An Interview with Stanford Newman
When it comes to lengthy perspectives on the world of cigars, it is hard to beat Stanford Newman. Joining his father's business at the age of 18 in 1934, Newman recalls the days when manufacturers agonized over a price increase from five cents to six cents. He worked part-time through his college days and began a full-time career in the cigar business in 1938, resuming his career in 1946 after serving in the Second World War. Today, having bought out his relatives 11 years ago, Newman remains the proud patriarch of J.C. Newman Cigar Co. (formerly M&N Cigar Manufacturing), which owns hand-rolled brands such as Diamond Crown, Cuesta-Rey and La Unica, all of which are made by the Arturo Fuente family in the Dominican Republic. His sons, Eric and Robert Newman, oversee the daily operations of the company, and a 15-year-old grandson, Drew, hopes to join the company full-time after he graduates from college.
In a comprehensive interview with Marvin R. Shanken, editor and publisher of Cigar Aficionado, Newman reminisces about the cigar industry, and offers his impressions of the impact of today's cigar boom.
Cigar Aficionado: Tell us about the cigar industry in America at the turn of the century.
Newman: My father started in business in 1895. He was a journeyman and cigarmaker. He learned to make cigars by hand. His mother paid $3 a month for three years for an apprenticeship, and he finally became a journeyman. He worked for a factory for six months and it went out of business.
CA: Where was this?
Newman: In Cleveland, Ohio. My father came from Austria-Hungary in 1888 with his family and he had five brothers. Each brother learned a trade. My father decided to become a cigarmaker, and he learned to make cigars by hand. After he lost his job, his mother got him an order for cigars from a grocer where she used to shop. Now, at that time, there were few brands; most cigars were generics. The grocer gave my father an order for 500 cigars and he started from there making his own cigars. He finally got an order for 5,000 cigars from a wholesale grocer who also distributed cigars. Suddenly, he had to make a lot more cigars, so he got two or three of his buddies together and they started in.
CA: At that time, how big or how important was the cigar industry in the United States?
Newman: Remember that all cigars were made by hand, and there were over 40,000 cigars factories in 1895 across the country. In fact, those 40,000 had federal licences. It makes sense. It took very little capital to get into the cigar business. A person could go into manufacturing cigars with 10, 20, 30, 40, 50 dollars. In all the major cities in the United States, there were cigar dealers, wholesalers that sold tobacco by the pound.
CA: Let me go back a second. Why did the federal government license cigar manufacturers? You didn't need a federal license to make dresses or shoes, or to sell groceries. Why cigars?
Newman: The federal government wanted to collect taxes on cigars. At that time, you had to go to the post office and buy stamps to put them on cigars boxes, whether they were boxes of 10, 25 or 50. You put them on the boxes and you sold the boxes. But you couldn't sell the box of cigars at all unless it had a stamp on it.
CA: How big was the cigar industry in terms of the number of cigars produced and sold at the turn of the century?
Newman: The cigar market was probably perhaps two or three billion. At the height of the 1920s, I think there were nine to 10 billion.
CA: How were the cigars sold? If there were that many factories, were there even more cigar stores?
Newman: No, there weren't very many. There was usually one or two in each city that were exclusive cigar shops. Most of the cigars were sold through grocery stores. There were not any real cigar distributors at that time. All the wholesale grocers that supplied grocery stores handled tobacco products. There weren't any cigar jobbers probably until maybe in the '20s.
CA: Later on, in the '40s or '50s, there was a huge boom in cigar stores.
Newman: Yes. When I grew up in the '20s and the '30s, there were two chains. The biggest was United Cigar Stores. They had 800 stores. They went into every major city. And in every major city in the United States, they'd tried to get a downtown corner. There was another one called Schulte Cigar Stores.
CA: When was the retail trade at its peak?
Newman: Remember that the outlets were a lot different than today's cigar stores. They were on the corners in the best traffic patterns of the community. Most of them established themselves as cut-rate stores. They gave out coupons, especially the United Cigar Stores, which attracted a lot of people. Eventually, in the late '40s, the rents just got too high for most of them because it was hard to make money. The basis of their business was cut-rate cigarettes, pipe tobacco, chewing tobacco; and cigars were less and less dominant.
CA: Earlier, you said that all the cigars at the turn of the century were handmade. When did the transition to machine-made cigars take place?
