Villiger Söhne AG is one of the world’s largest producers of machine-made cigars, but is not well known in the premium cigar world. In past years, it has made a foray into the handmade market with its U.S. division—Villiger Cigars North America. Part of that has been a major restructuring of its staff, including a new president. About a month ago, it moved its offices to Doral, Florida. The official ribbon cutting included a U.S. visit from parent company chairman Heinrich Villiger—the first time in 22 years. Villiger, 85, and the grandson of the founder, grew up in the industry, working summers for the company as a student and joining full-time after leaving high school. He became a partner and head of manufacturing in 1954. In that position he modernized machine production. Villiger has since traveled the world buying tobacco. Before the recent ceremony, he sat down with Cigar Aficionado senior features editor Jack Bettridge for an interview. They were joined by Rene Castaneda, president of Villiger Cigars North America, and José Matías Maragoto, president of ABAM Cigars SRL, which produces some premium cigars for Villiger in the Dominican Republic.
Bettridge: Tell me about the background of your company, please.
Villiger: We are a Swiss company, quite an old company. My grandfather Jean Villiger founded this company in 1888. He worked for another Swiss cigarmaker and started his own company when he was maybe 34. But he died in 1902 when he was only 42 years old. My grandmother took over. She was very sophisticated, a liberated woman. She established a branch factory in Germany. She was the first Swiss woman do that, in 1910. Now, Germany is 10 times bigger than Switzerland. We produce in Switzerland, Germany, Indonesia and in Brazil. But we export in about 80 countries.
Q: In Brazil?
Villiger: You know, after Cuba, they have the best tobacco. But after the revolution everybody started making cigars in the Dominican Republic and Nicaragua. Brazil is very hostile to cigar making.
Q: Most of your cigars are machine-made. What of the premium, handmade cigars you are now importing to the U.S. market?
Villiger: Our main business is 99 percent machine-made and handmade is one percent, but I hope [that will grow].
Castaneda: The production of most of our [handmade] product comes from his company [nods at Maragoto].
Maragoto: In the Dominican Republic. I think we are the only company in Santo Domingo, and we started a relationship with Villiger in 1988. So we are 28 years in a very good relationship, with several brands.
Castaneda: We make some cigars in Nicaragua, and for them we rely on Oliva [Villiger San’Doro Colorado] and Joya de Nicaragua [La Capitana].
Villiger: So we have 1,500 people and we produced last year 1.5 billion units. We are among the biggest players.
Castaneda: We are taking a new direction. We are trying to be more focused on the premium side of the business for North America and to try to bring in a new direction.
Villiger: But we have a small factory in Brazil, 17 people. We make a puro in Brazil [Villiger San’Doro Maduro].
Q: When did you start in premium cigars?
Villiger: We had a division in Germany called 5th Avenue Products 40 years ago. Back then, cigars had a low image in Germany, so we had an idea to make a mail-order business for luxury items. We had Chivas Regal whisky, we had the best Cognac, we had glass from Murano in Italy, we had expensive Swiss watches. In this choice of luxury, we had cigars. We had no handmade production, but we had Cuban cigars, high-quality Mexican cigars, and from the Dominican we had La Aurora. So we tried to lift the cigar image. We never made money, but we realized we could lift the image of the cigar.
Twenty-five years later we made a joint venture with Habanos, the first of its kind, and now we are the exclusive importer for Habanos in Germany. We work very closely, we have very good relations with Cuba.
Q: So when was the first time you made premium cigars?
Villiger: Well, we have no financial interest in his company [Maragato] but we have been together 28 years.
Q: Why this focus on the premium market?
Villiger: The premium market was growing very much in the last years, mainly in America. We consider that worldwide cigar consumption is 24 billion: 50 percent United States, 50 percent the rest of the world. The premium share in America is 360 million. That share in America is more than the rest of the world and it is growing. So it is a relatively good market. Tobacco is so much under pressure for regulation with health labeling. If one thing is going to survive, handmade will survive.
Q: Can you please talk about the recent restructuring of Villiger North America?
Villiger: Well, we came back to Florida. We established the company here in 2001. You know America’s far away, and we had management problems, we have had changes of management over the years. So we didn’t grow as other people grew. Then we moved to Charlotte, North Carolina. We took over the agency of Scandinavian Tobacco. Then they terminated our contract. Then we moved to Richmond, Virginia, and had a joint venture with Sutliff [Tobacco Co.]…they had our sales organizations, but we were not so very happy with the sales. Now we move back to Florida. We have a new president and a new sales force.
Q: There was some controversy and online backlash recently about Villiger having to let go some of its sales team.
Castaneda: I should address that question. The team wasn’t performing. We had no choice but to let everybody go. We don’t want to answer to social media as to how the company is restructured. We made a decision as to how the company would be restructured. It was as simple as that.
Q: Is it true that Villiger has been able to buy raw Cuban leaf from Habanos for its products?
Villiger: You know Cuba is a big tobacco production company and they export. They do not export wrappers. They do not export binders. But they do export filler, mainly as scrap. They do not export premium cigar tobacco or long filler. So they export smaller leaves that we use as short filler. And we have been buying leaf from Cuba forever, and we are not the only ones. Only the Americans cannot buy. Swiss banks are very scared to do business with Cuba because of conflicts they’ve had with the U.S. Department of Justice. So when we do business with Cuba we work with French banks.
Castaneda: It is important to make clear that the cigars we send to the U.S. market have no Cuban tobacco.
Villiger: We have to sign an affidavit that “this product does not contain any Cuban leaf.”
Q: In which brands for Europe does Villiger use Cuban leaf?
Villiger: In all brands we have Cuban tobacco. Maybe 10 percent, maybe 15 percent. That depends. But not in America. Habanos has a joint venture with a Spanish company for premium cigars. For leaf tobacco they have a venture with a Belgian company. Not many people know this but Cuba is also producing flue-cured tobacco [for cigarettes].
Q: Is there any chance of Villiger ever using Cuban leaf in one of its premium lines?
Maragoto: Maybe when the embargo ends and Cuba opens the tobacco business to the rest of the world, why not? Now, even if we like, we can’t.