While other cigar manufacturers have been engaged in multimillion-dollar purchases or building huge new factories, Manuel Quesada of MATASA (Manufactura de Tobacos S.A.) has quietly been building his business. The owner of the Fonseca, Jose Benito, Cubita and Royal Dominicana brands, and the manufacturer of such brands as Licenciados, Romeo y Julieta, Casa Blanca and Credo, Quesada has seen his cigar production more than triple during the past five years.
Quesada has been in the tobacco business his entire life, starting in the family enterprise at the age of 13. In Cuba, the Quesada family were leaf brokers for everything from cigarette tobacco to cigars, and one of the major exporters of Cuban tobacco to the world market. When they were forced into exile in 1960, they transferred their entire business to the Dominican Republic, where they had been buying and selling tobacco for years. It didn't take long before they began manufacturing cigars. When the cigar renaissance began in 1992, MATASA and Quesada were among the founding members of Pro-Cigar, an organization established to promote Dominican cigars.
Today, Quesada is entering a new era. One of the brands he manufactures, Romeo y Julieta, has become part of the emerging empire of Tabacalera, the Spanish tobacco giant. The brand, owned by Hollco-Rohr, gives Tabacalera an entry into the U.S. market for the first time. He's also starting a joint venture with Mike's Cigars of Miami and J.R. Tobacco to manufacture new brands in a new factory. In a recent conversation with Marvin R. Shanken, the editor and publisher of Cigar Aficionado, Quesada spoke about the huge opportunities in the cigar business and his ongoing commitment to growth and quality.
Cigar Aficionado: Your family has a long, rich past in the cigar industry and in tobacco. What drove you to choose the cigar industry as a career?
Quesada: We did not become manufacturers until we were exiled from Cuba. In Cuba we were not manufacturers, we were tobacco leaf people. My great-grandfather came to Cuba from Spain with his family. They were bakers, but the bakery wasn't big enough for him and his brother, who were the last to come to Cuba. When a debt to the family was paid with tobacco, the family told the two youngest brothers to take it and make a livelihood out of it. And they did. They started a leaf purchasing company in Cuba together.
CA: Who is they?
Quesada: My great-grandfather and his brother. Later, at the beginning of the century, they split ways to establish separate companies and they became the two largest exporters of Cuban tobacco from Cuba to international markets. And we have been competing in the world market ever since, and now in the Dominican Republic as well.
CA: What were the names of the two companies?
Quesada: Sobrinos de Antero Gonzales, our side of the family, and Constantino Gonzales, my great-grandfather's brother, the other side of the family. And we have come parallel through Cuba and the Dominican Republic until today.
CA: Was your grandfather in the business?
Quesada: My grandfather was in the business. He married my great-grandfather's daughter. He was a Quesada, not a Gonzales. The Gonzales family started the company. And then the Quesadas come in through my grandfather, who married a Gonzales daughter.
CA: And what role did he play when he was in the tobacco business?
Quesada: Well, the way the company was structured, there were always five managing directors or managing partners or whichever title they had, and my grandfather, of course, started as the fifth managing partner and moved all the way to first managing partner. That's what my father did, too. He started at the bottom and worked his way up. Some of my great uncles, cousins to my father, were also in that echelon of the company. Once they got involved in the company, they would be assigned different things such as the oversight of the farms or the warehouses, or they would be involved in sales. My grandfather and my father both had done the whole circuit of different jobs in the company.
CA: Is it fair to say that you stepped into your father's shoes?
Quesada: In Dominican Republic, yes. Because in Cuba we were too young to work. So we did not have any experience in Cuba.
CA: How long have you been working in the tobacco business?
Quesada: Since I was 13 years old. I'm 50 now. Thirty-seven years. I started when I was 13, but then I went to college, then into the army.
CA: Did you go to school in the United States?
Quesada: Yes. High school in Miami Beach, St. Patrick's, and college in Dominican Republic and then a master's degree from Florida State, in Tallahassee.
CA: I remember visiting your quaint, small, ordinary, but charming factory in 1991. Can you recall what your mission or strategy was in terms of the cigar business then, versus what your mission has become because of the change in the cigar market? What were your priorities then versus today?
