An Interview with Stanford Newman
Chairman, J.C. Newman Cigar Co., Tampa, Florida, the owners of Cuesta-Rey and Diamond Crown cigars.
Marvin R. Shanken
From the Print Edition:
Claudia Schiffer, Jul/Aug 97
(continued from page 6)
In a comprehensive interview with Marvin R. Shanken, editor and publisher of Cigar Aficionado, Newman reminisces about the cigar industry, and offers his impressions of the impact of today's cigar boom.
Cigar Aficionado: Tell us about the cigar industry in
America at the turn of the century.
Newman: My father started in business in 1895. He was a journeyman and cigarmaker. He learned to make cigars by hand. His mother paid $3 a month for three years for an apprenticeship, and he finally became a journeyman. He worked for a factory for six months and it went out of business.
CA: Where was this?
Newman: In Cleveland, Ohio. My father came from Austria-Hungary in 1888 with his family and he had five brothers. Each brother learned a trade. My father decided to become a cigarmaker, and he learned to make cigars by hand. After he lost his job, his mother got him an order for cigars from a grocer where she used to shop. Now, at that time, there were few brands; most cigars were generics. The grocer gave my father an order for 500 cigars and he started from there making his own cigars. He finally got an order for 5,000 cigars from a wholesale grocer who also distributed cigars. Suddenly, he had to make a lot more cigars, so he got two or three of his buddies together and they started in.
CA: At that time, how big or how important was the cigar
industry in the United States?
Newman: Remember that all cigars were made by hand, and there were over 40,000 cigars factories in 1895 across the country. In fact, those 40,000 had federal licences. It makes sense. It took very little capital to get into the cigar business. A person could go into manufacturing cigars with 10, 20, 30, 40, 50 dollars. In all the major cities in the United States, there were cigar dealers, wholesalers that sold tobacco by the pound.
CA: Let me go back a second. Why did the federal government
license cigar manufacturers? You didn't need a federal license to make
dresses or shoes, or to sell groceries. Why cigars?
Newman: The federal government wanted to collect taxes on cigars. At that time, you had to go to the post office and buy stamps to put them on cigars boxes, whether they were boxes of 10, 25 or 50. You put them on the boxes and you sold the boxes. But you couldn't sell the box of cigars at all unless it had a stamp on it.
CA: How big was the cigar industry in terms of the number
of cigars produced and sold at the turn of the century?
Newman: The cigar market was probably perhaps two or three billion. At the height of the 1920s, I think there were nine to 10 billion.
CA: How were the cigars sold? If there were that many
factories, were there even more cigar stores?
Newman: No, there weren't very many. There was usually one or two in each city that were exclusive cigar shops. Most of the cigars were sold through grocery stores. There were not any real cigar distributors at that time. All the wholesale grocers that supplied grocery stores handled tobacco products. There weren't any cigar jobbers probably until maybe in the '20s.
CA: Later on, in the '40s or '50s, there was a huge boom in
Newman: Yes. When I grew up in the '20s and the '30s, there were two chains. The biggest was United Cigar Stores. They had 800 stores. They went into every major city. And in every major city in the United States, they'd tried to get a downtown corner. There was another one called Schulte Cigar Stores.
CA: When was the retail trade at its peak?
Newman: Remember that the outlets were a lot different than today's cigar stores. They were on the corners in the best traffic patterns of the community. Most of them established themselves as cut-rate stores. They gave out coupons, especially the United Cigar Stores, which attracted a lot of people. Eventually, in the late '40s, the rents just got too high for most of them because it was hard to make money. The basis of their business was cut-rate cigarettes, pipe tobacco, chewing tobacco; and cigars were less and less dominant.
CA: Earlier, you said that all the cigars at the turn of
the century were handmade. When did the transition to machine-made
cigars take place?
