An Interview with Litto Gomez and Ines Lorenzo-Gomez
La Flor Dominicana burst on the scene in the middle of the 1990s cigar boom. Known first as Los Libertadores, the brand was met with the same skepticism that most of the other new brands encountered, both in the marketplace and among industry old-timers. But something changed very quickly.
The attitudes of the owners, the husband-and-wife team of Litto Gomez and Ines Lorenzo-Gomez, were clear from the start: they wanted to learn about the business and about cigars. Instead of copying the behavior of some of the newcomers, which might charitably be called arrogant, Gomez and Lorenzo-Gomez buckled down, spending time with some of the wisest people in the cigar business. They moved carefully, growing slowly and methodically as they acquired more expertise, better tobacco inventories and, finally, their own factory.
Today, La Flor Dominicana is considered the strongest of the new brands to hit the market in the past seven years. Gomez and Lorenzo-Gomez have remained focused on their original strategy--slow growth with improving quality--and they have garnered a loyal following among consumers and retailers.
Last October, they spoke with Cigar Aficionado's executive editor, Gordon Mott, at the magazine's New York City offices.
Cigar Aficionado: La Flor Dominicana is always mentioned as one of the success stories among the brands created during the boom. Why have you been successful?
Gomez: That is a good question. We didn't set out to do something differently than anybody else. It was just that we had a set of rules that we wanted to use in order to protect the brand and develop it over a period of 15 to 20 years. We didn't have economic goals. Today, we're still not even close to where we want to take the brand.
But name recognition is not something that happens over four or five years. It takes a lot more time than that. So, we made decisions that were designed just to protect that brand and make it respectable in the market. All of our efforts have been toward making a better product next year than we have made the year before.
How can we learn? That was our first question, since we are not people who have a long background in the industry. How do we learn something new every day, every week, in order to make ourselves better? Me, at my end, at the factory. Ines, at her end, dealing with customer service and the distribution part of the business. Everything was designed to improve our brand. All of our worries, every week and in our meetings over a cup of coffee or whatever, we talk about how can we do this better than we have done it the month before or the day before or the week before. There are no financial discussions, only about how to work better.
We asked ourselves questions like, do we sell the product to everybody that wants to buy cigars or do we keep it to a certain section of the market? Those are decisions where the consequence is that we sell a little bit less product than if we had given the product to everyone in the industry. Doing it the way we do it, we keep the brand only in respectable cigar dealers or cigar retailers as opposed to giving it to everybody that wants to sell cigars. Over a long period of time that kept us in a very safe and prestigious position in the market. Very small, but every year we have a very steady, small growth over the year before. Even given all the changes in the industry right now, we are still selling more cigars this year than we sold the year before.
CA: What are those production and sales figures?
Gomez: We expect that 1999 will be close to 2.5 million cigars, just for La Flor Dominicana. That's up from 2.4 million in 1998. When we started, the first year, we made just over 300,000.
CA: How do you make that determination about the right kind of retailer?
Lorenzo-Gomez: In the beginning, we did try to sell to every retailer. But then we decided over the years that it is best for the consumer to buy the product from those retailers that are knowledgeable, that keep the cigars in their right environment, that will be there for many years to come. It is very easy for anyone to open a cigar shop or to sell cigars mail-order or to sell over the Internet. But they are thinking about selling so many cigars that day or that week or that month or that year. They are not necessarily looking to the future. So we want to have the cigars with retailers who have the same outlook as we do, that we want to be in business for many years to come. We are going specifically to seek out those kinds of customers. There might have been an oversight [of some retailers] at some time, and we do try to correct it and give a shop our cigars. But we believe that in the end we are protecting the customer.
CA: I have been told that if a retailer doesn't display your cigars properly that they don't get cigars anymore.
Gomez: [everyone laughing] She is a cigar Nazi.
CA: Is that true?
Lorenzo-Gomez: It is upsetting if I walk into a store and I see our cigars on the bottom shelf.
CA: Do you still turn down retailers?
