The Dominican Republic's first cigarmaker celebrates its century mark
As years go, 1903 was a big one. Henry Ford founded his car company; a baseball team named the Highlanders played their first game in New York City, a decade before they would be renamed the Yankees; cousins Binney and Smith invented Crayola crayons; and brothers by the name of Wright showed the world a man could fly.
The same year, in relative obscurity, a man by the name of Eduardo León Jimenes opened a cigar factory in the Dominican Republic, making La Auroras. The country was an undeveloped, unheralded Caribbean nation, only 59 years independent. There was no Macanudo, no Davidoff, and it would be more than a lifetime before the Dominican Republic would claim to be a cigar country. Fine cigars, in the eyes of the world, came from Cuba and nowhere else.
On October 3, La Aurora officially celebrates its centennial year. Empresa León Jimenes CxA, the parent company, is still controlled by the León family. Empresa León Jimenes enjoys virtual monopolies in two local markets—beer and cigarettes—as well as having banking and printing subsidiaries. It is one of the country's largest companies, with annual revenues of approximately $600 million.
"We tried hard, and we finally made it," says Fernando León Asensio, one of Eduardo's sons. The 81-year-old speaks in a clear, resonant voice with the faintest accent. The former blending master of the company, he smokes the finest cigars made at the factory, corona-sized León Jimenes cigars rolled exclusively for him. Each box is inscribed with the words "Hechos especialmente para Don Fernando León A." Today, Don Fernando serves as a member of the company board. Educated in the United States and Canada, the patriarch of León Jimenes has a crystal-clear memory of his years in the family business, which span much of its history.
For any business, lasting 100 years is a notable achievement. A company that does that in a developing nation during a turbulent century has beaten all odds. While today the Dominican Republic has stabilized as the most advanced of the major cigar-producing countries, the past century saw border disputes with neighboring Haiti, forays by American troops, dictatorship and civil revolt. In the early 1900s, the country was mired in debt, and no one thought of it as a vacationland. (It would be nearly 50 years before the nation's first major hotel was built.) But for young Eduardo, his first problem was the mud.
Because his father, Antonio León, was a tobacco grower, the 20-something-year-old figured on abundant raw material to make cigars for the local market. The factory was located in Guazumal, near Tamboril, which is now famous for its cigar rollers. Some tobacco came from that area, and other fields were in Gurabo, Jacagua and El Ingenio, five or six miles away. In 1903, the Dominican Republic had dirt roads. Making cigars meant La Aurora had to pack tobacco in wood and ship it by donkey. The rainy season created a quagmire.
"It was so muddy, the mules went up to their bellies," says Fernando León. The beasts of burden trudged through the muck to deliver tobacco to the tiny fabrica. The first La Auroras were perfectos, pointed at each end with a bulbous middle. The cigars were called preferidos. Sales, like the cigars, were entirely Dominican.
Civil strife shut down production at times before La Aurora's 30th anniversary. American troops marched into the Dominican Republic, various local generals vied for power and civilians took to the streets. "In my father's time, he had hard times," says León. "With the revolutions and the uproar, [the company sometimes] just stopped production. It was a very convulsive country up to 1930."
In 1930, Gen. Rafael Trujillo seized power, creating a dictatorship that would last for more than three decades. Trujillo brought order to the country, but business opportunities became limited. La Aurora wanted to expand from cigars into the lucrative cigarette trade, but that was a business controlled by the dictator. He didn't welcome competition.
"Trujillo owned the only company that was producing cigarettes," says León. "My brother [Herminio] had an opportunity to ask him if we could complete our industry by producing a few cigarettes. He said, 'Go ahead.' But a few months later a law came into effect that made it impossible [to compete] due to the duties."
Trujillo's assassination in 1961 created more civil unrest, but it opened the door to allow La Aurora to grow. "As soon as he was killed, we began to establish contracts. We started building the [cigarette] factory right after Trujillo's death," says León. By 1963, La Aurora was making cigarettes, and six years later the company had forged a relationship that continues to this day with Philip Morris. The American cigarette giant owns a minority stake in Empresa León Jimenes, which produces Marlboros for the Dominican Republic.