Newman: Let me go back a little here, too. There was a man by the name of J.B. Duke who put all the cigarette companies together. He also purchased and bought every machine that was ever patented to make cigarettes. He formed the American Tobacco Co. In 1911, Teddy Roosevelt, who was a trust-buster, broke up the cigarette companies. That's when companies like United States Tobacco were started, and their business was the snuff or chewing tobacco business. The American Tobacco Co. had all the cigarette machinery, and they started making a cigar-rolling machine. My father bought some of the first machines that the company put out in about 1915. My father had one factory that he opened using machines exclusively to make cigars. You know, cigarettes weren't that popular at the time. It was during World War I that the cigarette companies gave out millions of packs of cigarettes to the Red Cross and they became apart of the rations pack. So, when [the soldiers] came back they smoked cigarettes, not cigars. At the time, my father had three factories, and he had to close two of them because none of the new smokers wanted to smoke cigars.
CA: When did cigars, machine-made cigars, really become the dominant part of the cigar industry?
Newman: In the early '20s. When the General Cigar Company and the Consolidated Cigar Companies and others were formed in the '20s, they all put in machines. That drove a lot of the small cigar factories out of business because they couldn't make as many. The smaller factories didn't have the capital to buy machines and eventually they began merging into bigger companies or they went out of business.
CA: Was the quality of the tobacco used in the 1930s the same whether it was handmade or machine-made?
CA: Then it was just a question that producing machine-made would involve lower costs and that would drive the handmade guys out of business.
Newman: There was one other factor. These large factories started to grow their own tobacco in Connecticut; Consolidated grew their own. Bayuk was a big factor. Bayuk made Phillies, which used be known as Philadelphia Handmades, and they changed the name when they went into machines, to Phillies. It was a cost factor, but on the tobacco end. The smaller companies couldn't buy the tobacco as cheaply as the big companies could produce it for.
CA: The tobacco then became the key. In 1900, all cigars were handmade. They were not branded, so it was essentially a commodity. Where did the tobacco come from?
Newman: In 1900, Connecticut shade had just started in quantity. But most of the wrappers were from Sumatra or Java.
CA: What about the binder and the filler?
Newman: Some binder and filler had started to be grown in Connecticut at the turn of the century. And much of the filler came from Havana, Puerto Rico and Pennsylvania, to a great extent. Most of these cigars had a blend of Pennsylvanian and Cuban tobacco.
CA: How did the tobacco change in the 1930s when machine-rolled cigars became dominant?
Newman: In the '30s, the wrappers were coming from Connecticut and also from Sumatra and Java.
CA: What about binders and fillers?
Newman: The binders were mostly coming from Connecticut.
CA: The Dominican Republic and Honduras and Nicaragua didn't play any role?
Newman: They didn't exist.
CA: What role did Cuba play?
Newman: Cuba was supplying tobacco to most of the manufacturers, in Tampa. After we moved to Tampa, up until the embargo, we used 100 percent Cuban tobacco.
CA: You were buying tobacco in bulk from Cuba in the 1950s?
Newman: Oh yes. We made 100 percent Cuban cigars.
CA: When did the Tampa manufacturers begin using Cuban tobacco?
Newman: It started before the turn of the century. The cigar business got started in Key West, Florida, and most of those people were from Cuba and Spain. They bought all their tobacco from Cuba.
CA: Between the turn of the century and the 1960s, the cigars that were made in Tampa were essentially all from Cuban tobacco.
Newman: That's right.
CA: Although you said cigars weren't branded, in fact there were thousands of what we would today call private labels, where practically every corner store had its own brand. When did branding as we know it today begin with cigars, and at what point was the first national major brand created?
Newman: You're right. The brands started to be made at the turn of the century, but we called them generic brands. They were essentially a lot of little brands that were created for different retailers who wanted their own labels. Some small buckeyes [small operators] also created their own brands. Let me backtrack for a second. I asked my father once how he really got started in the business. He said if someone went out of business in the early 1900s, he would buy the labels. If he bought the labels, he would be assured he would get a little business either from the retailers or companies who used those brands. When the cigar companies began to merge, some of the bigger ones, such as General Cigar and Consolidated, started to make brands with a wider distribution. They were able to advertise and have more of a national presence. However, even some well-known brands were still pretty much local. People didn't travel a lot until after World War II and there were certain brands that would be predominant in Akron or Buffalo, or some specific city.