Quesada: As much as I hate to tell you, back in the early '90s--'89, '90, '91--we were still suffering from the hangover of the 1980s when the market had slid. Business was slow. We were not growing in numbers to write home about and we were sort of in a doldrums state. We were making cigars, we were growing tobacco, we were warehousing tobacco basically in the same fashion we had been doing for years, and what we really didn't have was a challenge. We didn't have something to say, Let's really put ourselves to the test and see what we can do, if anything. Because one never knows what could happen. This may be a harsh judgment, and perhaps it was the case for the whole industry, but I think it was the case in our facility. We were making what we considered to be good cigars, even excellent cigars at the time. But we were within the parameters of what we had been doing in the past. Same filler, same binders, same wrappers, same fermentation processes, same blends, same brands, same markets. We were following in the footsteps of what we had been doing in the past. Creativeness in a market that really didn't show vast promise was curtailed, and we were suffering from that, I believe.
CA: I remember, though, that you had ideas. You wanted to do this, you wanted to do that, you wanted this, and you were like a coffee that's on boil. You were percolating with different thoughts and ideas, but nowhere to go.
Quesada: You always have to be doing that if you're going to be in the tobacco business, because tobacco is not the same thing day in and day out. You have different crops, you have different countries of origins, you have different vintages with different conditions. Tobaccos are always challenging you to play with them and make new blends.
CA: How much of your life did you spend in Cuba?
Quesada: I left when I was 13.
CA: What year was that?
CA: Is it fair to say that the final chapter in your dream is returning home?
Quesada: I would say so.
CA: By making cigars?
Quesada: Yes, sir. Yes, sir. Yes, sir.
CA: Let's fast-forward to 1997. It's an incredibly different market, not just that it's growing and it's bigger, but there has been an avalanche of new brands that nobody has ever heard of. If somebody said to you three years ago that there would be 300 new brands, because I know that every day I see 10 on the shelf I never heard of, would you have believed it? How has that changed the rules, and as a result, how would you define your mission or strategy today?
Quesada: I don't think the rules have changed. I think the playing field is also the same, because quality is still the guiding light. However, we now have a different dynamic in our business because the consumer is now much more involved with us, the manufacturers, than he was five, six, seven, 10 years ago. We were only dealing with retailers, wholesalers then. Now we're dealing directly with the consumer. We are more in contact with the consumer. We know more about his needs, his demands, his pleasures. So, there is an additional guiding light that we didn't have eight years ago.
The proliferation of brands is interesting. Three years ago, I would have probably guessed that a lot of new brands would come to market, because the market was pointing to opportunity. People could say, I'll make any kind of cigar and I'll sell it no matter what. That environment was conducive to more people coming in.
CA: Is it fair to say, however, that the days of creating new premium cigar brands are over, or do you still think there's opportunity?
Quesada: I still think there are opportunities for new brands because there are a number of variations that haven't been tested yet. There are still tobaccos that I believe can be blended into a cigar that will be accepted by the market. If a new brand comes from a manufacturer that has some sort of position in the market, it will be accepted as a quality-consistent product as opposed to a brand coming from someone who just started months ago.
CA: In 1997, what is the approximate production of your premium cigar business?
Quesada: MATASA will produce this year close to 16 million cigars.
CA: What was it in 1991, a fraction, right?
Quesada: In 1991, 5 million.
CA: That's incredible. Do you seek continued expansion, and do you see significant growth continuing, or a more moderate growth pace? What's your production target in 1998?
Quesada: In 1998 we plan to grow maybe 5 or 7 percent.
CA: Does that include your new facilities?
Quesada: No sir, just MATASA.
CA: When does the new joint venture facility come on the scene?
Quesada: Tabacalera Nacionale Dominicana already started June 2. And Cotabex actually started three days ago, Monday.
CA: What kind of production are those factories going to have?
Quesada: When they come to full production, they should be doing 60,000 cigars a day at Tabacalera Nacionale Dominicana, and Cotabex should probably be double that level.
CA: What does that work out to on an annual basis?
Quesada: Fourteen million to 15 million cigars.
CA: Per factory?
Quesada: Per factory.
CA: Which brands do you own, and which do you manufacture?
CA: Fonseca is clearly your primary focus. What is the origin of the Fonseca brand?
Quesada: The Fonseca brand was registered in the United States in 1963 by a Cuban family in Miami. It was registered then and it came into MATASA's possession three years ago when we purchased the rights. But we have been involved with the Fonseca brand since 1974.
