Austin McNamara has become a well-known figure in the cigar industry during the tremendous sales boom of the past five years. As president of General Cigar, he has led the company through the most significant period of growth in its history. But that's not why he took the job, leaving his position as group vice president and general manager of the prepared foods division of Chiquita. At the time, he was charged with bringing some of his marketing expertise to a company that had seen its market slowly declining and had been searching for ways to reverse that trend.
McNamara has shown his stuff over these past five years. He was involved in the successful campaign to launch and sell the one-time Partagas 150 series; he helped shape and bring to market the new Cohiba brand; and has been integral to the marketing campaigns of Partagas and Macanudo, seen by many in the cigar industry as standard setters.
The 43-year-old McNamara also is steeped in a background of corporate analysis and market research, and he has used that training to produce valuable information and insights into today's cigar-smoking trends. In a wide-ranging interview in November with Marvin R. Shanken, the editor and publisher of Cigar Aficionado, McNamara talked openly about the incredible ride of the past five years, and his optimism about the next five years in the cigar market.
Cigar Aficionado: Recent press reports have suggested the cigar boom is peaking. Given General Cigar's perspective on the market, what impact will that have on future cigar consumption in America?
McNamara: There is a shakeout going on. I think it's healthy for the cigar industry. I believe that the secondary brands and the third-tier brands are having a tough time selling. We've seen no slacking in the demand for our premium brands. In speaking to other premium manufacturers, they seem to have the same kind of demand that existed last year and continued on into this year. That's good.
The reason is because great tobacco is the source of great cigars. These new cigar brands are not doing as well, primarily based on the inferior tobacco that they are using. Most of the major manufacturers have held tight to their standards. They continue to produce high-quality cigars. The consumer and the retailer are coming back to quality. I think that bodes extremely well for General Cigar and our brands, because we produce a quality cigar and our consistency and quality are second to none. In many ways, we're perfectly positioned, even in a shakeout.
CA: What allowed so many new unknown brands to be successful? After all, the cigar market has always been brand-driven, which made it tough to launch new ones. How did that change?
McNamara: The new smoker coming into the marketplace explains it. They were experimenting with many different flavors from many different countries. Your publication has done an excellent job of educating them about various countries of origin, different brands and even highlighting those different brands. There's a whole ethos of experimentation with the new 25-to-40-year-old consumer. That's great.
CA: Wasn't it also a fact that major premium marketers such as yourself couldn't give the retailer enough product, so that they looked to other brands just to fill their shelves?
McNamara: Clearly, the retailers were in a tough spot. They could not get sufficient quantities of name brands or the top brands, the brands they really wanted to sell. So they had a choice: Do they go bare on the shelves or do they experiment with other brands? Some of them experimented with them. But the major brands have come back. We've significantly expanded our production. Last year we went up by 50 percent. This year  we went up by 50 percent. Next year we plan to go up by 50 percent.
CA: Do you see any resistance in terms of supply and demand for your brands this year or next?
McNamara: No. We are so far behind the demand curve for our brands that we still have a lot of growth potential before us.
CA: Given the portfolio of brands that General Cigar already owns and the fact that some of those brands are yet to be developed in the marketplace, because of your focus on Macanudo and Partagas, what was the rationale behind the acquisition of Villazon?
McNamara: We are a brand-driven company. We believed that Villazon represented the largest group of very powerful brands in the industry. It was an acquisition that we had coveted for a long time. We have great relationships with [Villazon's former owners] Frank [Llaneza] and Danny [Blumenthal]. It built on our portfolio of brands. Now, we own U.S. rights for seven of the top 10 former Cuban brands and we've got two very powerful brands, Hoyo de Monterrey and Punch, which are in the top 10 in the country in terms of reputation and image, and we've got many brands, even those that you mentioned that weren't even being developed.
CA: Aren't you still putting virtually all of your energy and resources behind the larger-selling brands and giving some of the secondary brands less attention?
McNamara: I think to answer that question, you have to come back to the issue of tobacco. Tobacco availability is our number-one constraint. As we expand our tobacco inventory and capacity, we will be able to come on line with those incremental brands.
CA: Does that mean in 1998 and beyond, we'll see General Cigar begin to put more marketing muscle behind brands such as Ramon Allones, Temple Hall and Bolivar, or will they continue to take a back seat to Cohiba, Punch, Hoyo de Monterrey, Partagas and Macanudo?