CA: What was the first national cigar brand?
Newman: The first one I can remember is White Owl and there were not many others until the 1930s and '40s.
CA: Was cigar smoking a popular pastime?
Newman: At the end of World War I was one peak when there were about eight billion cigars sold, but it declined after that until 1964. After the surgeon general's report on cigarettes in 1964, it rose again for a while, but it was in steady decline from then until 1992, when less then two billion cigars were sold.
CA: A typical cigar smoker smoked how many cigars a day in the '30s, '40s and '50s?
Newman: Well, in the '30s most cigars were sold for a nickel or two for a nickel. Most smokers had four or five cigars a day. They were very price-conscious. When we raised a brand from five cents to six cents in the early 1940s, we lost half the business. But five a day was about average.
CA: What was the average size of a cigar?
Newman: The average size of a cigar was a perfecto shape that was about 5 1/4 [inches] by maybe 40 ring gauge. They were all perfectos. The pressed bunch didn't come along until later on.
CA: After the embargo began, how did the cigar industry in America change?
Newman: Up until the embargo, most of the premium cigars that were made in the United States were made in Tampa. At that time, they were made of all-Cuban tobacco. We had an association in Tampa which owned a little boat that went back and forth between Tampa and Havana, called The Privateer. It brought tobacco to Tampa twice a week. The boat was usually full. Most of the factories in Tampa stored all their tobacco in Cuba, and they would send down orders and they would load the ship with what they needed for the next week.
CA: Where was this tobacco storage? In Havana, or in the Pinar del Río?
Newman: Most of tobacco was kept in warehouses in Havana after the leaves were packed. Most of the factories in Tampa had their own processing warehouses. Some of them would buy directly from the farmers and they would process and pack their own tobacco.
CA: OK, so up until around 1960, was there such a thing as a premium market segment like there is today? Were there expensive cigars? Were there cigars made from a much higher quality tobacco that would differentiate them in terms of quality and/or price?
Newman: The cigars that were made in large volume were 26 cent cigars, which had been 25 cents up until about 1954 or 1955. The 26 cents stayed through the embargo. You couldn't get 27 cents because people wouldn't pay 27 cents for a cigar.
CA: Was there a premium industry?
Newman: Some of the factoriesæCuesta-Rey, Gold Labelæmade some higher-priced premium cigars for 35 cents. There were very few cigars that were made in Tampa that were over 35 cents because there was no market.
CA: Is Tampa the one area of the country that made the cigars?
Newman: That was the only area that made Clear Havana cigars, except for one factory in New Jersey that was run by the American Tobacco Company in Newark that did Clear Havana, too.
CA: So, in the 1950s and in the early '60s, what brands would you say were the premium cigars of that period?
Newman: As I said, Gold Label had some sizes and Bering did, too. They were a little bit more than the 26 cents, but I would say 90 percent of the cigars sold were sold for 26 cents or below. There were a lot of cigars that sold for 10 cents. They were made of the by-products from the factories. They were made of the short filler and they were made by machine. But in Tampa, they didn't make any machine cigars until about 1950 or 1952. It was all handmade.
CA: The embargo arrives, and 100 percent of the cigars in Tampa are made with Cuban tobacco. What happened to the cigar industry there?
Newman: In the beginning, we thought that the embargo would only last for about six months. We didn't believe that the U.S. government would keep an embargo. But when we started to run out of Cuban tobacco after two or three years, many of the factories wanted to sell their businesses because they couldn't get any more Cuban tobacco. Gold Label was sold to General, Bering was eventually sold to Swisher, and Perfecto Garcia was sold to United States Tobacco.
CA: Does that mean those factories stopped making cigars for a while, or did they get tobacco from other places?
Newman: They tried to get tobacco from other places. We got tobacco, mostly wrappers, from Cameroon in 1962. But the price went up from $7 to $14 [a pound]. Nobody in Tampa or in the United States wanted to pay that much, because in Cuba they only paid $6 or $7 [a pound] for tobacco.
CA: Was this the first time the Cameroon wrappers were brought in?
Newman: That's right. There was no reason to use Cameroon tobacco when you could get Cuban tobacco. We used the top grades of Cameroon, because I thought that if we had something of quality, we could keep our market. It was not exactly a substitute. It had a different taste, but it was a very, very fine wrapper.