CA: So you've been making it since 1974?
Quesada: Yes, we started making it in 1974.
CA: Do you own other brands besides Fonseca?
Quesada: Yes sir, Jose Benito is our brand as well, Cubita is also our brand. Royal Dominicana is also our brand. Those four brands.
CA: But you also produce brands for Hollco-Rohr and Tabacalera.
Quesada: J.R. [Tobacco].
CA: J.R., that's Lew Rothman.
Quesada: And Mike's.
CA: And Mike's, which is owned by Oscar Boruchin. That's good to know, because many people don't realize you are involved. So, which brands do you make for each of those?
Quesada: I make Licenciados for Mike's.
CA: Licenciados has done well in our taste tests.
Quesada: For J.R., I make Casa Blanca, and for Hollco-Rohr, Romeo y Julieta and Credo.
CA: What was the volume for Licenciados this year?
Quesada: In '97, a million and a quarter.
CA: Casa Blanca?
Quesada: About a million and a half.
CA: Romeo y Julieta?
Quesada: About one million.
CA: And Credo?
Quesada: 1.2 million.
CA: Jose Benito?
CA: Royal Dominicana?
Quesada: Royal Dominicana has no numbers, Marvin, because we just can't make it.
CA: In terms of priorities, don't you have a lot of horses here? Where are you going to put your emphasis in the future?
Quesada: At MATASA, I cannot take resources away from Casa Blanca or Licenciados or Romeo y Julieta to put into Fonseca or Cubita, because these are brands that brought me to where I am today. The loyalty that I owe to the owners of those brands is the same I owe to myself. So whatever tobaccos we have ready for these cigars will be split among them. We plan our crops and we plan our warehousing for these brands in particular. The major limiting factor has been mostly the Connecticut-seed wrapper.
CA: Is that the only thing holding you back?
Quesada: Yes, sir.
CA: But haven't plantings expanded in Connecticut and Ecuador, so that there would be more material available?
Quesada: Yes, sir, but when you talk about premium cigars, a lot of the wrappers that you buy do not qualify for that particular level of production.
CA: What happens to that? Binder?
Quesada: Some go into generic brands, or bundles, or smaller, lesser known brands, regional brands.
CA: In the Dominican Republic last year, there was a huge surge in the price of tobacco, and a huge surge in what new factories were willing to pay for rollers. Has the dust settled? Where are things now? You hear stories about a number of factories that have closed, of rollers that left where they were and now are trying to get their old jobs back. Are tobacco prices rolling back? What's really happening in the Dominican Republic regarding handmade cigars?
Quesada: In January 1997, we lost--and when I say we I mean, Arturo Fuente, Davidoff, General Cigar and MATASA--thosefour factories lost over 350 cigarmakers. That occurred in the period between Christmas vacation and the January opening of those factories.
CA: In a two-week period.
Quesada: In a two-week period, these 350-odd cigarmakers were taken away by new companies starting to make cigars in Dominican Republic. But we had been training people for two years before that event, so we had been replenishing and getting ready for a situation like this. Nevertheless, when you substitute a cigarmaker with a trainee, your output does come down a bit. We saw a dip in our production numbers in the first four or five months of this year. Then we started coming back on line with the addition of more trained people. As of today, the cigarmakers are starting to come back. After the RTDA [Retail Tobacco Dealers of America] convention in August, some of the new ventures, some of the new factories, found that their product wasn't selling as easily in the market today as it was maybe six or eight or 10 months ago. They have cut back production, therefore, letting go of a number of the cigarmakers that were originally taken from us.
CA: Have there been many of the new factories closed down?
Quesada: I don't have an exact number on that. We do know that the cigarmakers are coming back to the factories looking for jobs, so therefore we assume that there has been a cutback. Whether it's a total shutdown or a severe cutback in production that is occurring, I don't know for sure.
CA: What seems to be the attitude of the manufacturers? Are they welcoming back their former employees or basically saying, You went for the dollar, good luck.
Quesada: No. We are being selective, because a lot of the cigarmakers that left in January, left under less than good situations. But we are taking back a lot of the old cigarmakers. They are starting as new personnel in the factories, but we are taking them back.
