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Swisher International Group Inc. Switches Gears

With three factories in two countries and a growing roster of brands, Swisher's investment in handmade cigars definitely isn't too little. But is it too late?
Brendan Vaughan
From the Print Edition:
Gina Gershon, Sep/Oct 98

(continued from page 1)

An industrial engineering graduate, Antuña, 36, began his career in the computer industry--assembling workstations, building networks and developing software for clients in his native Dominican Republic. At 25 he married Raquel Peña, daughter of Puros de Villa González president Leocadio Peña, whom everyone calls Don Leo. Leocadio, 65, began working with tobacco when he was 12. He founded Puros de Villa González in 1961, and for years was a tobacco processor and exporter. When the premium cigar market heated up in 1995, Peña began rolling cigars.

In the spring of 1996, Antuña joined his father-in-law's nascent cigar business, leaving the management of his computer operation in the hands of a partner. As general manager of the factory, Antuña has seen the number of rollers grow to 200 and production increase to 9 to 10 million cigars a year. Now that Swisher owns half of the company, about 70 to 80 percent of Puros's production is devoted to Swisher brands such as Santiago Silk, Siglo 21 and Don Julio. The factory also produces Don Leo and Manifiesto, which it owns jointly with Swisher, and Napa, La Diva, Cusano and Carrington for other companies.

Antuña hangs a sharp left into the Puros compound, which consists of six squat, beige buildings; a seventh is under construction. A yellow school bus with the factory name stenciled on the side is parked near the entrance. Every morning at 7, the bus rolls in, filled with workers from outlying areas, and every evening at 5 it takes them home.

At its peak period of activity (in April and May, when the tobacco is deveined after it has been sorted, bulked and fermented), Puros employs about 600 workers. In late March there are about 400. Half are rolling; the other half are sorting tobacco in dank, cavernous rooms about half the size of a football field.

In the rolling room, a low wall runs down the center, dividing the rollers into two distinct groups. Those on the right wear yellow uniforms over their street clothes. "The ones with the yellow jackets are the master rollers--they get paid better," Antuña explains. "The others are good rollers, but they look over to the other side and try to become master rollers, too."

On this day, most of the master torcedores are making Bering Hallmark cigars. This is a new Dominican version of Bering, Swisher's flagship Honduran brand. It was introduced in June for about $3 to $5 a cigar.

"We're real excited about this new brand," says Swisher's Ryan, showing a mockup of an ad featuring Senior PGA pro Bobby Duval, who's endorsing the cigar. "It's a little heavier than our other Dominican cigars because Bering is an old Cuban-style brand, so we wanted it to be a little more full-flavored and have a little more punch to it. The first blends that we put together we didn't think were quite along the Bering line, so we beefed it up a little."

Swisher acquired Bering in 1985 when it bought Tampa, Florida-based Corral Wodiska y Cia. At the time, the brand was made with long filler and a natural binder and wrapper. Most sizes were made by machine, though a few were handmade. In 1990, Swisher moved the production to Honduras and converted Bering to a 100-percent handmade brand. Some sizes were made under contract by Nestor Plasencia, others by Frank Llaneza at the Villazon factory.

Lack of control over the supply of Bering--there were no specific numbers attached to the contract--was a primary reason for building the El Paraiso factory, which has an annual capacity of 30 million cigars. Swisher retained Plasencia to run that factory as well, and it now produces Bering, La Primadora and La Diligencia. The company's Nicaraguan brands, Sabroso and Flor de Jalapa, are still made at Plasencia-owned factories in that country.

Back in Santiago, Manuel Quesada is awed by the cutting- edge technology that characterizes Cotabex. "Look at this--it's a key cabinet," he says with mock wonderment, before leading a tour of Cotabex's 75,000-square-foot factory. "You open this, and all the keys are color-coded. You walk into Matasa, and you know how we open doors? Kick the damn things in! Look at this: pink keys, blue keys. I mean, this is progress. This is the twenty-first century of cigar making."

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