Newman: Let me go back a little here, too. There was a man by the name of J.B. Duke who put all the cigarette companies together. He also purchased and bought every machine that was ever patented to make cigarettes. He formed the American Tobacco Co. In 1911, Teddy Roosevelt, who was a trust-buster, broke up the cigarette companies. That's when companies like United States Tobacco were started, and their business was the snuff or chewing tobacco business. The American Tobacco Co. had all the cigarette machinery, and they started making a cigar-rolling machine. My father bought some of the first machines that the company put out in about 1915. My father had one factory that he opened using machines exclusively to make cigars. You know, cigarettes weren't that popular at the time. It was during World War I that the cigarette companies gave out millions of packs of cigarettes to the Red Cross and they became apart of the rations pack. So, when [the soldiers] came back they smoked cigarettes, not cigars. At the time, my father had three factories, and he had to close two of them because none of the new smokers wanted to smoke cigars.
CA: When did cigars, machine-made cigars, really become the
dominant part of the cigar industry?
Newman: In the early '20s. When the General Cigar Company and the Consolidated Cigar Companies and others were formed in the '20s, they all put in machines. That drove a lot of the small cigar factories out of business because they couldn't make as many. The smaller factories didn't have the capital to buy machines and eventually they began merging into bigger companies or they went out of business.
CA: Was the quality of the tobacco used in the 1930s the
same whether it was handmade or machine-made?
CA: Then it was just a question that producing machine-made
would involve lower costs and that would drive the handmade guys out
Newman: There was one other factor. These large factories started to grow their own tobacco in Connecticut; Consolidated grew their own. Bayuk was a big factor. Bayuk made Phillies, which used be known as Philadelphia Handmades, and they changed the name when they went into machines, to Phillies. It was a cost factor, but on the tobacco end. The smaller companies couldn't buy the tobacco as cheaply as the big companies could produce it for.
CA: The tobacco then became the key. In 1900, all cigars
were handmade. They were not branded, so it was essentially a
commodity. Where did the tobacco come from?
Newman: In 1900, Connecticut shade had just started in quantity. But most of the wrappers were from Sumatra or Java.
CA: What about the binder and the filler?
Newman: Some binder and filler had started to be grown in Connecticut at the turn of the century. And much of the filler came from Havana, Puerto Rico and Pennsylvania, to a great extent. Most of these cigars had a blend of Pennsylvanian and Cuban tobacco.
CA: How did the tobacco change in the 1930s when
machine-rolled cigars became dominant?
Newman: In the '30s, the wrappers were coming from Connecticut and also from Sumatra and Java.
CA: What about binders and fillers?
Newman: The binders were mostly coming from Connecticut.
CA: The Dominican Republic and Honduras and Nicaragua
didn't play any role?
Newman: They didn't exist.
CA: What role did Cuba play?
Newman: Cuba was supplying tobacco to most of the manufacturers, in Tampa. After we moved to Tampa, up until the embargo, we used 100 percent Cuban tobacco.
CA: You were buying tobacco in bulk from Cuba in the 1950s?
Newman: Oh yes. We made 100 percent Cuban cigars.
CA: When did the Tampa manufacturers begin using Cuban
Newman: It started before the turn of the century. The cigar business got started in Key West, Florida, and most of those people were from Cuba and Spain. They bought all their tobacco from Cuba.
CA: Between the turn of the century and the 1960s, the
cigars that were made in Tampa were essentially all from Cuban
Newman: That's right.
CA: Although you said cigars weren't branded, in fact there
were thousands of what we would today call private labels, where
practically every corner store had its own brand. When did branding as
we know it today begin with cigars, and at what point was the first
national major brand created?
Newman: You're right. The brands started to be made at the turn of the century, but we called them generic brands. They were essentially a lot of little brands that were created for different retailers who wanted their own labels. Some small buckeyes [small operators] also created their own brands. Let me backtrack for a second. I asked my father once how he really got started in the business. He said if someone went out of business in the early 1900s, he would buy the labels. If he bought the labels, he would be assured he would get a little business either from the retailers or companies who used those brands. When the cigar companies began to merge, some of the bigger ones, such as General Cigar and Consolidated, started to make brands with a wider distribution. They were able to advertise and have more of a national presence. However, even some well-known brands were still pretty much local. People didn't travel a lot until after World War II and there were certain brands that would be predominant in Akron or Buffalo, or some specific city.