McNamara: Because the demand is so great for Macanudo and Partagas and Punch and Hoyo de Monterrey, we still need to take care of those brands. They are very large. But we have also got very specific plans for many of the middle-tier brands--Bolivar, Sancho Panza, Ramon Allones--to market those brands as aggressively as we do the big brands.
CA: Just out of curiosity, the four brands you mentioned--Macanudo, Partagas, Hoyo and Punch--about what percentage of your total do those four brands represent?
McNamara: Of the total premium side of the company's business, about 75 percent.
CA: How large is your premium cigar business?
McNamara: You mean in units?
McNamara: We don't give out units.
CA: I'm not asking for individual brands.
McNamara: In terms of branded product, I think it's 60 percent. And, I believe that in 1997, in total, we were one of the largest premium cigar producers in the world.
CA: How large?
McNamara: We don't quote that.
CA: I see. Let's deal with brands for a second. Of the lesser four, will any of those brands receive increased amounts of attention from you in 1998? Which and in what way?
McNamara: Each one of the brands will continue to be marketed separately. We'll probably develop new promotional activities. We have a couple of new product launches on line extensions, new sizes. So I think that most of the top seven brands that we have will receive incremental focus.
CA: Is there anything in the new product area that you can talk about?
McNamara: Not right now. We are still finalizing those plans. We launched three new products in 1997. The Macanudo line launched the multiyear vintage product. We launched Cohiba, which is the biggest thing we've done in 15 years. And we introduced Cifuentes. Cifuentes would be viewed as a smaller niche brand.
CA: Is Cifuentes a limited distribution product?
McNamara: Yes. Very small.
CA: Is it too soon to talk about the degree of success with the Cohiba launch, which took place in February 1997?
McNamara: All our early indications are tremendous. Sales are very positive; demand in terms of people requesting it and seeking information is very, very high. But you know sales have really only been going for five or six weeks, so it's really too early to tell.
CA: How many cigars are you going to put into the marketplace between now [the November interview date] and the end of the year? It has to be a small number.
McNamara: We don't talk about numbers like that.
CA: You can't even talk about what your long-term goal for the brand is?
McNamara: Our long-term goal is to make it the very best cigar that is available in the United States, that will be considered one of the best cigars in the world. We think that it has the potential of being one of the world's great cigars.
CA: Cigar brands have had to boost prices in recent years to offset increased costs of tobacco and labor. But there are signs that consumers are beginning to resist the higher prices, especially above six dollars, and they are becoming more and more price conscious. What are your thoughts on pricing in the premium cigar market, and what are your thoughts about General Cigar's pricing?
McNamara: Macanudo, if you go back 10 years, was always the highest-priced, highest-quality cigar in the marketplace. And when the boom occurred, let's say in the beginning of 1993 and accelerating in 1994, there were many new brands that were introduced with prices well in excess of Macanudo. In some ways, we were sandwiched. We took price increases in line with what the market could bear. Our prices are definitely higher today. But we are still well below a lot of the brands that came to market during that period, and there are many new brands quite a bit higher priced. We've seen little or no price resistance on our major brands. We took a healthy price increase in the beginning of the year and we took one in midyear, and we've seen no slowing up in the demand for our product.
CA: Do you have plans for another price increase in 1998?
McNamara: Generally, we have annual price increases, but we do not have it in our plans at this time because obviously, we're sensitive to the pricing issue.
CA: What percentage increase did you have in 1997, in the beginning of the year and then later in the year?
McNamara: I think we took about an 11- or 12-percent increase in the beginning of the year and then we took another 5 or 6 percent in September. That has been our pattern over the last couple of years. Because of this pricing sensitivity, I'd be surprised if we take two increases [in 1998], if any.
CA: Many of the new brands, which have been very high-priced, are reportedly dumping their product on the market right now, in some cases at 10 to 20 cents on the dollar to various retail chains. How does that affect your business, especially when some of these brands which were priced more expensively now will be less expensive than your brands?
McNamara: I think it goes back to the quality of the tobacco. I believe that a lot of those cigars are finally getting to the price that they are actually worth, rather than what they were charging in the beginning. In terms of cigar quality, a lot of those cigars didn't justify the price they had before. So, the drop in their prices is healthy. I think that value and quality are coming back both into the retailer's mind and the consumer's mind. I don't think that that will affect or restrict our ability to sell our major brands.