CA: Looking at the major brand that you own, Fonseca, in terms of image, in terms of sizes, in terms of geographic distribution, what is your sense of where you want to take it in the next three years?
Quesada: I would have wanted to have taken it three years ago to a level of sales that would have been triple or quadruple the number that I have today. And that is still my goal. I feel that the quality of the product is there. I think that it has a market. Unfortunately, I could not produce the cigars that I needed without hurting other brands that we manufacture or lowering the quality of the brand. Therefore, we have been keeping at the level that we spoke about earlier.
CA: Which relationship began first? Mike's, J.R. or Hollco-Rohr?
Quesada: Hollco-Rohr was the very first.
CA: How did it come to pass that you ended up manufacturing Romeo y Julieta?
Quesada: Mr. Wally Frank, who had purchased the Romeo y Julieta brand from the family here in New York, was looking for manufacturing facilities in three countries: Honduras, Mexico and Dominican Republic. I was approached by the Hollco-Rohr Co. and I interviewed with Mr. Frank. I told Mr. Frank that I thought it was a mistake to have a brand in three different countries. And if that was the case I didn't want to get involved in that project. To have two countries already would have been a difficult situation. Three countries, I was out of the project. It was finally kept down to two countries, Honduras and Dominican Republic, and eventually Honduras was discontinued and Dominican Republic stayed.
CA: And when was that?
Quesada: 1978. That's where the box factory also opened. The first boxes ever made in Dominican Republic by MATASA were Romeo y Julieta.
CA: And then which was next?
Quesada: J.R. [J.R. owner Rothman] was introduced to me by the Mendez family, the leaf dealers in Dominican Republic, and we have been making cigars for J.R. since 1982. And Oscar [Boruchin of Mike's Cigars] came on board in 1984 or 1985 and we started making cigars for Oscar.
CA: Let's talk for a minute about your new joint ventures. Could you explain what they are and how they work?
Quesada: OK, the two facilities--Tabacalera Nacionale Dominicana and Cotabex--are a joint venture with J.R. Cigar and Mike's Cigars in Miami. It's a three-way company where the output of the factories will be shared equally by the three partners: MATASA, Mike's and J.R., and all the investment will be shared three ways as well.
CA: So you each get one-third of the output.
Quesada: Exactly, to be distributed accordingly. The project there is to have one brand shared by all and then have brands that each individual company will distribute as a side.
CA: When you say one brand, is that a new brand?
Quesada: A new brand, yes, sir.
CA: When is this new brand coming out?
Quesada: It probably will not be until one year from now.
CA: Is it anything you can tell me or is it premature?
Quesada: It's premature.
CA: What kind of output will that facility have?
Quesada: I'm planning when it's finally ready to make cigars in full bloom, about 15 million per year.
CA: So, 5 million will be the new brand?
Quesada: Probably more, because the gentlemen that are involved here are capable of distributing in big quantities. They have power to distribute product in the United States.
CA: Will Licenciados or Casa Blanca be produced there as well?
Quesada: No, sir. Licenciados and Casa Blanca will continue to be a MATASA operation.
CA: So the new factory will produce 15 million cigars, all new brands?
Quesada: Yes, sir.
CA: Wow. What about the other factory?
Quesada: The Cotabex factory involves Swisher International out of Jacksonville, Florida, and CITA, a Canary Islands concern which manufactures cigarettes and cigars. The idea of that factory is to have Dominican Republic as a supplying point to both sides of the Atlantic. We will sell cigars in the United States and we will also sell cigars in Europe and beyond.
CA: And that has a similar capacity?
Quesada: No, sir, that's going to be a bigger factory, because it will do about 15 million handmade cigars and it will do 15 million hand-rolled cigars.
CA: Handmade versus hand-rolled. That went straight over my head. Are we going machine-rolled?
Quesada: We're talking machine-bunched, hand-rolled.
CA: What brands will that factory produce?
Quesada: Those will also be new brands, and some old brands from the Canary Islands that have been in existence in Europe for a number of years but not sold in the United States.
CA: Regarding tobacco quality, you're in the market buying the best tobacco you can. What are you looking for?