CA: Who went out to find the Cameroon wrapper?
Newman: Cameroon wrappers were being sold in Europe to the European manufacturers at that time. They started an inscription, actually an auction. Inscription is something where you put in sealed bids, but it's really an auction. They started that in about 1954 or '55.
CA: Where did the binder and filler tobacco come from?
Newman: The binders came from Connecticut, and we also got wrappers from Connecticut. The filler started coming in from the Dominican Republic and Nicaragua and some from Honduras. But what really changed the business in Tampa so rapidly was that Cuban cigar manufacturers after the embargo went to Nicaragua, the Dominican Republic and Honduras. They also started selling cigars in New York and California and Detroit and Cleveland and other places, like Miami. They made cigars larger than we did in Tampa and charged less money than manufacturers in Tampa could. And, you couldn't change the size of the machines in Tampa. Cigars started to be made, too, in Santiago, the Dominican Republic.
CA: What about taste and quality?
Newman: The quality was good because a lot of these people coming from Cuba had a good taste for tobacco, and they started to grow Cuban-seed tobacco in the Dominican Republic. Now, the Dominican Republic had the soil that was very similar, especially around Santiago, to Cuban soil.
CA: In effect, the Dominican Republic tobacco industry began to evolve when the Cubans left Cuba and searched for new homes, and began to practice their trade in a comparable climate. How were the cigars different? And what was the reaction from people who had been smoking Cuban cigars from Tampa all these years and now, all of a sudden, had to smoke something different?
Newman: Cuban tobacco had its own distinct flavor. But the people couldn't buy Cuban cigars anymore, so they had to change their taste. Some of the Cubans brought tobacco seeds from Cuba into Nicaragua and Honduras and the Dominican Republic. It was a heavier, more aromatic type of tobacco. They started to grow the Cuban-seed tobacco, and the majority of the cigars that were made in those countries were made from that tobacco. But they didn't taste the same.
CA: What was the reaction from cigar smokers in America when they were no longer able to buy Tampa-made Cuban cigars and they were now given this alternative? Was there a good reaction? Was there, you know, "This is not my cigar. It doesn't taste a bit like it," or "Hey, this is nice"? What was the reception for the Dominican cigar?
Newman: The cigars that started to come from Honduras, Nicaragua and the Dominican Republic, the smokers accepted them because they couldn't buy anything else. Some of those cigars were better than others, especially the ones with aged tobacco. But those are the ones that even today people like better.
CA: Is it fair to say that the embargo, because it permitted these Cuban-exile cigarmakers to set up operations in other countries, triggered the beginning of the premium cigar market as we know it today in America?
Newman: When they started to make cigars in the Dominican Republic and Honduras and Nicaragua, they were priced at the same prices that we were selling them in Tampa, 26 cents. However, they took the business away from Tampa because those new cigars were handmade.
CA: After the embargo, to the best of your recollection, what was the first premium brand to surface and emerge as a premium handmade cigar sold in America from the islands?
Newman: The first brands that came into the United States that were handmade were from the Canary Islands. One was Montecruz, brought in by the Dunhill people. And there was, I think, Don Diego. There may have been one or two others, but they were small.
CA: What about Macanudos?
Newman: Macanudo, I think, started out in about 1964. I remember that my friend Martin Annis in Tampa told me that he'd gotten a call from Edgar Cullman [Sr.], on vacation at his home in Jamaica. He wanted to know if he should buy a factory called Temple Hall that was making about four million cigars a year. He asked Marty, who was already working for the General Cigar Co. at the time, whether he thought he could sell the cigars. Marty said, "Go ahead and buy it." So, Cullman bought the Temple Hall factory. Now, there were no Macanudos sold in this country at the time. There were a few Temple Hall cigars sold, there were some other brands that were sold by Faber, Coe & Gregg. Most of the Macanudos at that time were sold outside of the United States.
CA: Was Royal Jamaica around at this point?
Newman: Royal Jamaica came in a little bit later. That was a family by the name of Gore, who made them in Jamaica.
CA: Tell me how your relationship with the Fuente family began.