Lorenzo-Gomez: Yes we do, because we are not about numbers. We don't say we have to sell two and a half million cigars this year, or we have to sell 3 million cigars this year. We are about making a product that will be there for the long term. The numbers are not that important for us.
Gomez: There was a chain of supermarkets in Florida that called our office to carry our cigars and we told them we were not interested, and the guy couldn't believe that we were saying that. He said, "We are so and so, do you know who we are?" I said, "Yeah, we know who you are," and he couldn't understand that we were refusing such a volume of purchases from somebody. He couldn't believe that we were refusing the sales to that chain of supermarkets. But that is not exactly where we want to see our cigars sold.
CA: From your description, you're content to keep La Flor Dominicana a boutique-style of brand. Is that a fair conclusion?
Lorenzo-Gomez: Well, we do need to grow right now. But I feel that one of our goals for the future will be focusing on the international level. Although we are selling overseas, we are not selling the brand everywhere. We would like the consumer to be able to travel to anywhere and find La Flor Dominicana, whether it is London, in Tokyo, any major markets. We are trying to expand in those markets. As it is, I believe we are almost everywhere in the United States that we want to be [for now].
Gomez: We will continue growing until we reach the point where I would be at the verge of losing touch with the production in the factories. If there comes a moment when I have to start delegating and letting somebody else take care of the production of the factory, I will stop right there. So whether it is 3 million cigars or 4 million cigars, as long as I can handle it myself and oversee production at the factory myself, I will be comfortable with the growth.
CA: During the period that you started growing rapidly, the acquisition of good tobacco became very difficult. But that period has passed. How are you choosing your suppliers? What kinds of things are you doing to insure that you are getting the best tobacco available?
Gomez: When we started in 1994, many tobacco suppliers still had inventories of old tobacco. Two or three years' worth, because it came from a time in which there was not really a huge demand. Then the cigar boom brought too much pressure on the suppliers and they sold off that tobacco inventory. Everybody needed it. I have to say that the tobacco dealers in the Dominican Republic are people with a tremendous sense of values. They have respect for the customers and they have loyalty to them. I remember that there was a time when my tobacco supplier could have closed our factory if he would have sold our tobacco to someone else at a higher price. He could have done that, but he didn't. We always had our supply of tobacco even though there were a lot of very powerful companies offering more money. There we were, a very tiny, insignificant company on the market, and we always had this fine tobacco. You always have to be thankful to our supplier of tobacco, of wrapper and filler and binder. They were great people.
Now today, there is a lot of tobacco again. Everything has changed. We have more access to a lot of different tobaccos that we didn't have before. It started a couple of years ago. As the company gained name recognition within the industry, tobacco suppliers would come to see us and offer different tobaccos. Before, they wouldn't answer my phone calls. It was a joy to start experimenting with different types of tobaccos. It became a lot of fun. We are still having fun with that.
But right now in the Dominican Republic, there is too much tobacco. That is bringing us a different sort of problem. Sometime in 1997, some of the major companies, for whatever reason, decided to start contracting tobacco from the farmers at double the price of the year before. God knows what the intentions were. So, tobacco prices suddenly went way up. With tobacco up in price, a lot of farmers in the Dominican Republic wanted to grow tobacco. You had the farmers that had contracts with the buyers that were safe, but the vast majority of growers decided that even though they didn't have a contract, they were going to grow tobacco anyway. They figured that at those prices they were going to make a lot of money. So what happened is, the buying season starts and the crops start coming in and the people who didn't have contracts, they couldn't sell the tobacco and it's still there in their sheds.
A month ago, the government started putting a little bit of pressure on the big buyers that they need to buy this tobacco from the farmers. So now, people are starting to buy a little bit of that tobacco. But some agitators in the Villa Gonzales area are stirring up these farmers and they are threatening everybody that if the tobacco is not bought from those farmers, nobody is going to grow tobacco. And that is what is happening in the Dominican Republic right now.
CA: How much of your needs can you meet from your 120-acre farm?