CA: When you think about the premium cigar market five years ago at 100 million cigars, and in 1997, if it surpasses 500 million imported cigars, where do you see the market reaching in five years? Where would you like to see General Cigar in that framework?
McNamara: It's really tough to project the future. I mean, even the change [in 1997] is really dramatic in terms of shaking out the market. We did an analysis of all similar categories that had this kind of explosive growth, one of which, you know, is the wine business. We went and looked at the wine business. We looked at premium meats. We took a look at premium coffee. Their rate of growth went through a bell-curve shape. They started out slow--5, 10, 15 percent, and they would accelerate to a peak somewhere around the fifth, sixth or seventh year. And then they would gradually go down about the rate at which they went up. Obviously, you can't say that experience is going to be replicated here. But, I believe that good, healthy growth for premium-quality brands will be double digit for some years to come.
CA: You mean the cigar market, or General Cigar's share of the market?
McNamara: I think that we will outpace the market, because of the quality of our brands.
CA: So, you're saying that General Cigar's market share will increase over the next five years?
CA: What is your market share today?
McNamara: We don't give those numbers out...(laughs). Sorry.
CA: Can you tell me a little bit about the history of Jamaica vis-à-vis Macanudo, and what the present and future plans are, in terms of production?
McNamara: We expanded the capacity of Jamaica by 50 percent in 1997. We're about tapped out in terms of the present facilities. We don't have any plans to expand.
CA: Does your factory in Jamaica produce anything other than Macanudos, or is it strictly Macanudos?
McNamara: Some Temple Hall, but largely Macanudo. Macanudo was an old Jamaican brand that actually came about because of the special relationship with the United Kingdom. Because they had an opportunity to import it during World War II.
CA: Which sizes are made in Jamaica?
McNamara: All sizes are made in Jamaica.
CA: And, are all sizes made in the Dominican Republic?
McNamara: Oh no. We only have a selected few. Probably only three or four are made in the Dominican Republic.
CA: Do more Macanudos come out of Jamaica or the Dominican Republic?
McNamara: Oh, much more comes out of Jamaica. Much more.
CA: Given the market leadership of Macanudo, does that present problems in the future, or does that present opportunities for the future?
McNamara: Opportunities. Definitely opportunities. We have the ability to take Macanudo into other areas, whether it be line extensions or extended lifestyle products. It is a tremendous brand name. A brand name much bigger than just the cigar. We've been very successful with our logo clothing and we have plans in place to expand that out on to other products. Club Macanudo is a perfect example. Who could have ever dreamed that it could be that successful? A cigar bar.
CA: And as far as Macanudo outside of the United States?
McNamara: We believe that Macanudo is the world's largest-selling non-Cuban cigar today in units.
CA: But as a percentage of Macanudo sales, I'm sure [outside America] it's very small.
McNamara: Very small.
CA: Recently you acquired an export company that you used to do business with anyway, to expand the international distribution of Macanudo.
CA: How small was it and how big do you think it will get, in terms of potential?
McNamara: It's less than 5 percent of our total sales. As our sales have grown, it has kept pace with that.
CA: It's not outgrowing it?
McNamara: No, it's not growing faster. In terms of potential, we're beginning to see around the world many of the same signals we saw here in early 1993 and 1994. Particularly in Europe and in the Far East, younger people, between the ages of 25 and 40, are getting interested in smoking premium cigars. And as the international market becomes more aware of other sources of cigars, from the Dominican Republic and Jamaica and Honduras, that opens up more opportunity for us and Macanudo.
CA: Are you sold all over the world now, or are there a lot of markets that you're still not in?
McNamara: We're in probably half the countries of the world.
CA: From what you said earlier, you are actually predicting or projecting in your business plan that whatever the total sales of your brands are in 1997, it is going to increase by 50 percent in 1998?
CA: Do you see a shift in power, so to speak, in the cigar industry, in that it was a seller's market--limited supply, strong demand--to a changing buyer's market, where the retailer has a much stronger role to play? If you do see that, how does that affect your business?
McNamara: The retailer has always had a very important role, not only with the new experimental smokers, but also in communicating information about the brands. I mean if you really think about the cigar business, it's a very complicated, educationally driven pleasure. A testimony to your own success. So the retailer has always been on the forefront of educating and guiding the consumer and training them. That relationship is going to continue. Yes, [we and other manufacturers have had trouble keeping up with the demand] and we've tried to do the best we can to sort through that.
