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The Two Billion Cigar Baron

Altadis U.S.A. Chief Theo Folz celebrates a unique perspective developed over four decades in the cigar business.
David Savona
From the Print Edition:
Tyson vs. King, Jan/Feb 04

(continued from page 1)

Folz says that he didn't work hard in his first years in the business -- an 18-month stint in the French Quarter of New Orleans left him in debt, and he jokes that on his departure "all the barmaids flew the flag at half-mast." That was to be the exception to his career. "I eventually made up for all those years of not working," he says. "I've worked pretty hard the last 30 years."

He learned from his father well enough that in 1976 he was promoted to assistant vice president of field sales and given an office at the company's new headquarters in Fort Lauderdale. It was the former executive washroom. Worse than his work space was the job assigned him on day one in Florida. "Tony Regensburg [executive vice president of Bayuk] comes into my office and closes the door and says, 'Welcome, you're Bayuk's new hatchet man,'" says Folz. He was given a list of 50 people to fire, but he was reluctant to make the moves without doing his own research. "I didn't want to accept somebody else's judgment on who to let go and who to keep, so the next six months I went out and worked with almost every salesperson, every district manager, so I could make my own judgments." Eventually, Folz cut the sales force from 100 down to 33.

"We hadn't been making any money," says Folz. "In my opinion, there's no reason to be in business if you don't make money. And I take pride in the fact that I honestly believe since 1979, since I've been in charge of the P&L of cigar companies, we've always made money, and I don't think any other large cigar company has ever made a better return on assets, or larger percentage on sales for profit, than we have."

Beginning in 1981, Bayuk's aging owners started selling their brands piecemeal. In March of 1982, General Cigar Co. purchased the company's Garcia y Vega brand and related assets. In June of that year, Folz went off on his own and joined with Havatampa Inc. to buy the Phillies brand and related assets in a $5 million leveraged buyout. At that point Bayuk exited the cigar business.

Folz reserves a warm space in his heart for Bayuk, and specifically for its president and CEO, Archie Mishkin. "My main mentor after my father. This guy was the second most important guy in my life," says Folz, "and one of the smartest guys I've known. He's the one who gave me the opportunity to progress into management.

"I always used to say that Bayuk was the Chrysler of the cigar business. Chrysler brought many, many technologies to cars, but they could never make a profit out of them. Bayuk Cigars brought a lot of things to the industry like advertising on television, five-packs, racks, lots of creativity, but never really made lots of money." The Phillies deal would be the first of many acquisitions that Folz engineered. But he would soon be working for a man who would radically change his lifestyle.



Before leaving Bayuk in 1982, Folz took a call from Ronald Perelman, who owned the world's largest licorice extraction company, MAFCO Holdings Inc., and was a keen cigar smoker. At the time, Folz didn't recognize the name, but today Perelman is a staple of both the business and gossip pages, known as the billionaire investor who acquired beauty giant Revlon and married celebrity Ellen Barkin.

Perelman told Folz that he was buying Consolidated Cigar Co. from Gulf + Western. Consolidated was the maker of Dutch Masters, and it dwarfed Bayuk. Perelman had heard about Folz by talking to people in the cigar business, and he wanted to meet Folz in New York. While walking to lunch in Manhattan, Perelman offered Folz the job as head of Consolidated.

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