An Interview with Carlos Fuente Sr.
A discussion with the head of Arturo Fuente Inc., one of the world's largest producers of premium hand-rolled cigars.
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C.A.: In 1995, forgetting about shipments for the moment, just in terms of production, how many Opus X cigars do you expect to produce?
Fuente: I don't have that figure. We're just going to start making them. We're not going to rush it, and I think production is going to be limited to begin with.
C.A.: Are we talking about 20,000, 50,000, half a million?
Fuente: I don't think we'll hit half a million. Maybe next year we might get to the half a million mark. I don't think this year we will probably make more than 100,000, maybe 150,000.
C.A.: How many will you be releasing this summer into the marketplace?
Fuente: I think that's very hard to say. We haven't sat down and figured it out yet.
C.A.: But do you know how many cigars you are going to release?
Fuente: Oh, yeah. We'll probably release about 50,000 cigars.
C.A.: The dramatic change in the market for premium cigars apparently has placed pressure on the most successful producers, and in fact, many of them can't supply demand. How large are your back orders?
Fuente: We are concerned because we want to be able to provide the market with what we really want to provide. But our main goal is not to release cigars until we feel that it's right. I'd have to sit down and figure back orders. What we are doing is making cigars and shipping cigars. We are running five, six months behind, and we still have orders that we haven't filled. I think if you sit down and do the back orders, it runs over 4 or 5 million.
C.A.: You have over 4 or 5 million back orders?
Fuente: If you figured it. I haven't done that because nobody gets what they order. We're shipping a third of what the retailers order and, in many cases, not even that. We had a customer yesterday who was telling me that for three months they haven't received some sizes of cigars. And it's not that we're not making them.
C.A.: In 1994, what was your total production of cigars?
Fuente: What we manufactured or what we shipped?
C.A.: What you manufactured.
Fuente: We manufactured close to 26 million. We shipped a little over 24 million cigars.
C.A.: And in 1995, what will your production capacity reach with your new capacity?
Fuente: We plan to go to 28 to 30 million.* That will depend on the new factory. We just started the new factory in January and our production is starting to kick in.
C.A.: Don't you have the largest manufacturing company of handmade cigars not just in the Dominican Republic, but in the world? In your total operation, you also manufacture cigars for other brand owners. In particular, you produce Cuesta Rey for the Newmans. In recent years, you've also combined your sales operations with them.
Fuente: Yes, sales.
C.A.: Is that strictly in the United States or all over the world?
Fuente: In the United States.
C.A.: Given your relative size, what prompted you to merge your sales operation in the States with the Newmans?
Fuente: We thought carefully about it. Our brands had been growing constantly. But in the early '80s, we were struggling a little. I had a call one day on the phone from a sales manager who had been a big part of our company. When I first met him I knew he was the person that was going to help us to grow, because he was well liked in the trade and was very knowledgeable. So even though our company was growing he said a lot still had to be done to increase sales. We used to do all the sales from Tampa with Fred Zaniboni and Linda Portugese and other people, including my brother in Tampa.
Then, around 1986, I went to see the Newmans. My son and I were living in the Dominican Republic at that time, and our sales force back here kept telling us that we needed to do more. It just happened that we were still manufacturing cigars in Tampa, too, some other machine-made brands. So I asked the Newmans if they would make our Tampa-based brands, and they said yes, but they asked us to make some handmade cigars in the Dominican Republic for them. That's how it got started. From 1986 to 1990, we saw that there were also possibilities to use their sales force.
C.A.: So from 1986 to 1990 you were producing Cuesta Rey?
Fuente: Not Cuesta Rey at first, but we made other brands for them, like La Unica. We started with that brand and when we were very successful with it, they started bringing in Cuesta Rey. Then, when we saw the sales force that they had, and that they are wonderful people to work with, and that they are hardworking people, and that they are a family company, like we are, I saw the possibility of working more closely together.
I also thought it was time for the Newmans to come out with handmade cigars. It all has just turned out to be the best thing that we've done, to go with them and the sales force and to use their sales ability. They put us in a lot of places we weren't in before. The more spread out you are with a brand, the more possibility that good things will happen. It's turned out to be a very good thing for the Newmans and for us.
C.A.: You're saying that it's a very successful relationship and both sides are pleased.
Fuente: We are together in the sales aspects. We're still with Linda and Fred. They are watching the Fuente brand. And the relationship has been marvelous.
C.A.: From my personal experience, it's two great families. You couldn't have picked better and they couldn't have picked better.
Fuente: Thank you.
C.A.: It's one of those marriages that work.
Fuente: I feel the same thing.
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