Quesada: We're looking for the traditional countries that we have always purchased from, and those have been Brazil, Dominican Republic, Nicaragua, Honduras and sometimes Mexico, for our fillers. For binders, we're looking for Central America again: Nicaragua, Honduras, Mexico and Dominican Republic. For wrappers we're looking for United States, both the Connecticut shade and the broadleaf. We also buy some Ecuador wrappers with Connecticut style as well as the Sumatra style. We discontinued Cameroon wrapper a number of years ago because the supply became too scarce and nearly all the quantities of leaf were contracted by two companies. There was nothing else available. We have been using some TBN [wrapper] out of Indonesia for the two brands that we were making with Cameroon. We're looking basically for those countries in those categories of ingredients.
Dominican Republic, of course, is our home base, so we have much better control of both the filler and the binders, because we have our farms and warehouses and we have a factory. In the other countries, we have long-standing relationships with people who have been selling and farming tobacco forever and selling us tobacco. Of course, we now compete with other people who are in the market for the same tobaccos. The long-standing relationships have been honored by our suppliers, however. It's just that the quantities we have required have increased significantly from our commitments five years ago and our suppliers have not been able to supply our new requirements.
CA: What's the current status of pricing in tobacco?
Quesada: All countries are higher than they ever have been and they will continue to be higher, unfortunately for the next year at least.
CA: These price increases are obviously going to be passed on and have been passed on in terms of what the cigar lover is going to pay. Any projections?
Quesada: I feel that 1998 will still see some increase in prices for the cigars coming into the United States. It's the only way we can remain solvent. We have to make choices. Actually, three choices: not make cigars at all; lower the quality; raise the prices. For the last 500 years, [the handmade cigar industry has] been raising prices.
CA: In 1997, what percentage increase in price did you have for your cigars on the shelf?
Quesada: About 15 percent.
CA: What do you expect in 1998?
Quesada: A little less than that, but somewhere between 8 and 10 percent.
CA: Do you buy the hypothesis that the cigars made today by the traditional families that have been in the business are of higher quality than five years ago?
Quesada: No, I don't buy that they're higher quality. They may be different in a number of ways, but the quality has always been there. We may, if we compare it to a car, may be polishing a little more the doors, we may be tightening a little more the screws, but the quality [was always] there.
CA: So the tobacco quality has not changed.
Quesada: The tobacco quality has not changed, no, and that's why we haven't been able to supply the market, because we haven't had tobacco that's up to our standards.
CA: I'm not talking about quantity, I'm only talking about quality.
Quesada: If we had had enough tobacco of the quality that we're looking for, we would have been supplying the market in the numbers that the market needed. We didn't; therefore, a huge shortage occurred. But we didn't play with the quality, so we didn't have the cigars.
CA: Do you think that what you just said applies to the other manufacturers as well?
Quesada: There are a number of manufacturers that I respect enormously and have committed themselves to that principle, and I can probably name a whole bunch of them, but...
CA: Given the influx of so many new factories--I've heard that there's some 30 new factories. Is that approximately right?
Quesada: It sounds right, but the exact numbers are very hard to judge.
CA: OK. But then, where are these new factories getting the tobacco from, and what kind of tobacco is it?
Quesada: There are two areas where the new factories are finding tobacco. One is from nontraditional areas of growing, even in Dominican Republic, for example. And in countries from which we have never used tobaccos. European markets have used these tobaccos always, but we, in this part of the world, have never used those tobaccos. I am talking about Italy, Germany, Indonesia, Philippines, Argentina, Paraguay, Colombia. These are countries that have produced tobacco always, but mostly for short-filler cigars in Europe, and cigarettes.
CA: Can you smoke those cigars and tell the difference?
Quesada: You can probably tell that they have tobaccos from those countries of origin because they have distinctive tastes. However, if you blend in very minute quantities with more Dominican and more Nicaraguan, more Honduran, you could probably hide some of those tobaccos in a blend. But you need to have the other tobaccos to hide those in.
CA: Has there ever been controversy over a Dominican cigar not having all of its raw material grown in the Dominican Republic, which also really applies to many other countries with the exception of Cuba?
Quesada: No. There never has been controversy because the concept of Dominican Republic has always been a blend, and a blend necessitates different origins to make a product. We have been always blending, so we know that the Dominican element is present, but the quantity will vary from manufacturer to manufacturer. However, the basis, and this perhaps is where your question is coming from, the basis of the blend in the filler, in the binder has been Dominican and without quoting numbers among manufacturers, 60 percent to 80 percent of the filler and binder blends were from Dominican Republic always.
