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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

(continued from page 19)

Perez: It was not only a question of brands. Of course, as you know, the portfolio of Consolidated is larger than in the case of General Cigar, because they have Montecristo, and others. No, the elements we considered very attractive in the case of General Cigar were, first of all, its position in the market as the leader in the premium segment; in connection with this, its excellent distribution and promotion system; and also, leaving aside the premium element, the efficiency in the machine-made cigars and the efficiency and quality in the handmade cigars. In analyzing all the aspects of the company, we considered General Cigar very attractive. At the same time, its size, which is smaller than Consolidated, was again a positive element for us.

CA: Consolidated was just sold a few years ago. I assume it was sold before the time that you were actively looking, because had it not been, you probably would have considered its acquisition as a possibility. Do you see yourself making further investments in America to build the General Cigar operation? Will there be other brand acquisitions?

Perez: Our strategy at present is to be associated with General Cigar; this is the main target. The 51 percent stake is something. The principal idea is to get an association between Culbro and Tabacalera in order to manage General Cigar and to exploit all the potential that Culbro and Tabacalera can generate together. If this project finally is successful, I think that we may be limited to further expansion because of antitrust legislation.

CA: But that doesn't stop you from product-line extensions or new brands, if you have access to Cuban leaf--to come out with the Pedro Perez Selection, for instance. You can grow internally, limited only by your own supply of tobacco. Isn't that right?

Perez: To grow internally is a goal in any company, but as to the possibility of increasing the size of the project by incorporating other companies, the problem in my view is a legal one with regards to the antitrust laws in America.

CA: What are your thoughts about the future of the premium cigar market, not only in Spain and Cuba, but in the rest of the world?

Perez: I think that the cigar industry is in a great period of recovery. It is perhaps the only segment in the whole tobacco industry with such a recovery. This is a fact in the United States; it's also a fact in Europe. I see a clear future for this particular part of the industry. Premium handmade cigars are the key to sustaining any recovery in the tobacco business. More and more people will continue to discover the pleasure of fine handmade cigars. And once the consumer is enjoying this product, he or she is going to be tempted to taste and try not only the handmade cigars but the whole range of cigar products.

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