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Family Matters—The Perez Tobacco Growers

For the Perez family of Miami's A.S.P. Enterprises Inc., tobacco growing is more than just a career—it's in the genes.
Michael Kaplan
From the Print Edition:
John F. Kennedy, Nov/Dec 98

(continued from page 2)

In 1971, Silvio's former boss, Jaime Toraño, who had also fled Cuba and was now a tobacco man in Miami, made Silvio an offer that he could not refuse: become a 50-50 partner on a candela wrapper farm in Nicaragua, north of Managua and in the heart of the country's tobacco-growing region. Silvio recruited Alfredo into the project, and soon their families headed to Central America.

The opportunity was alluring, but not without hurdles. Growers there had developed bad habits and were producing crops that did not meet standards to which the Perezes had become accustomed. There was no soil analysis, recalls Alfredo. People did not have the love for tobacco, because they were not traditional tobacco people. It was something they thought they could make money with, but their hearts were not in it. Slowly we began to change things.

Planning for the future, the family devoted each Sunday to cross-breeding tobacco and experimenting with new seeds. Though the work is a tedious, labor-intensive process that requires pollinating by hand, it has the potential to pay off with interest over time. For tobacco growers, the proper seeds are among the few competitive advantages, and, for the Perezes, it was a worthwhile investment. Eighty-seven percent of the 1978 crop was wrapper, totaling 300,000 pounds of prime tobacco, says Alfredo, explaining that routinely only 70 percent of a crop is suitable for wrapper.

A year later, following a political coup, the wrapper yield dropped to 5 percent of the crop. [Sandinistas] took over the farms--they wanted to grow the tobacco themselves--and we made an agreement with the government where we would sell the tobacco, explains Alfredo, hinting that the poor yield was the result of the takeover. We moved to Miami and began going back and forth, between there and Nicaragua.

Because the production was so meager, the Perezes sought other sources of income. In 1982 they turned to Mexico, where the farms were in the hands of a government-owned agency called Tabamex. Following a tip from a customer, Alfredo recalls, We approached them about buying their tobacco and selling it to our clients. The deal worked because we could put together whole packages for them, consolidating everything, making one package out of it, and providing the tobacco that each customer needs.

When Mexican farming was privatized in 1990, the Perezes were uniquely suited to offer support to the farmers whose product they were already selling. Unfortunately, the family lacked the requisite capital. So they entered into a deal with Deli Universal Corp., a Rotterdam-based subsidiary of Universal, in 1990. The Nether-lands tobacco company wanted a presence in Mexico, which the Perezes already had. The Perezes sold 50 percent of their company to Deli Universal in exchange for an infusion of cash. (Several years ago, Deli Universal sold its interest in A.S.P. to its parent company.) The idea was to combine A.S.P.'s agronomic know-how and Central America connections with Deli Universal's capital and management-planning expertise. Never mind that the merging of a family business with a giant corporation sounded like a recipe for disaster; Alfredo insists, It was very clear that they would give us the support, which gives us some benefit from the profits of the company, and we would be the management. That's the way it has been and we have had no discrepancies. It is collaborative. They have companies that we deal with; we buy and sell from them. But we operate independently.

The infusion from Deli Universal not only allowed A.S.P. to provide backing for farmers in Mexico, but it also paved the way for the Perezes to own their first operational farm outright since La Pequeña Cabaña was sold to Toraño in 1948. According to a fairly awed competitor, the Connecticut-type wrapper farm that the Perezes bought in Ecuador in 1991 is now on a par, in terms of quality and beauty, with anything located in the United States.It is regarded as the family's baby, and they treat the farm as a showplace, where trees are planted rather than knocked down, where seed technology is state of the art, where high-quality wrapper is produced by people who are proud to be working in such a place.

Ironically, the purchase was one that Silvio was initially skeptical to make. I was afraid to buy it because of what happened in Cuba and Nicaragua, he says, recalling military regimes seizing privately held property in both countries. I figured that you buy land and the same thing can happen again. Now, though, I am very happy to have bought it.

Ask 27-year-old David Perez when he first got an inkling that he wanted to be involved in the tobacco business, and he replies, When I was born. Like his father and grandfather, David learned the tobacco business from the ground up, harvesting a crop of tobacco with the Cullmans training with a tobacco broker in Europe, and working in a factory where tobacco is blended. All of this has come in handy for a tobacco salesman who likes to have one foot on the farm and the other in the boardroom.

At a family lunch in an Italian restaurant near A.S.P.'s Miami headquarters, David sits next to his father. He sips a beer and reveals that one of the secrets to the company's success is that its chief salesman has spent time in the fields. You cannot divide the growing from the [selling], he says. With our seed development we do what our customers want. A customer tells us that he would like us to try growing, say, a Sumatra seed in Ecuador, where we already grow Connecticut wrapper; we do that. The majority of that product goes to them, and we sell smaller amounts to our other customers as well. In most of the cigar business, growers make products that can be sold in the market, rather than customizing to meet the customers' needs.

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