Newman: In 1980, I saw what was happening to the whole industry in Tampa. It was clear to me then that these people from Nicaragua and the Dominican Republic and Honduras were taking some of our business. It wasn't critical for us because our business was so strong. We were able to sell some of our machine-made Cuesta-Reys, especially our Cuesta-Rey '95s, because the quality was so good. We were the only ones at that time using Cameroon tobacco. We were able to sustain our brand. Still, we were looking to have our cigars made in Nicaragua, or in the Dominican Republic, by hand. After making a survey, I realized there was no way that I could have cigars made unless I'd run the factory myself. I was a little frustrated about that because I never found a factory that I could connect up with.
In 1986, Carlos Fuente [Sr.] was running a factory in Tampa for himself. He had also set up shop in 1980 in the Dominican Republic. Just prior to that, for a couple of years, he had been manufacturing in Nicaragua and he got burned out there from the revolution. So, he went to the Dominican Republic in 1980 with a couple of cigarmakers and he started a factory down there. I'd known him for about 20 years. I thought he was always one of the finest cigar manufacturers, even though he was small at the time.
When he came to me in 1986, right after I had bought out my other family members, he walked in and he said that he would like to close his factory in Tampa, and he'd like us to make cigars for him. I said, "Well, of course, let me see what the prices would be." I did that, and realized I couldn't make any profit on the deal. So, I said to him, "I'll make them on one condition: if you'll make cigars for us." And he said, "Well, I'll do that."
I was looking for somebody to make cigars who I could really trust. And if there's any person in the world that I'd known who I could trust, it was Carlos Fuente. And so I said, "Well, let's sit down and make four or five shapes, and let's get a blend that you think will sell, and we will put them in bundles." I had a brand that we'd bought when we acquired Cuesta-Rey called La Unica. We weren't using the label, so I said, "Let's put this in bundles of 20 cigars of five sizes and we will sell them to 300 or 400 cigar stores. In six months, if we see it's successful, if people like them and they like the blend, we'll take the brand off the market and we will start slowly changing Cuesta-Rey to hand-rolled, and have you make it for us."
The La Unicas were so good that today, I think they are the largest-selling premium cigar in bundles. We never took them off the market because the brand was so good. One thing that always impressed me with Carlos was that he had the same feeling for the business that I did, that he believed in large inventories. And all the money that he made from 1980 till 1986, he put into tobacco. All his profits that he made. Because he felt that he could only make a good product if he had aged tobacco, and I know that you can't make good product in cigars unless you have an inventory.
CA: What kind of volume did you do with La Unica in 1996?
Newman: La Unica can be much bigger, but, of course, it's like all the other cigarsæwe can only make several million of them, and we just keep them down, but we've increased the prices like every other manufacturer. When we first put La Unica on the market, we labeled it La Unica Primeros because all the cigars that were in bundles on the market at that time were seconds from factories. And, I wanted to make darn sure that we could charge more than what the bundles go for. These cigars are primeros.
CA: So La Unica are not seconds.
Newman: No, they're firsts. They're primeros, and that was the thing, and I wanted to put them on the market. I didn't want to have any cigars with bundles. At first I didn't like the idea of having bundles. I wanted to take them off the market, and I planned to, but it became successful.
CA: How did Cuesta-Rey become part of your company?
Newman: Cuesta-Rey was a brand that was started in Atlanta in 1884 by Angel Cuesta Sr. He'd come from Spain. In 1886, he moved his factory operations to Tampa, when Tampa was being established as a cigar manufacturing city, and at that time, the Chamber of Commerceæthey called it the Board of Tradeæwould build a cigar factory and all the houses around it for the workers if they could get somebody to lease it for five years. And the Cuestas started a factory, in 1886, in Tampa. The Cuestas and I got to know each other pretty well, and when my father passed away, in 1958, I approached them about buying their business. We made a deal and it worked out very, very well.
CA: Did you buy the brand name, or the business?
Newman: We bought the business. We bought the tobacco. We bought whatever equipment we needed, and anything that had a Cuesta-Rey name on it. They had some other brands, White Heather and La Unica, and some other brands. Now, Karl Cuesta wanted to also give me some brands that were registered in Cuba, like El Rey del Mundo. And Karl said, "Just pay me for the labels." And I said, "I'll buy them, but I'll throw them away. I'm interested in just having one brand." We had the Rigoletto brand, which was our high-priced brand. We changed it to a medium-priced brand and we made the Cuesta-Rey the premium brand.
CA: How big was the Cuesta-Rey business that you bought in 1958?
Newman: At that time, it was maybe four or five million cigars.
CA: And revenue would be?