CA: What percent of handmade Dominican cigars are Connecticut wrapper?
Quesada: Well, the traditional brands are definitely using Connecticut tobacco. The nontraditional are not using Connecticut, because it is not available to them.
CA: What's your take on the potential for Dominican-grown wrapper tobacco, and do you have any sense or plan to grow it or buy it or in putting your cigars in it in the near term?
Quesada: Well, Dominican Republic has been toying with the idea of a wrapper for decades now, and a number or projects have been done in Dominican Republic since the late 60s, early '70's. None were anywhere close to successful until three or four years ago, when the Fuentes took over the now Oliva farm and started growing wrapper. And that has proven that wrapper can be grown in Dominican Republic.
CA: Do you and other manufacturers have plans to get into that market?
Quesada: Yes. There are some experiments in some of the farms that are controlled by different manufacturers. But they are still experimenting with different seeds and different variations of growing conditions with an eye towards the future.
CA: Do you have a specific plan to have someday a 100-percent Dominican brand?
Quesada: Our goal is to accomplish that; whether we are successful or not, we don't know yet. We are toying with it and we are experimenting with it.
CA: How were the Fuentes able to do something that nobody before them was able to do to the point that nobody believed it possible?
Quesada: I would say, to their credit, that they were intent on doing it. I would say that they dedicated resources, both human and economic, to it and they were successful.
CA: But there had to be something else, too--the microclimate, the farmer planting the crops, something. What was it?
Quesada: The area where the wrapper is being grown by the Fuentes has been successfully grown by General for years for their candela wrapper. León Jimenes also grew some wrapper there, probably in the late '60s. In general, the leaves were spotted because of the humidity in the area. The Olivas were running that farm for years, but from the United States. The Fuentes, being in Dominican Republic, were closer to managing the farm. That helped make it successful.
CA: So, it was the hands-on approach?
Quesada: Yes, yes.
CA: Is it now pretty much acknowledged that the Dominican Republic is capable of producing a competitive quality wrapper?
Quesada: I would say so. Yes, sir.
CA: Everybody has a different point of view and I'm sure that you have spent many, many, many hours thinking about when the embargo ends. How do you think that will affect your business, a), and b), how do you think it will affect the cigar aficionado?
Quesada: We have to look at it hypothetically. If the embargo is lifted tomorrow morning, for the sake of argument, and Cuban cigars immediately begin to come from Havana, from Cuba, wherever, in the next 24 hours, it will affect everybody's business outside of Cuba because consumers will want to try the Cuban product. Initially, there will be a surge towards buying Cuban product instead of our product. That will settle down and I think we will be able to live with the Cubans and they will be able to become another cigar taste, another cigar in the market. They will live with the Dominicans, the Hondurans, the Mexicans, the Nicaraguans, and they will be just another cigar on the market down the road.
CA: Do you see the need or the plan where some of the Dominican or Honduran manufacturers might begin to buy Cuban tobacco in bulk and put it in their cigars to strengthen the taste, make it a little spicier, or be more in the style of a Cuban cigar, or do you think the taste will come closer together, or stand apart as they do now?
Quesada: I think you'll see everything. I think you will see Dominican brands remaining as they are, with the Dominican taste that the market has grown to like and to accept and that has made Dominicans the best-selling cigar in the market today. You will also see combinations with Cuban tobacco in leaf form going into blends of new products, or perhaps variations of the existing brands, where you make a private selection and you make a cabinet selection, and you'll also see perhaps some manufacturers going to Cuba and making Cuban cigars in Cuba. But I don't foresee that anyone will forsake their Dominican ventures.
CA: I would doubt that anyway.
Quesada: No, no, but I think that you will see everything happening in the market because there will be opportunity for 100-percent Cuban cigars, 100-percent Dominican cigars and combinations thereof.
CA: I can't quite imagine you going back to Cuba, where you'd need fields, cigar rollers and so forth, and all having to working with the systems and pay scales they have now. Wouldn't it be difficult?
Quesada: We were bitten once. We have no desire to be bitten twice. So before we do go back and put our money up and start ventures, we have to have assurances that we will be respected.
CA: It sounds like, at least for the nearer term, the only real practical road is buying bulk tobacco.