Gomez: About a third. On top of all that, there was even a kind of an order issued from the minister of agriculture that he was not going to let any filler and binder be imported to the Dominican Republic until the existing tobacco has been bought from the farmers.
CA: Presumably, a lot of that tobacco is not very good tobacco.
Gomez: No, the tobacco is definitely not good. It has been sitting there for too long, it has been grown without economic support. That means there were no fertilizers and you don't have the necessary labor. It takes a lot of money to clean those plants over the three-month growing process. It takes a lot of labor. It takes a lot of fertilizers. It takes a lot of protection from pests. If you don't have the economic support, you're not going to get a good product. So most of that tobacco is not good.
It was really bad when there was no tobacco, but having a lot of tobacco right now is having negative consequences, too. And the buyers, even though they don't really want to buy that tobacco, are buying it. But they are carefully examining the tobacco coming in. There were farmers that produced 50 percent [premium-grade] tobacco; now they have 20 percent when they bring it in. The rest doesn't qualify.
CA: What kind of inventory do you have right now? I have heard that some of the larger companies have built up large inventories of tobacco.
Gomez: We have about two years' worth of tobacco right now. This is going to be the third crop that we are going to have at the farm and I still haven't touched even one leaf from that farm. It is just aging and being processed at the moment, so we have a lot of tobacco. We are very safe.
CA: How did you decide to do the farm?
Gomez: I wanted to start taking care of our tobacco from the moment that it is planted in the soil. Within two years, 50 percent of the blend in our cigars should be able to come from our tobacco. We want to be as vertical as possible. We are not selling this tobacco to anybody. This is for us, this is for me to make cigars. So, whatever you know and whatever you learn is going to be done a little bit better because we are going to make cigars with this; this is not going to be for sale. If we want to grow the kind of tobacco that we would really want at the factory, then we have to do it on our own farm, in the way that we like to produce it.
We have seen the results, and it is a very different tobacco because of the way we clean those plants and the way we eliminate the suckers that grow between the leaves and the stem. We go four times around all one million plants in the farm, cleaning; then at flowering, we take the flower off so all the leaves develop fully. We also put a little more space between plants so they get a little more wind and more sun to the leaves so that the leaves will develop more muscle. Can you ask your tobacco supplier to do that? No. Because they have little control over all the small farmers who supply them. Dominican tobacco is great tobacco. But I have seen the difference when you handle the tobacco yourself. I am totally crazy about our tobacco. It is fantastic.
CA: Are you growing wrapper or just binder and filler?
Gomez: Just binder and filler. The farm is in a very hot area. Even during the rainy season, we have to irrigate. While this is one of the good things about the area, it is still difficult to grow wrapper there. It takes a huge infrastructure and knowledgeable people that you have to bring from outside the Dominican Republic, because Dominicans aren't used to growing wrapper. The only people who have succeeded doing that were the Fuentes, because they put a lot of resources into the project. People who have just tried to experiment haven't succeeded.
CA: Ines, how many different wrapper types does La Flor have?
Lorenzo-Gomez: We have the maduro from Mexico, the Connecticut broadleaf, Connecticut shade and Cameroon.
CA: What percentage does each wrapper represent in terms of market sales, and which do consumers respond to best?
Lorenzo-Gomez: The bulk of our sales are Connecticut shade. Most people like the Connecticut wrapper and we have about seven different sizes in the Connecticut shade. Our best seller is the figurado. About 30 to 36 percent of our sales are Cameroon wrapper.
CA: And that is the 2000 Series?
Lorenzo-Gomez: That is the 2000 line. We introduced that last year at the RTDA [Retail Tobacco Dealers of America] convention. We started with three sizes and then from there, in a period of a year, we have introduced another six sizes, so we have nine different sizes in the Cameroon. That attracts a completely different consumer. I used to smoke mostly the Connecticut shade, but now I have gotten used to the Cameroon taste and that is what I enjoy the most. I find that it has a lot more flavor. But our number one seller is still the Connecticut shade.