Newman: Not too much. Most of their cigars were on the cheaper end of the spectrum.
CA: Was it a good buy?
Newman: Cuesta-Rey was a name that had been established all over the world. The label had not been hurt like a lot of other brands that had once sold for 30 cents, and were now selling for 10 cents. The brand was never hurt, and that was one of the reasons I was interested in it. But another reason I was interested was that there was a Cuesta-Rey made in Cuba, but the government never registered the trademark. I knew we had an opportunity because Cuesta-Rey was one of the few brands that was being made in Tampa with a Cuban brand heritage that could be sold all over the world. The factories that are making Hoyo de Monterrey, H. Upmann or Partagas in this area can't sell these brands all over the world. So, in the last two to four years, we started to sell our products in the Pacific Rim.
CA: When did you decide to create the Diamond Crown brand?
Newman: In 1990, I decided I'd been in this business for so long that I wanted to create something different. The largest ring gauge cigar was about 50; there were a few 52 ring gauges. I thought we could make one that was 54 ring gauge. So we created five sizes, from 4 1/2 to 8 1/2 inches. All 54 ring gauge, all the same blend. The only difference was the size of the cigar.
And at that time I talked this over with Carlos Fuente Sr., and Carlito [Carlos Fuente Jr.] to see if we could make something that was very special. What I wanted to do was to take Connecticut wrappers that were several years old, and keep them for about five years, and take this wrapper and re-sweat it, you know, open up the bales again and re-ferment it so that the harshness would disappear from the leaf. I wanted to take filler tobacco that was four or five years old and, combining the two, make a cigar that was special, even if it would take me two or three years to do it.
So, after three years, new cigars were coming out that were more expensive. I had wanted to have the most expensive cigar on the market, and by 1994, there were so many new cigars coming out with bigger ring gauges, as big as 54, a few of them, and some of them were as expensive. Now, by the time we got them out, our cigars were still expensive. Today, they sell from, I think, between $8 and $16.
We started a year ago in California. No place else. We thought we'd have a lot more cigars. We have two teams in the Fuente factory. The people were being paid by the day instead of by the piece, and they only made about 75 cigars a day. We thought we'd put out that way maybe 150,000 cigars. But then lo and behold, as we started out in California, we lost one of our teams. Somebody came in there and [took] not only ours but some of the people that were making some of the Fuente cigars, and these were some of the best people. They stole our cigarmakers and they made them supervisors in some of these new factories. So, instead of making 150,000 we made, maybe, close to 100,000, and that's about what we're making today.
CA: In 1996, you shipped how many Diamond Crowns?
Newman: About 100,000.
CA: In 1997...
Newman: We won't be shipping any more [than 1996]. We hope to ship the same.
CA: So, in other words, are you saying that for the near future...
Newman: We hope to be back to about 150,000 a year and more. But it's very difficult down in the Dominican Republic because they're stealing our people. They're paying $15,000 Dominican, as much as $1,500 American, to try to steal the better cigarmakers from the Fuentes. I think they've lost 90 workers this year. It's difficult.
CA: Is there a plan to ever get this to a million?
Newman: Oh yes, yes. There will be a plan once this situation settles down. This may be another two or three years. The Fuentes are training people, but the whole situation, I think, is difficult.
CA: Do you have tobacco set aside?
Newman: We certainly do. Not millions, but we have tobacco aging for the Diamond Crown.
CA: Can you get up to a half a million?
Newman: Maybe eventually to half a million, but I don't think we'll do any more than that. It may take two or three years. And the plans were that we were going to sell the Diamond Crown on the West Coast and come east, and a Fuente Fuente Opus X was going to go from the east to the west. The Fuente Fuente Opus X--I think they're only sold up to the Mississippi River today, although they're probably black-marketed all over.
CA: How do you build a business that's so strapped from a production side? What goes through your mind?
Newman: Well, my way of thinking is that the Fuentes are the best manufacturers by far, and have the best value of any cigar manufacturer in existence because of the way they make their cigars, and the way they run their [business]. They don't have anything that's fancy; their overhead is very low. And they're so good because they live there. And the theory goes back to when I used to go to Cuba; I used to know that the best tobacco was kept in Cuba by the Cuban manufacturers.
CA: How old are you now?
Newman: I'm 80.