CA: Today, there may be five times as many retailers in America as there were five years ago, and that number is going to continue to grow as new outlets and distribution channels are created for cigars. Is this good or bad?
McNamara: The core tobacconists, who were good before the boom started, and during it, are going to be with us for a long time. However, there are some opportunistic people who have come into the marketplace. If they have fundamental respect for the tobacco and the education process, they'll be here for a long time, too. But some will come and go quickly, much like the brands which have come and gone quickly.
CA: Does it strengthen your growth potential to have many more outlets for impulse sales, creating opportunities in hotel lobbies, golf clubs and different kinds of retail chains, such as drugstore chains? Is that bad? Does it matter? Is it worthwhile to create more convenience in purchasing the product?
McNamara: On the premium level, for the premium cigar, it's a perishable product. Therefore, it has to be handled properly. I think that when it's properly handled, with the right outlet, I think that's positive. But there are a lot of outlets that don't handle the product properly and that damages the smoker's experience. So I think that some is good and some is bad.
CA: You mentioned briefly Partagas, your number two brand. Is it still number two, even though you have Hoyo and Punch?
CA: Do you have any plans, in terms of 1998, to build the brand?
McNamara: Yes. Actually, Partagas has grown faster in the absolute and on a percentage basis than even Macanudo. It's a great brand that we have been marketing well. The Partagas 150 is a good example.
CA: But Partagas 150 is gone?
McNamara: Yes. But it added a halo effect to the Partagas brand overall. We significantly increased the marketing support behind it. The availability of Cameroon wrapper was the physical constraint on that growth. The farmers there had a very good year last year, and it looks by every indication that it's going to have another good year this year. We're very hopeful.
CA: In other words, you are going to have the raw material to greatly expand Partagas again?
CA: Are there any areas where you are dependent on crops that have, for whatever reasons, had a bad year or will have a bad year, that will affect your ability to buy tobacco?
McNamara: We have long-term tobacco commitments and because our tobacco ages so long, most of the tobacco that we need for 1998, we've already acquired. It's already been aging. There are some hot spots. With Connecticut shade, we've had record levels of quality tobacco for the last couple of years. With Cameroon we're doing very well in terms of [quality]. We would like to have more, but it's not a hot spot. I believe that two areas of some concern are the Mexican binder and a little bit of a filler, and of course with Hoyo de Monterrey and Punch brands, which use Ecuadorian tobacco; because of El Niño, the rain there is a threat.
CA: But you don't see any major problems in terms of raw materials?
McNamara: No, but it continues to be spotty.
CA: So you basically have your tobacco for 1998?
McNamara: Yes. Because we like to age the filler two years minimum and the wrappers, except for Cameroon. Cameroon is used from the same crop. It's not aged.
CA: Where's the Cohiba wrapper from?
McNamara: That's from Cameroon, West Africa.
CA: General Cigar has done a great deal of consumer research in terms of who is the target audience. Could you describe the target audience as it is, and then tell me whether or not you think it's going to change in the next five years? What percentage are male? What's the median age? Basic things, and how you think that's going to change.
McNamara: The most dramatic differences are if you go back five years and then look at the present. Our premium cigar smoker was basically 40 and above. They have always been at the higher end economically, usually with a higher educational level. They were managers and chief executive officers and probably better educated than the average person. The most startling change has been the group of young consumers between the ages of 25 and 40 who historically have not been involved in the premium cigar market, and who have come in. They are the largest growth of new users in the marketplace.
CA: So the median starting age dropped from about 45 to...?
McNamara: When we started, the median age was closer to 45. That's dropped to about 38.
CA: We're talking 45 to 38. In terms of male to female?
McNamara: Obviously there are a lot more female smokers today, but the real percentages are still largely male. Probably 90, 95 percent male, 5 to 10 percent female.
CA: Is there anything that the industry can do, or should do, regarding the government's health report coming out in the next few months, and which may be out by the time that this article is published, which is going to take a very negative perspective on cigars and the health risks of smoking cigars? From an industry point of view, what does it mean, how do you handle it, what will be the impact of this?
McNamara: I believe that as a company, we strongly support the Cigar Association of America's [CAA] plan, which is: developing a position that clearly states our product is made for, has been marketed to, and is used by adults--it's an adult product. And we hope to have before this issue comes out, a program in place that supports that, both in terms of the retailers and also the companies who will support a program of limiting cigars to adults only. I believe that the issues around cigars are well known, that we make products that are made for mature, responsible adults who can make their own informed decision about the use of the product. If you look at the demographics, this is really a product category that mature adults start using.