Gomez: It is incredible how the wrapper can change the flavor of a cigar. In the 2000 we have a thoroughly different blend, but even when I switch wrappers from one cigar to the other, it is like apples and oranges. It is totally different. It is unbelievable. I never stop being amazed by that difference. And [the wrapper] is the thinnest leaf that goes into a cigar.
CA: Have you seen the market change at all in terms of what people are looking for? Do you think the reception of the 2000 was better when you launched it than it might have been in 1995 or 1996, early on?
Lorenzo-Gomez: In 1995 and 1996, almost everything was selling. The cigar stores were looking for cigars, they needed to fill their humidors, and unfortunately in 1995 to 1996 we did not have access to Cameroon. It was only about two years ago that we were able to buy Cameroon and we were able to experiment with it and bring up something that we truly believed was going to complement and add to what we already had.
I find that people go into stores and they want things that are different. They may know that they like the taste of Connecticut shade but they are willing to try different cigars from different brands. They want things that are unusual, that look different, that appeal to them, and they are taking the tobacconist's advice. They are a very educated consumer that we have right now. And they are asking questions and they demand quality. If they pay between four and seven dollars, they want to see the quality and they want to get their money's worth for the cigar.
CA: You said about 35 percent of the production and sales are in La Flor 2000. Do you see that percentage growing over the next couple of years?
Lorenzo-Gomez: I believe so. I think that in a few years we will probably be selling half and half. Half of the Connecticut and half Cameroon.
Gomez: Without reducing the sales of the Connecticut.
CA: Do you have any problems with Cameroon's supply at this point?
Gomez: No, it is great. The company that is selling the Cameroon, we were their first customers. They have put a lot of resources into the area, and this year's crop is fantastic. There are plenty of large-sized leaves.
CA: Initially, there were a lot of whispers in the industry that the project wouldn't be successful, and you wouldn't be able to keep making cigars with a Cameroon wrapper.
Gomez: True. But you should see the funds that they put into the infrastructure. Prefabricated warehouses. They bought trucks from the army. It is going to work fine. There was concern, and that's normal when you see a new thing.
CA: Is there a shortage of maduro wrapper now?
Gomez: No. Connecticut had a little bit of a problem in the past couple of years with blue mold, which has hurt a lot. But 1999 was a blessing for Connecticut and there is going to be a lot of tobacco; everything was perfect. Blue mold is not a very common thing in Connecticut. So, hopefully, going forward, it is going to be great for all of us.
CA: Have you been able to hold your pricing structure this year?
Lorenzo-Gomez: We never raised prices. From day one we have kept the price the same.
CA: Have you been able to hold that level? You haven't had to drop prices?
Gomez: No. We never change them up or down. Because we have been growing and producing more cigars every year, even though the cost has increased a little bit for us, as we make more cigars we still keep the same price level. The company is healthy and so it hasn't hurt us, because we have been growing, but we have never changed the prices.
Lorenzo-Gomez: As a matter of fact, our pricing structure is something that has given us customer loyalty. They have never felt that we wanted to raise the price to make more money because we had fewer cigars to sell. That is something that we said at the beginning. But the first time that Litto went to buy wrapper he said, "I want the best," and from there on we had to continue buying that wrapper. We could have tried other things that were less expensive, but what was there to do? It had to be the best. And we have kept our word on the retail end, too. We said we wouldn't raise prices, and we haven't.
CA: What have you done to keep the brand consistent?
Lorenzo-Gomez: On top of our list of important things is the cigar's consistency. That nothing changes. We try to make it better. And as we start using our own tobacco, you will see an improvement there. Other than that, I'm not sure we are great marketers. We only have four sales reps. We still have work to do on the selling side, which we don't do now.