CA: Eighty years old! You spent your whole life in the business. You've seen the rises and the declines and the most recent resurrection, if you will. Things have never been so good. You have your kids in the business today. But you can't get enough product to really allow your business to rise to the level that the market wants. Is this very frustrating to you?
Newman: It is, but we're hoping that it will alleviate itself. I think in time--it may take a year or two--it will alleviate itself, because I think this competition for tobacco, the competition for labor will stabilize sometime. It will certainly be more stable on the popular brands. But it will not stabilize for the new brands, which are destabilizing the market very bad down there. They're paying a lot of money for tobacco, and they're paying for tobacco that some of it is good, but some of it's very new, very green. They say that when they go out to sell the cigars, it's young tobacco. I think a lot of these things will level off.
In the meantime, the Fuentes are building a fifth factory. They have one factory that has, I think, 200 or 300 learners [apprentices] in there. The other people in the businessæGeneral Cigar, has a similar amount of learners, Consolidated has learners. And, I think if the main brands become more plentiful, it will stabilize the whole industry. But, as I say, it is frustrating right now. But, I'm real happy to see that in the computer in our factory, for our distribution system, that we sell to 2,000 or 2,500 retailers, and every time we get a shipment in from the D.R., they get some cigars.
CA: What made you go into the humidor business? What was the thinking behind that?
Newman: We have bought and purchased from Reed & Barton over the years, humidors that we put in 20,000 restaurants. We had our better sizes of our Cuesta-Rey [cigars], our numbers 1s, 2s and 3s, the more expensive ones. [Selling cigars to restaurants] was one of the ways we marketed them. And we had them make humidors so we could give them to the restaurants. But for the past two or three years, we had lost most of our restaurant buiness because the owners often couldn't sell cigars in the restaurants. We hadn't done very much business with them recently. About two years ago Reed & Barton said to us they were beginning to get requests for humidors from jewelry stores and department stores.
They wanted to know if they started to sell humidors, whether we would go into the business [distributing them]. And, at that time, I, and Eric and Bobby, conducted some surveys and talked to a lot of retailers: "If we had humidors, would you buy them?" They'd be made by Reed & Barton. "Oh, of course we would, because when we place orders with people from this country, from Italy, from Spain, we don't get the humidors. We place them at the RTDA [Retail Tobacoo Dealers of America convention] in July or August, and they come in in January or February." I got the idea that we would keep the inventory, and if people wanted to buy one, or if they wanted to buy 10, that it would be a very good idea. And we've been very successful because Reed & Barton goes back to 1824. They've made jewelry cases and cases for their silverware.
CA: In 1996, how many Diamond Crown humidors did you sell?
Newman: About 40,000.
CA: Forty thousand! Maybe you'll go out of the cigar business! [Laughter]
Newman: We have some new accounts [about which] Carlos is saying, "We can't sell them cigars, but we can sell them humidors." I mean, we haven't opened a new account for two years on Cuesta-Rey or Fuente cigars.
CA: You said earlier that your father started in the cigar business in 1895.
Newman: That's right.
CA: You bought out your relatives in 1986.
Newman: In 1986.
CA: So, it's your family's business. You have two sons, Eric and Bobby, who are in the business. You have a grandson, Drew, who plans to get more involved. What's your dream for your family and the future of your family business?
Newman: My family can be in this business for another 100 years if they will apply what my father told me. He said, "If you make cigars of quality, you can stay in business for another 100 years, but if you make something cheap, somebody can always make them cheaper and you'll go out of business in six months." He impressed that upon me all the time, that we should strive to make something of quality. Now, something has happened in our whole culture. There're a lot of upscale people. In the past 20 years, you see ads in the paper for people where they can get more interest on CDs. There's so much disposable income.
We have a situation in our country where there are trillions in mutual funds. Where did the money come from? That's all disposable income. It's from somebody. And so, we have a market out here that people will enjoy a product if they enjoy life, and they can enjoy a cigar. That's why I feel that [our family business is] going to be here for a long time. But, my sons have to be very, very careful for the future of the business that they stay focused on what they're doing. And, one of the things is if they want to hold on to their business or if they decide to go public. If they decide to go public, then it's a public business and it's no longer theirs anymore.
CA: What would you recommend them to do?
Newman: I recommend that they just keep on working, and enjoying life, and try to make the quality products and try to be of service to customers and try to have a mission in this world for the company and for themselves. Not just making money, but for something to help humanity.