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Edgar Cullman Jr.

CEO, General Cigar Company
Marvin R. Shanken
From the Print Edition:
Demi Moore, Autumn 96

(continued from page 15)

Cullman: He wasn't in the cigar business. Sometimes you're lucky and sometimes you're not, but in this case I think we've been lucky. We recruited a new president of General Cigar a couple of years ago when David Burgh said he wanted to retire. We created a transition team, in essence, that allowed a transition to take place. The plan was for Austin to spend almost a year being head of marketing and sales and ultimately to step in for David the following year, which basically occurred. Austin came from a very interesting background, including his upbringing. He worked with his father in a McDonald's franchise and really understood what it was like to serve a customer.

CA: They understood the Big Mac.

Cullman: That's right; little did he know he was going to be in another Mac.

CA: Yes. [laughter]

Cullman: He worked for an ad agency, a Saatchi & Saatchi subsidiary, and then he worked for Proctor & Gamble and then he worked for Chiquita. But not in the banana business. In their food business. And in all cases, he's learned the consumer business: he's learned sales, distribution and intermediaries; he learned, of course, the marketing end. All of which combines in somebody who's got a tremendous personal drive. He's got a very strong personality with very, very good training. He's very methodical in the way he approaches these problems. He's very consumer-oriented. He likes to go out and test his ideas and his thoughts. So he has brought in, with our blessing, of course, a whole new management team. And the transition will continue as time goes on. That is the real direction for General Cigar, to be a first-rate marketing company. We will use cigars as our base, but cigars aren't the only thing, even though it will remain the principal thing.

CA: It's a new season for Culbro and there's much talk of shedding some of the past businesses, which are being sold or divested in different ways. There is the launch of Club Macanudo [in New York City] and the apparent interest in the luxury consumer business. What I would like to do is find out about this new corporate strategy and then learn more about how Club Macanudo fits in and what is the plan for Club Macanudo.

Cullman: As my father started talking to me about making the transition from himself to me, it became apparent that I had to develop a strategy for Culbro that was mine, not just his. It started back in 1993, and began with my interest in trying to take advantage of what was going on in the cigar business. Cigar Aficionado put another light on the concept of cigars as a key to a lifestyle and the notion that cigar smokers shared many other common interests. It was an intriguing idea for me, because it meant that there was a way for us to develop parts and services that would appeal not just to cigar smokers but maybe to other people who are similar to cigar smokers.

What we first did was develop Club Macanudo as a concept. By 1995 we started looking for a place and we actually opened in May '96. But the underlying concept here started with looking at General Cigar. We started to draw concentric circles and, as we got further and further away from the cigar business, we said to Austin that there was a line "where you can't cross. You have to stay within this line for the cigar business. That's your responsibility." As we looked at other opportunities, such as Club Macanudo, we said, "That can't be your responsibility, that has to be something we want to develop separately, because it would be distracting to the cigar company." General Cigar could not both keep up with the demand of the cigar business and also develop a whole new line of business. So the first step out for Culbro was really Club Macanudo.

We also made a decision at the beginning of this year to sell our packaging business. We have an agreement in principle with a potential buyer. The course is set for us to shed the businesses that do not fit this strategic view, which is quite simple: we want to concentrate on the cigar business and concentrate on the affluent market both for products and services that play off of the cigar industry. Not every product that we would be looking at and company that we would be looking at would necessarily mean that every one of our consumers would be a cigar smoker or vice versa, that every cigar smoker would be a consumer of the product. But this is how we want to develop this approach. We're seeing a tremendous resurgence of branded luxury products, which are the cornerstone of the consumer products business. For a period of time, brands were "out" because there was an awful lot of discounting going on, an awful lot of generic products being sold, etc. All that is well and good, but I think if you keep after the branded business, and you offer quality, you'll be ahead of the game.

CA: Can you be specific in terms of what you plan to do in addressing or penetrating the affluent market?

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