Gomez: There are a lot of areas in this country where we haven't even tried selling cigars. We still have a long way to go. The only advertising that we do is our ad in Cigar Aficionado. We go to all the Big Smokes because that is our opportunity to see the cigar smokers. They come to you and they say that they smoke your cigar and we get a feeling directly from the cigar smoker. They may tell you, "Hey, keep doing a great job"or they may tell you, "Hey, you made a mistake on this," or whatever. But you get the real feeling from the cigar smokers. You give cigars away and that is a great opportunity for you to show your product to the people.
CA: Have you learned from people in Cuba about tobacco and cigars? Do you see in the future, once the embargo is lifted, that Cuban tobacco will be an important ingredient for your cigar?
Gomez: For our cigars and for the cigars of everybody else that is willing to experiment. I think it would be tremendous. I always learn from the people in Cuba. They do great things with tobacco and they do a lot of things different than what we do in the Dominican Republic. So, it is fantastic to learn new things about processing tobacco. I can't wait until the moment that we can get ahold of those great Cuban wrappers or filler that are well grown, well cured and well processed. There are wonderful things that we can do with Dominican tobacco. But Cuban tobacco is just great. It is unbelievable.
There are a lot of questions. Is the whole system going to fall apart? Or will we suddenly have the opportunity to go there within the present system and try to make cigars there, or try to grow tobacco in Cuba and bring it to the Dominican Republic? For the consumers it is going to be a tremendous thing. And I can't wait until it happens.
For cigarmakers, working with tobacco is what it's all about. We know how tobacco reacts and we know how tobacco works, but year after year crops are different and tobacco leaves react differently. Tobacco talks to you and you have got to know the language that it's speaking. I've tried some experiments, and they are stunning. We are just waiting and watching to see what the changes are and we are going to get our foot in there and start to make friends.
Lorenzo-Gomez: In general it will benefit everybody. I believe that there will be a lot of new smokers for all of us. There are a lot of people who will want to try Cuban cigars because they have never had the opportunity. We are going to get another boom.
CA: As you did with your farm, you also started your own factory two years ago. How is that project going?
Gomez: Basically, the same people who started with us in Villa Gonzales are still with us. We still have the rollers that used to work with us. They don't want to leave us. When there were factories offering them more money, I spent a lot of time explaining to them that they cannot just be thinking about money. They need to think about their families and their future and the long-term relationship. They must continue to be proud of what they do. If anybody tells you that they achieve perfection, it is a lie. It is not about perfection. It is about artistry. Because you can't perfect a cigar. It has a flavor, it has a blend, and it is kind of like a chef creating a dish. With cigars you need the rollers to be concentrating on what they are doing and be proud of what they are doing. You can't make it work as a machine operator because it is never going to happen. They cannot be working unhappy because if they are working unhappy they are not going to blend the cigars properly. You can give them the blend, but they can make all the cigars with one type of leaf and there is no way that you can control it if some rollers want to hurt you. So, you need to be very close to them and work with them and let them know that they should take pride in what they are doing.
It is great to work with Dominican rollers. They are very noble people. They don't need to talk to the supervisor before they talk to me. I am on the floor all day and I sit with them while they are making the cigars and they can talk to me. Any problems that they have, they don't have any block in communication with me. We have been able to keep all our rollers, even through the war of rollers. We have the same supervisors.
The factory continues to change, but with the new things that I want to do. There are better ways that I want to process the tobacco. I start to think everything is OK, and then the next week I will install a whole humidity system for one room to ferment the tobacco with a higher humidity because it is going to ferment better. So I change it. It is a continuous quest to improve what you do because you hear from this person or you hear from the other master. I have a lot of communications with people that have been in the tobacco business for decades, and every time that I have the opportunity to speak to one of them, I always learn something. Everybody has their own way of doing things better, and even though I see how they do it, I come back and I am probably not going to do it exactly like they do it. I'm going to do it with my own changes that I think can improve it.
All the cigarmakers have a tremendous pride in what they do. We are continuously looking for improvement. It doesn't matter how much it costs. You can get any corporation into the cigar industry with perfect marketing, a perfect system and economic structure, and everything, but if they don't have somebody that is passionate about tobacco, it is never going to help. There is no system that is pre-established that you can go and create a structure and then make a good product. You need that guy that is in the factory to be passionate. When he goes into the factory, everything in his life stops, and he begins to look at tobacco and work with it and do beautiful things with it.