CA: What was the first national cigar brand?
Newman: The first one I can remember is White Owl and there were not many others until the 1930s and '40s.
CA: Was cigar smoking a popular pastime?
Newman: At the end of World War I was one peak when there were about eight billion cigars sold, but it declined after that until 1964. After the surgeon general's report on cigarettes in 1964, it rose again for a while, but it was in steady decline from then until 1992, when less then two billion cigars were sold.
CA: A typical cigar smoker smoked how many cigars a day in
the '30s, '40s and '50s?
Newman: Well, in the '30s most cigars were sold for a nickel or two for a nickel. Most smokers had four or five cigars a day. They were very price-conscious. When we raised a brand from five cents to six cents in the early 1940s, we lost half the business. But five a day was about average.
CA: What was the average size of a cigar?
Newman: The average size of a cigar was a perfecto shape that was about 5 1/4 [inches] by maybe 40 ring gauge. They were all perfectos. The pressed bunch didn't come along until later on.
CA: After the embargo began, how did the cigar industry in
Newman: Up until the embargo, most of the premium cigars that were made in the United States were made in Tampa. At that time, they were made of all-Cuban tobacco. We had an association in Tampa which owned a little boat that went back and forth between Tampa and Havana, called The Privateer. It brought tobacco to Tampa twice a week. The boat was usually full. Most of the factories in Tampa stored all their tobacco in Cuba, and they would send down orders and they would load the ship with what they needed for the next week.
CA: Where was this tobacco storage? In Havana, or in the
Pinar del Río?
Newman: Most of tobacco was kept in warehouses in Havana after the leaves were packed. Most of the factories in Tampa had their own processing warehouses. Some of them would buy directly from the farmers and they would process and pack their own tobacco.
CA: OK, so up until around 1960, was there such a thing as
a premium market segment like there is today? Were there expensive
cigars? Were there cigars made from a much higher quality tobacco that
would differentiate them in terms of quality and/or price?
Newman: The cigars that were made in large volume were 26 cent cigars, which had been 25 cents up until about 1954 or 1955. The 26 cents stayed through the embargo. You couldn't get 27 cents because people wouldn't pay 27 cents for a cigar.
CA: Was there a premium industry?
Newman: Some of the factoriesæCuesta-Rey, Gold Labelæmade some higher-priced premium cigars for 35 cents. There were very few cigars that were made in Tampa that were over 35 cents because there was no market.
CA: Is Tampa the one area of the country that made the
Newman: That was the only area that made Clear Havana cigars, except for one factory in New Jersey that was run by the American Tobacco Company in Newark that did Clear Havana, too.
CA: So, in the 1950s and in the early '60s, what brands
would you say were the premium cigars of that period?
Newman: As I said, Gold Label had some sizes and Bering did, too. They were a little bit more than the 26 cents, but I would say 90 percent of the cigars sold were sold for 26 cents or below. There were a lot of cigars that sold for 10 cents. They were made of the by-products from the factories. They were made of the short filler and they were made by machine. But in Tampa, they didn't make any machine cigars until about 1950 or 1952. It was all handmade.
CA: The embargo arrives, and 100 percent of the cigars in
Tampa are made with Cuban tobacco. What happened to the cigar industry
Newman: In the beginning, we thought that the embargo would only last for about six months. We didn't believe that the U.S. government would keep an embargo. But when we started to run out of Cuban tobacco after two or three years, many of the factories wanted to sell their businesses because they couldn't get any more Cuban tobacco. Gold Label was sold to General, Bering was eventually sold to Swisher, and Perfecto Garcia was sold to United States Tobacco.
CA: Does that mean those factories stopped making cigars
for a while, or did they get tobacco from other places?
Newman: They tried to get tobacco from other places. We got tobacco, mostly wrappers, from Cameroon in 1962. But the price went up from $7 to $14 [a pound]. Nobody in Tampa or in the United States wanted to pay that much, because in Cuba they only paid $6 or $7 [a pound] for tobacco.
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Clifford Brown — independence, ky, usa, — May 14, 2013 3:47pm ET
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