tell us why you feel that way, both from a cigar lover's point of view as well as from a moral point of view?
Cullman: I think that it is something that I have thought a lot about and you have heard me express my thinking about that quite often. I think that the taste of a Cuban cigar is a very rare taste, a beautiful taste, and people who like that taste will do anything to get a Cuban cigar. And they do almost anything to get a Cuban cigar, such as bring them in illegally and smoke them illegally. And don't forget that that's against the law. There is a new law that says you can't bring in any cigars from Cuba and people who do bring them in do so at their own peril.
Having said that, what do I think about Cuba? I think if we ever could find a way to deal with Cuba, it would be a great boon for the cigar business. But I'm not a politician. It would add a lot of excitement to the whole industry if we could get some of our domestically made cigars--the less-than-premium cigars--produced with some Cuban tobacco in them. People haven't smoked anything with Cuban tobacco and would like to try it. And if they try it, some of them may like it.
We used to blend our White Owls and our Robert Burns with all Cuban filler. So that was a domestic cigar with all Cuban filler. There could very well be a revival of the cigar business when people want to taste Cuban tobacco. Now how that's going to be worked out, when and if we recognize Cuba, I don't know. I think [the end of the embargo] is going to come, but I don't know when because I was told in '74 that it was around the corner and now I'm told it's around the corner. I hope during my lifetime I'll see us recognize Cuba.
I think to the American taste, for the most part, Cuban cigars are too strong. People are going to have a tough time smoking all Cuban tobacco.
C.A.: Do you have a best-case scenario for when the embargo ends?
Cullman: Yes, I do. The best-case scenario will be: the embargo ends and the American government says that until we can buy enough tobacco to satisfy the American demand by the U.S.-owned manufacturers to make whatever cigars they want with Cuban tobacco, it will hold up allowing Cuban cigars in. That was the understanding we had with the State Department way back in the 1970s when we thought we were going to have some rapprochement with Cuba.
C.A.: Does that mean that you, the manufacturer, will have the first option to buy Cuban tobacco in bulk to ship to your factories in the Dominican Republic and Jamaica to blend with whatever tobaccos you choose? Or make clear Havanas? And I assume you mean with Havana wrappers?
Cullman: Yes. And the various brands could have some Havana wrapper.
C.A.: In other words you might end up having separate versions of Partagas: a Dominican version and a Cuban version?
Cullman: We might very well.
C.A.: Forget for a moment that the legal issues have to somehow be resolved in terms of who has the right to the brand names. Obviously, depending on how the issues are dealt with, Cuba may feel that the brands are hers, and of course the American courts have said that the brands in the United States are not Cuba's. But also there is the world market that has had the Cuban products exported to it without the effects of an embargo.
Cullman: It is a very difficult problem. I don't know when or what the answer to that will be. They came out with Cohibas, a new brand, in order to have their own brand. We own Cohiba here. We would like to work something out with the Cuban government at that time, whether it is the Cuban government, private companies, or whatever, we don't know. But I certainly think no one can say that it wouldn't be a good thing for the cigar industry.
But I don't think there is any pressure on our government to recognize Cuba. There has been no president who has felt strongly that by recognizing Cuba he's got the citizenry of our country behind him. They don't care; Castro is not a favorite for them.
I think the people in Miami put a lot of pressure not to [end the embargo], but the rest of the country is ambivalent about it. They are not very excited about Castro; they don't think much about it. So there is no pressure.
C.A.: Moving to the social ills of the smoker in general. Over the past 10 years there has been a rapid increase in restrictions on cigar smoking and a rapid decline in locations available to a cigar smoker to enjoy his smoke. It is extremely frustrating to all of us. Many of us believe that we are being treated like second-class citizens and denied our individual rights because of the unsubstantiated issue of secondhand smoke based on the research we've seen. There are many restaurants that allow cigarette smoking but not cigar smoking. We are really the ultimate lepers in our society today. What is your view?
Cullman: I think it has gotten to a point that is completely out of hand. I don't think anybody should smoke if it offends somebody next to them. There are people who suffer from various asthmatic conditions...and people around them shouldn't smoke. But I think there should be much more freedom about smoking, all types of smoking because it is a free choice. And the question of this environmental smoke has gotten to a point where just recently I was watching CNN with the statistician of the United States government, who had to decide what the economic impact of higher taxes on cigarettes would be on total revenue of the government. And in that testimony, this woman said to the Senate that, first of all, we don't think that the environmental-smoke report was significant. She said that there was no evidence that environmental smoke had any deleterious effect on other nonsmokers. And she was asked: None at all? And she said, look, people who drive small cars are at greater risk than people driving large cars. But they are not banning small cars. She said there is no reason to ban cigarette smokers from smoking outdoors or anywhere else.
We have to find some way to bring sanity back to the issue because people enjoy cigars and they should be allowed to enjoy them. People have enjoyed them for many years and it has made their lives richer. They shouldn't be told where they can smoke cigars and where they can't smoke cigars.
C.A.: What should the cigar industry be doing?
Cullman: I think the word enjoyment has to be really played up tremendously. I enjoy looking at tobacco and knowing that I made a cigar as good as this (he holds a Macanudo). And just looking at it in your hand, rolling it, is a sensual pleasure, just to have it in your hand and make it move back and forth. Also, I have never been embarrassed about smoking cigars. I have always been proud of smoking cigars. I think you've underlined that feeling within me and within a lot of other cigar smokers as to how proud we should be about smoking cigars.
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