CA: What about making 100-percent Cuban cigars, but making them in the Dominican Republic or using the tobacco to blend in with what you're now making to make something either brand new or to have a different style?
Quesada: I feel the same way. Politics will not allow us to go back and start investing money right away.
CA: How will that situation affect the consumer? He's already flooded with cigars, half of which he's never heard of and all of a sudden he's going to have two Fonsecas, two H. Upmanns, two Montecristos, two Partagas?
Quesada: First of all, Cigar Aficionado has done a tremendous job in making the consumer a lot more capable of understanding the cigar world. I think that the consumer is able to discern and make distinctions between origins, between types of tobacco, between what creates a strength in a blend, what creates aroma in a blend. I think the cigar smoker would be most interested in these variations in these new adventures in taste and what the possibility of introducing Cuban tobacco to blends might afford them as a smoker. I think that would be a plus.
CA: You have a long-standing relationship with your growers. Have they been greatly increasing their production to keep pace with your growth or do you have to keep adding new growers all the time to supplement your increase each year?
Quesada: Dominican Republic three decades ago used to grow 1 million quintals [100 million pounds] per year of tobacco. In the 1970s, that dwindled and finally the crop at its bottom production was 200,000 quintals, one-fifth of what it was. All that land that used to grow tobacco lay fallow for a number of years because the prices weren't there for the farmers to grow tobacco. And the prices weren't there for us to sell tobacco in the world markets.
CA: Where did all that tobacco go?
Quesada: It used to go to North Africa, to Spain, the Canary Islands, North Europe...
CA: Used for?
Quesada: Cigarettes and short-filler cigars. The United States used to buy enormous amounts of tobacco in Dominican Republic for their short-filler cigars as well. Prices and taxes by the Dominican government made the production dwindle, and with the advent of the new cigar production in Dominican Republic, a lot of the land started to come back into production slowly, because the farmers had dedicated themselves to other things or they had moved to the cities. Their sons were studying to be engineers. But slowly, people from the old tobacco-growing families have come to those fields and started growing tobacco again in land that originally grew tobacco a number of years ago.
CA: But the tobacco that was grown a number of years ago, was it at the quality level that is used for cigarettes as opposed to the quality level for cigars?
Quesada: No, we were also growing Cuban seed and Olor seed at the time. Olor was one of the largest growing varieties in Dominican Republic. And Cuban seed as well. Crillo [cigarette tobacco] used to be the biggest of all. And all had dwindled because of lack of demand.
CA: After Cuba, what drove you to decide to go to the Dominican Republic as opposed to one of the other countries that grow tobacco?
Quesada: We first went to Dominican Republic in 1939. My great-uncle went to Dominican Republic in '39, and we used to buy tobacco from Dominican Republic and from Cuba and sell it to the Spanish monopoly. So we knew the country, we knew the people and we knew the tobacco, and when we left Cuba the family moved its operations to Dominican Republic--without any money, of course.
CA: When did the Dominican Republic begin the free zones?
CA: How important was that governmental action in attracting and maintaining manufacturers during this period of decline?
Quesada: It was important for two reasons. One, you could make cigars in a country that had a long tradition of tobacco and cigar-making. Two, you could bring in tobaccos from any part of the world duty free as long as you exported the cigars out again from the country. So, it afforded you a blend without having to pay duty for the tobacco. Also, you had labor, because it was a cigar-making country. So you had labor there to make cigars right away. So Dominican Republic was attractive for cigar-making back in the 1970s. There were two factories, local factories, and then Consolidated came from the Canary Islands. We established ourselves in Santiago. General Cigar and Fuente came later.
CA: So you avoid a duty on the tobacco you bring in. What about on the cigars that you ship out?
Quesada: There is no export duty.
CA: So you save the consumer a lot of money and, I assume, the theory there is that you're creating jobs?
Quesada: Exactly. And also bringing hard currency into the country, because we pay all the expenses in dollars.
CA: Do the locals in the Dominican Republic understand that cigar-making is something which is really exciting and healthy and great for their country in terms of growth and export?
Quesada: Quite so. It not only creates labor and jobs, but it also creates a name for Dominican Republic. It's a product that is recognized worldwide.
CA: Do you get government support?
Quesada: No, we don't.
CA: What's an example of something for which you, as an industry, have tried to get the support of government, but were turned down?