The money from cigarettes began to turn La Aurora into a giant, and it steered the company toward its next grand venture: beer. In 1980, Empresa León Jimenes bought a brewery in Alaska, and actually shipped the brewery by boat to the Caribbean. "We didn't expect to take over the market in a day," says León. "The first year we had 28 percent of the market. From then on, it was uphill, a big fight." When yet more local turmoil made it impossible for foreign companies to repatriate profits, the Leóns bought their largest competitor. "Now we have 98 percent of the market," León says. León Jimenes brews some Heineken and Miller beer, but its king brand is Presidente, which can be found—ice cold—almost anywhere in the Dominican Republic.
With virtually all of the Dominican cigarette market and even more of the country's beer market, one wonders—why make cigars at all? La Aurora is the oldest Dominican cigar company, with the nation's oldest brand, but its annual production is relatively small. The company says it makes 8 million cigars a year. In addition to the La Aurora brand, the company has made León Jimenes since 1987, and last year it introduced Indepencia, an inexpensive line of Dominican-wrapped smokes. It also produces small, handmade flavored cigars packed in tins for C.A.O. International Inc.
Cigars account for only 1 percent of León Jimenes's sales, and even during the peak of the cigar boom, profits from cigars paled in comparison with its twin core businesses.
"The margins on cigars and the output of cigars is not very great. We know cigars will always be a much smaller business," says León. "We find our profits satisfactory, but it's nothing to speak of."
Would La Aurora sell its cigar business? "No," answers León. "How can you sell a son?"
León's youngest son, Guillermo, 43, has run La Aurora's cigar business for most of the past decade. He responds in similar fashion to his father when asked if the parent would ever sell the cigar company. "Never. This is the mother of the whole group. Even if it is not profitable like the other [segments] of the group, we give very much importance to cigars."
As a symbol of that significance, La Aurora planned to release a celebratory line of Dominican puros called Aurora Cien Años, Spanish for 100 years, to celebrate its milestone.
"It's a one-time deal, only 400,000 cigars," says Jose R. Blanco, the amiable, baseball-loving sales director of La Aurora. "It will be a strong cigar, Cuban-like flavor. It's Corojo wrapper and it has a lot of Corojo filler. All of our tobacco."
To prepare for the project, La Aurora has been trying to grow the troublesome Corojo seed in its home country for this special cigar. The company lost about half its crop in 2001/2002 due to blue mold, a testament to the difficulties of the seed variety, which is prized for its flavor but loathed for its vulnerability. "It's one of the hardest seeds to grow, in any part of the world," says Blanco. "The yield on it is terrible. A lot of it has to become binder and filler."
The company has been growing Corojo wrapper since the 1999/2000 crop and culling the best leaves from its farms, as well as from other tobacco bales. "We've been saving each year and each crop, bales of the better filler and the binder," says Blanco. The cigars will be individually numbered, as will the boxes.
Empresa León Jimenes is celebrating the birthday in other ways, inaugurating a 10-story, $10 million corporate office building in Santo Domingo, publishing two books, and opening a cultural center in Santiago. The shrinkage of the cigar segment among the company's holdings continued this year, as León Jimenes expanded its banking business by acquiring the fourth-largest bank in the Dominican Republic in the summer.
Expanding its reach so that it does not depend solely on regulated interests is part of a conscious strategy at León Jimenes. "One of the targets of any government, when they want additional revenues, is they look at alcohol and tobacco. In that case, we're in the wrong industries," Fernando León says with a laugh. An experienced traveler, he laments the newest antismoking legislation in New York City. He typically smokes his cigars outside when in New York, and to his horror, he was recently asked to put out his cigar in the smoking section of a Dominican Republic restaurant.
"After lunch, I pulled out my cigar. People were smoking cigarettes—the manager said cigars are objectionable," he says. "Why let foreign influences take you to prohibit smoking in a country where tobacco is a backbone? This has been introduced by tourists. I don't understand it. If my father should come back in life, he'd die again."
Incidents such as that—which would have been unthinkable only a few years ago—make the elder León fear for the future. His sons are in for a battle that may prove tougher than guiding a burdened mule through thick, clingy mud.
"The young generation," he says, "they have to fight for the right to produce a legal product."