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Pedro Perez—Former President, Tabacalera

A talk with the man behind Tabacalera, Spain's $7 billion tobacco company.
Marvin R. Shanken
From the Print Edition:
Tom Selleck, Winter 95/96

With annual sales of nearly $7 billion (mainly cigarettes), Spain's tobacco company, Tabacalera, is one of the largest companies in the international premium cigar market.

Involved with the Cuban tobacco trade for almost four centuries, Tabacalera is the largest buyer and distributor of Cuban cigars in the world, purchasing nearly 50 percent of Cuba's annual export of handmade cigars. The firm is also the largest purchaser of Cuban bulk tobacco, which goes into machine-made cigars and cigarettes manufactured in Spain and the Canary Islands. In total, the company produces nearly 450 million handmade and machine-made cigars.

Pedro Perez, 45, has been the president of Tabacalera since September 1993. He was instrumental in initiating negotiations with General Cigar, a division of the U.S.-based Culbro Corp., for a 51 percent stake in the company at a price of about $100 million. [Three days after this interview, the deal fell through.] Prior to his position with Tabacalera, Perez served in the Spanish government as the secretary of state for the economy; undersecretary for planning and economy, and commerce; and as executive director for the International Monetary Fund. Marvin R. Shanken, editor and publisher of Cigar Aficionado, interviewed Perez in Havana in late September.

CA: Can you give us a brief description of Tabacalera--how big it is and what industries it operates?

Perez: Tabacalera is a holding company with two major parts, the tobacco business and the nontobacco business. Within the tobacco business, we have a Tabacalera group that covers both cigarette and cigar production. As Tabacalera, we produce two and a half billion packs of cigarettes a year and roughly 350 million cigars.

In addition to Tabacalera, we have subsidiaries, normally 50/50 partnerships. For instance, we have subsidiaries with BAT [British-American Tobacco], Reynolds, and private investors in the Canary Islands. With the subsidiaries we produce a total of roughly 4 billion packs per year. That's roughly 80 billion cigarettes, since the industry standard is 20 per pack.

CA: What are the major brands of cigarettes?

Perez: Our major brand is Ducados. This is the second largest brand in Europe. We produce 1.2 to 1.3 billion packs. The second of our brands is Fortuna. We produce roughly 1 billion packs of Fortuna. These are the two leading brands. In total, we cover almost 95 percent of the cigarette demand in Spain. We are exporting to France. We are manufacturing in Poland and we are exporting also to Russia and some other former republics of the Soviet Union. We also export some small quantities to other European countries. One of our projects at present is to expand our presence in the European market.

CA: Which other areas of the tobacco business are you in?

Perez: We are presently in all phases of the tobacco business, including tobacco leaf and tobacco processing through our two subsidiaries, CETARSA and INTABEX Holding Worldwide. For cigars, we make mechanized cigars through Tabacalera and both mechanized and handmade Canary Island cigars through CITA. The brands include Condal, La Fama, Goya, Peñamil and others.

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