Quesada: When we started the institutional advertising for Dominican Republic in Cigar Aficionado, we went to the government and told them, This is a wonderful opportunity for you to promote Dominican Republic. We wanted the government to come in with us and afford us a bigger scope of advertising. And the government said, This is your enterprise, you go do it yourself.
CA: That campaign, I remember it well, was part of ProCigar. Where is ProCigar now?
Quesada: ProCigar is alive and well. ProCigar has eight members, back to the original number that it was three years ago. We still meet regularly. We are continuing the job that we proposed to do when we started ProCigar: promote Dominican cigars.
CA: I remember that one of the missions--aside and apart from building brands, which are the responsibility of each owner--was to affect a sort of cooperative effort to strengthen the image of cigars made from the Dominican Republic. It would appear that that's been on hold for the last few years.
Quesada: It has been on hold. The arrival of all the new cigar manufacturers into Dominican Republic created a sort of situation where we could not create ill will amongst us by separating ourselves from all the manufacturers in Dominican Republic. For a couple of years we were in discussions about internal problems that faced industry in Dominican Republic such as labor, tobacco availability and so on. That has been settled finally. Now, we are back into looking at promoting Dominican Republic. We're finishing a campaign that should come out early next year.
CA: When I used to go to Europe five years ago, if I went to a classic tobacconist in London and they had a Dominican cigar, it was usually on the bottom shelf. The tobacconists would say they didn't want to sell them, they were low quality, there was no market for them. That's changed. Do you believe there's a world market for non-Cuban cigars?
Quesada: Quite so. The only problem that we have had is that we have not had enough production to dedicate ourselves to Europe or any other market. The United States has captured our attention completely. Some product has gone to Europe and one particular manufacturer has dedicated themselves strongly to Europe and they have done a wonderful job vis-à-vis the Cuban cigars in Europe. That is, of course, Davidoff. They have done a magnificent job in promoting Dominican Republic cigars in Europe and their sales have grown every year since they started making cigars in Dominican Republic.
CA: But Davidoff is based in Switzerland. What about you and the other mainline manufacturers? Is it still entry-level pipeline push or is there real consumer demand developing now for your cigars as an alternative?
Quesada: I can only speak for our situation because I have no idea what the other manufacturers have faced, but in the last four years, we have unfortunately had to say no to European manufacturers and distributors who have shown interest in distributing products from our company. If they feel that they can ask us for product, they must be sure that they can sell in Europe, so that indicates to me that there is a possibility that there is a market out there for us.
CA: You're one of the leading producers of maduro cigars. Is there a growing demand for that kind of wrapper and is there a growing supply to meet that demand?
Quesada: I don't want to say that there's a growing demand. There is a demand, perhaps because it has been unsatisfied in the last couple of years. Maduro cigars are a very individual type of cigar that has a specific market. The maduro smoker is a maduro smoker. He wants nothing but maduro and that's what he smokes. There is a shortage of maduro cigars and there will be a shortage of maduro cigars because of the line of supply, which comes from two particular countries, Mexico and the United States--where broadleaf is used. There's a shortage of broadleaf in Connecticut because of blue mold this last crop. In Mexico, they have started growing more of the maduro crop in San Andres, but they haven't caught up yet.
CA: So, does that mean that your production of maduro is going to decline?
Quesada: It will not decline, but it will not grow significantly. It will stay basically within the same level. Today, we have about 20 percent of our production into maduro cigars.
CA: The 1995 crop is mostly in the market, if not already sold, and 1996 is in the market, and 1997 is just starting to come in. How do you rate the quality of those three vintages?
Quesada: Those three years in Dominican Republic have been the greatest crops that we have ever had in terms of quality.
CA: What is there about the quality of tobacco that made it distinctively better?
Quesada: We had wonderful growing seasons. We had just the right amount of rain. We had the right amount of people taking care of the crops. We had the barn space to hold the crops, we had the warehouses to hold the crops. We had the time to work the crops. But basically the growing conditions were what gave the starting point for the best three crops we have ever had. Which in the situation of the market, it was a blessing. If we had a disaster in any of those years, we would be in dire straits.
CA: On Sunday afternoons, after you've had brunch with your family, and you go out on your deck, which cigar do you smoke?
Quesada: A Fonseca 7-9-9.