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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 5)

"Our company, I believe, is the only company, certainly in the U.S., possibly in the world, that is a major player in every sub-category of the cigar business. I'm talking about every price point and every type of cigar," says Folz. "We are highly confident we're the most profitable cigar company in the world." "In the last 19 years, the management team that leads Consolidated has seen the sales increase by more than six times, and the earnings increase more than 13 times," says Folz.

The picture looks even brighter going forward because of the links to parent company Altadis S.A., the world's largest cigar company, which claims nearly 25 percent of the world market for cigars, some 3.2 billion units. Altadis S.A. also makes cigarettes, including the Gauloises brand, and has a large distribution business not limited to tobacco products. Tabacalera and SEITA, the companies that merged to become Altadis S.A., have long had close ties to Cuba, but that relationship has grown even closer since Altadis S.A. acquired a 50 percent interest in Habanos S.A. in 2000. Habanos is the company that distributes all of Cuba's cigars worldwide. In October, 2003, Altadis S.A. acquired a controlling interest in the largest cigar retailer in the United States, 800-JR-Cigar Inc.

"We at Altadis S.A. have made a huge investment in the U.S., and we have our investment in the hands of a great CEO with great skills and an outstanding capacity at managing people," says Folz's boss, Altadis S.A. chief operating officer Antonio Vázquez. "I, personally, have been dealing with Theo for a long time now, and I cannot feel better."

Folz, at center, gives much credit to his team at Altadis U.S.A. including (left to right) Denis McQuillen, Jim Colucci, Gary Ellis, and George Gershel.
Premium cigars have much to do with Altadis U.S.A.'s positive performance. "The premium cigar business, in my lifetime, has become very, very important. It's certainly important at our company," says Folz. "The largest number of employees working for the company work in the premium area." Altadis U.S.A. now offers premium cigars to suit a variety of taste preferences, including those of the most seasoned aficionados.

"At our company we were making nothing but middle-of-the-road tastes," says Folz. "Since 1998, we have looked hard at enhancing the flavor of some of our cigars, or coming out with line extensions under certain brands that are full of flavor." The Montecristo brand is but one example. Once available only in a mild form, the cigar now has several stronger line extensions, such as the Serie VII, which has Peruvian and Nicaraguan tobacco in the blend.

Folz has profited from the lessons of the boom. "Today, we have back orders and they're more manageable," he says. Montecristos are on back order, as are some Romeo y Julietas, and sometimes the Onyx Reserve brand. "We're doing everything we can to fill the back orders, but without sacrificing one tenth of one percent of quality and consistency. Because I learned my lesson. I'd rather be short on Montecristo in the yellow box than have all we need if I can't deliver them at the same quality that we want 'em to be."

Folz's performance has won him the respect of his peers.

"Ours is a relatively small industry and we all get to know each other pretty well. Theo is a people person who genuinely cares for his fellow man. I respect him as a friend, a competitor, and a leader of our industry," says Timothy Mann, president of competitor Swisher International Group Inc.

"Theo's a great guy," says Clinton Price Sr., president and CEO of John Middleton Inc., the third-largest maker of mass-market cigars in the U.S. "He's very honest, extremely bright, he's a great guy for the industry -- and a tough competitor. He's known for being in the business so many years, and he has the brains and the smarts to use that history to the benefit of the industry." Folz served as chairman of the Cigar Association of America for 14 years, from 1986 to 2000.

The last four decades have brought Folz a long way from driving to A&Ps and sitting in a windowless office. He now has the corner office at company headquarters in Fort Lauderdale, a room decorated with memorabilia from those 40 years, including old cigar boxes, photos of trophies -- both from the business world and his fishing boat -- and a black-and-white photo of his father, smiling proudly in front of a full display of 5-cent Phillies. Following in the big footsteps of his dad, Folz has filled them just fine.

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