Pedro Martín, the founder and owner of Tropical Tobacco.
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CA: How many cigars do you expect to sell through the international division in 1999?
Martín: According to the people involved, they claim they can sell 3 million cigars.
CA: Which brands are you going to sell outside the United States?
Martín: We are going to sell V Centennial, Don Juan, Cacique and maybe Maya.
CA: And which are the primary markets that you are going into?
CA: Any particular country?
Martín: Germany and Austria. And then maybe Spain, too. And then in the Pacific we want to get into Japan and get into China. We have connections. Not us--the people who work under us.
CA: Let's go back to your roots. You were first and foremost a tobacco man. Tell me, in your own analysis today, where the best tobacco is being grown. How do you see it changing, now that a lot of land that went into production over the past five years will be coming out of production? Where should people be focusing on tobacco?
Martín: Well, there are some countries that are growing good tobacco. First of all, the Dominican Republic is growing good
tobacco, no question about it. They have some areas over there that are good. But the problem there is the farmers. They are not used to working with tobacco like the Cuban farmer.
CA: Do you think the Dominican farmers are improving?
Martín: They are improving, but little by little. And the first thing they have to do is to make different kinds of sheds to cure the tobacco. With these open sheds like they have over there, the tobacco gets wet. But they got good tobacco. Nicaragua has good tobacco, too. And there's some good tobacco in Honduras in the Jamastran valley. We went to Costa Rica a little while ago, and we saw some excellent tobacco there, too. But as I said in Nicaragua, they have a lot of sections where the tobacco is the same as Cuba.
CA: Do you think they will be able in Nicaragua to get back to the level that they were in 1978, before the revolution?
Martín: I hope so. But I tell you very frankly, for blending, I like the Estelí tobacco better than the Jalapa. You blend that with Dominican and it is a perfect blend. I don't like the tobacco in Jalapa to blend with the Dominicans.
CA: Do you still own tobacco fields?
Martín: No, not anymore.
CA: Do you have any plans to start growing your own tobacco?
Martín: No. We get a good farmer and we try to figure out the tobacco, and if the cigar is good, we make a contract with the farmer and deliver it. We check what they are doing with the tobacco. We also buy from wholesalers.
CA: Have prices come down for tobacco?
Martín: Some prices have come down, but the problem is that manufacturers and wholesalers bought a lot of tobacco in the beginning. They paid high prices for it, but it was not the best tobacco. There's still a lot of tobacco out there, but a lot of bad tobacco. It was tobacco grown by people who didn't know what they were doing. We quit buying tobacco for a while in the Dominican Republic.
CA: Let's talk a little more about the future of Tropical Tobacco. Are you going to launch any new brands? What's the plan?
Martín: We're going to concentrate on the brands we have. We've got enough brands. We have about two or three brands that we've registered and that aren't in the market right now, like Casanova. With brands today, and cigars becoming like any other item, you have to do a lot of advertising, otherwise you don't sell. So the more brands you have, the more money you have to spend on it. So we have to concentrate on two or three brands, otherwise we will get lost.
CA: Do you see Don Juan remaining your largest seller, and V Centennial the second?
Martín: I would say so.
CA: Do you think that that brand mix will remain the same over-seas also?
Martín: Yes. We will concentrate on these two or three brands. I think 1999 is going to tell a lot about our company. It may be that one of the other brands or one of the less strong cigars may do better in some country than we'd expect. So you never know. We have a lot of brands registered.
CA: Casanova is a great name, too.
Martín: And eventually we should start it. There is a lot of capacity in this new factory, but if the boom had lasted a little longer, we may have done something in Honduras or Nicaragua because of its much cheaper labor. The Dominican Republic is getting expensive. But eventually, if we do well in the rest of the world, especially in Asia, then we will have to use it to keep up with that demand. Cigar smoking is improving in the rest of the world. People are smoking more cigars, no question about it. Premium cigars, not cheap cigars.
I think a lot of people are beginning to notice that the differences between Cuban cigars and cigars [made in the Dominican Republic, Nicaragua and Honduras] really are not that huge, and the prices are just unbelievable. We went to Geneva to conventions and I saw the Cuban people were there. They had some people making cigars there. It was a beautiful show. But then, we had a dinner, and everybody went. I had about 30 cigars in my pockets and gave them away to people around me. Then the Cubans gave cigars to everybody, including Partagas and Romeo y Julieta. They were lousy. They were very crappy. I am Cuban and I didn't know what to say, because I don't like to talk against my country, my motherland. So, people started smoking the Cuban cigars, and then later on, some of the people I gave cigars to came around to me and pulled out my cigar, saying it was better than the Cuban. Imagine that. I don't think my cigar is going to be better than a good Cuban cigar. A good Cuban cigar is still better than my cigar, no question about it. Not just my cigar, but any cigar; a good Cuban cigar is better. But these were lousy Cuban cigars.
CA: Do you think U.S.-focused manufacturers have an opportunity to build a market for their cigars in markets that traditionally have been dominated by the Cubans?
Martín: I would say so.