Look at all the successful cigarmakers. Their life is dealing with good tobacco and trying to make the best product that they can make. But they are always looking for something new that is going to blow their minds when they smoke it. That's never going to stop for me. We will always be doing new things.
Lorenzo-Gomez: I think a lot of what we've done is done precisely because our background was not in tobacco. Many cigarmakers tend to follow a process that somebody else started. For us, we had no background, we had nothing to follow. Everything had to be created. Of course, we listened to the advice of the people that we know, and everything else. But change wasn't so drastic for us, because this was something new that we were creating. We didn't have to do things like another generation.
Gomez: We learned the basics. It's like, once you have the basic rules of playing football, you can play, but the way you play, it is up to the player. Or it's like a great chef. They all know the rules but they are going to put their own personal mark on it. This is how we have to work in cigars, because it is something that people are going to taste. It is about flavor. It is about taste. Anybody that doesn't have the sensibility of different tastes from one leaf of tobacco to another has no place in the business. You need to have that sensibility. You either have it or you don't.
CA: Getting back to the factory for a minute. You had a fire there in 1999. How serious a blow was that?
Gomez: It was very serious, because we had a lot of irreplaceable cigars in that room. It was only the cigar room; thank God the fire didn't get out of the cigar room and burn the whole factory. It could have happened. We were about a half an hour away from it happening. Thank God it didn't, but we lost a lot of product that is in very high demand.
CA: How many cigars did you lose?
Gomez: Four hundred thousand. But we had cigars in there like "A's," that are made with Cameroon wrapper. We had been making those cigars for 10 months, picking the leaves that were big enough. You know Cameroon leaves don't come that large. So we were picking the leaves for those cigars for a long time, and I finally had made about 20,000 or so, and they were all gone. We also lost about 60,000 El Jockos, and we always have a waiting list for them. It broke our hearts. We've recuperated, because there's plenty of tobacco now. We don't have those cigars anymore, and it would take probably five or six months to rebuild the inventories of those cigars. But we are coming out of it fine.
CA: Did you design your own marketing and advertising campaign?
Lorenzo-Gomez: As a matter of fact, to this day Litto is still taking 99 percent of the pictures for our ads. We used to hire photographers, but photographers don't always have the same eye or they don't always know exactly what we want.
CA: What about the cigar band and things like that?
Lorenzo-Gomez: Litto created the cigar band, the pouches that we use, the ads--everything. We don't work with marketing agencies. That is why when you asked me about marketing, I went blank. It works for us, because it is just the two of us, and we can make a decision right away. We don't have to go through the process.
Gomez: It is over a cup of espresso, at Starbucks. That s our company meeting. It is very simple.
CA: Isn't it a problem because you two are usually in two places, Miami and the Dominican Republic?
Gomez: Yes, but we just talk about major decisions. We come to an agreement. It's very fast. Everything happens quickly. The next day, it is being practiced.
CA: Does that direct approach extend into the marketing area?
Lorenzo-Gomez: [with mock exasperation] Marketing. [laughter] Why are you asking me about marketing? We don't do any marketing. We do it ourselves. We go see everybody. I talk to everybody on the phone. We only advertise in Cigar Aficionado.
CA: But I've been told you are a very hands-on marketer. You take an involved role with each of the retailers that sell your cigars.
Lorenzo-Gomez: I answer the phone, I go through every single order that comes into the office. Even if I'm not there, when I get back I want to make sure, I want to know where the cigars are going, who is buying what, what the consumers are saying.
Gomez: That department is where you can reach perfection, and I think Ines achieves that as much as any human being can. She deals with retailers. They can call about an order that was shipped two months ago and she can tell them without looking at a paper, "Yes, I sent you this and that and that," and she remembers everything. And so it is very simple when a customer calls our o