Owner, MATASA, makers of Fonseca, Licenciados, Romeo y Julieta, Jose Benito, Cubita, Royal Dominicana, Credo and Casa Blanca cigars.
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CA: And when was that?
Quesada: 1978. That's where the box factory also opened. The first boxes ever made in Dominican Republic by MATASA were Romeo y Julieta.
CA: And then which was next?
Quesada: J.R. [J.R. owner Rothman] was introduced to me by the Mendez family, the leaf dealers in Dominican Republic, and we have been making cigars for J.R. since 1982. And Oscar [Boruchin of Mike's Cigars] came on board in 1984 or 1985 and we started making cigars for Oscar.
CA: Let's talk for a minute about your new joint ventures. Could you explain what they are and how they work?
Quesada: OK, the two facilities--Tabacalera Nacionale Dominicana and Cotabex--are a joint venture with J.R. Cigar and Mike's Cigars in Miami. It's a three-way company where the output of the factories will be shared equally by the three partners: MATASA, Mike's and J.R., and all the investment will be shared three ways as well.
CA: So you each get one-third of the output.
Quesada: Exactly, to be distributed accordingly. The project there is to have one brand shared by all and then have brands that each individual company will distribute as a side.
CA: When you say one brand, is that a new brand?
Quesada: A new brand, yes, sir.
CA: When is this new brand coming out?
Quesada: It probably will not be until one year from now.
CA: Is it anything you can tell me or is it premature?
Quesada: It's premature.
CA: What kind of output will that facility have?
Quesada: I'm planning when it's finally ready to make cigars in full bloom, about 15 million per year.
CA: So, 5 million will be the new brand?
Quesada: Probably more, because the gentlemen that are involved here are capable of distributing in big quantities. They have power to distribute product in the United States.
CA: Will Licenciados or Casa Blanca be produced there as well?
Quesada: No, sir. Licenciados and Casa Blanca will continue to be a MATASA operation.
CA: So the new factory will produce 15 million cigars, all new brands?
Quesada: Yes, sir.
CA: Wow. What about the other factory?
Quesada: The Cotabex factory involves Swisher International out of Jacksonville, Florida, and CITA, a Canary Islands concern which manufactures cigarettes and cigars. The idea of that factory is to have Dominican Republic as a supplying point to both sides of the Atlantic. We will sell cigars in the United States and we will also sell cigars in Europe and beyond.
CA: And that has a similar capacity?
Quesada: No, sir, that's going to be a bigger factory, because it will do about 15 million handmade cigars and it will do 15 million hand-rolled cigars.
CA: Handmade versus hand-rolled. That went straight over my head. Are we going machine-rolled?
Quesada: We're talking machine-bunched, hand-rolled.
CA: What brands will that factory produce?
Quesada: Those will also be new brands, and some old brands from the Canary Islands that have been in existence in Europe for a number of years but not sold in the United States.
CA: Regarding tobacco quality, you're in the market buying the best tobacco you can. What are you looking for?
Quesada: We're looking for the traditional countries that we have always purchased from, and those have been Brazil, Dominican Republic, Nicaragua, Honduras and sometimes Mexico, for our fillers. For binders, we're looking for Central America again: Nicaragua, Honduras, Mexico and Dominican Republic. For wrappers we're looking for United States, both the Connecticut shade and the broadleaf. We also buy some Ecuador wrappers with Connecticut style as well as the Sumatra style. We discontinued Cameroon wrapper a number of years ago because the supply became too scarce and nearly all the quantities of leaf were contracted by two companies. There was nothing else available. We have been using some TBN [wrapper] out of Indonesia for the two brands that we were making with Cameroon. We're looking basically for those countries in those categories of ingredients.
Dominican Republic, of course, is our home base, so we have much better control of both the filler and the binders, because we have our farms and warehouses and we have a factory. In the other countries, we have long-standing relationships with people who have been selling and farming tobacco forever and selling us tobacco. Of course, we now compete with other people who are in the market for the same tobaccos. The long-standing relationships have been honored by our suppliers, however. It's just that the quantities we have required have increased significantly from our commitments five years ago and our suppliers have not been able to supply our new requirements.
CA: What's the current status of pricing in tobacco?
Quesada: All countries are higher than they ever have been and they will continue to be higher, unfortunately for the next year at least.