CA: Can you elaborate on the Cigar Association's plans?
McNamara: We are very supportive of the CAA's program that they are about to implement--the "adult's only" focus. Any issue associated with underage usage of cigars, we don't want to encourage at all. The plans calls for distributing across the country a "retailer focus" program that educates their employees, that is going to give signage and is going to encourage the support and carding of people to ensure that they are the proper age. They must make sure that to the best of their ability, the only people that use this product are mature, responsible adults who have made an informed decision.
CA: So, have you a minimum age effort? Does that vary from state to state? Or do you have one uniform age that you're going to be dealing with?
McNamara: Well, we actually take the position that anybody under 21 should not be using our product. But in many states the age limit is 18. So the position is to do it at 21 or older. And we're working on it and it should be out in the field soon.
CA: Is it fair to say that in terms of brands, that Macanudo, for the foreseeable future, will be the flagship of the company?
CA: Could you spend a minute with the various brands describing their strengths--you know, strong, spicy, mild, whatever--to get a sense of your portfolio, starting with Macanudo and going down the list and describing the taste and strength characteristics of each brand.
McNamara: Macanudo is a legendary taste. In fact, we believe that it's a unique taste in the marketplace. It is the largest-selling premium cigar in America and has been for a long time. It has a smooth and very consistent taste. It's actually the bedrock of exactly how General Cigar looks at cigars. It's relatively easy to make one great cigar, one time. Or even a thousand. It's yet another to make tens of millions in the course of a decade and make them all the same. And that's what we focus on.
CA: Is it mild, or strong, or extra strong? Is it spicy? Is it neutral? How would you describe the taste?
McNamara: I think it's very smooth and I think that it's very consistent from cigar to cigar and it doesn't change from one end to the other. It's a great cigar, and very smooth.
CA: Would you call it mild?
McNamara: I wouldn't call it mild. I'd call it smooth.
CA: With a medium body?
McNamara: Yes, medium-bodied.
McNamara: Partagas is more full-bodied. It's definitely richer and it's got more taste characteristics than Macanudo. But it doesn't go as far as Hoyo de Monterrey and Punch. They are even more full-bodied. So that through those four brands, we have an entire spectrum of taste covered.
CA: Where does Cohiba fit in that taste spectrum?
McNamara: I personally like Cohiba better than I like Partagas. I have smoked Partagas for 10 years. [Cohiba's] my preferred cigar. Cohiba is more full-bodied than Partagas, but it has a very smooth aftertaste.
CA: When you went through the trial and error in developing the tobacco blend for Cohiba, did you look at the Cohiba from Cuba as something that you were trying to emulate, or were you trying to create a taste unto itself? What was the goal and where did you end up with it?
McNamara: No, we didn't try to match the taste of Cuba. We can't. Cuban taste is as unique as anything else. As unique as Cameroon or Connecticut shade. We wanted to design a specific taste that matched the taste of the times. And what we found is that we wanted more full-bodied flavors but not at all harsh. We experimented with literally hundreds of samples over a six-year period to come to this taste.
CA: What about the lawsuit that the Cuban government has brought against you for using the Cohiba trademark in the United States?
McNamara: It is a complicated issue. We believe we own the rights to the Cohiba name in the United States, which we registered back in 1978. We've been selling the Cohiba brand in limited distribution in [a few cigar stores] since 1978. In fact, we were quite puzzled by the action that Cuba took, because they've never challenged any of our trademark rights in the past, and they have the right to do that. In fact, in an article in Cigar Aficionado two years ago or so, [former Habanos S.A. chief Francisco] Padron admitted that they weren't interested in securing the rights to Cohiba; he recognized that someone else owned the name in the United States, same as with Consolidated's ownership of Montecristo. We are very confident that this will settle out that we own the trademark--the name, not the box. We were never interested in the design or dress of the box. We are not interested in any confusion. We specifically designed the [new] box to try to eliminate any confusion, either with the Cuban Cohiba or all of the counterfeits coming into the marketplace.
CA: Your primary sources for wrapper for all of your cigars are Connecticut and Cameroon. Do you buy wrapper tobacco from any other area?
McNamara: Hoyo de Monterrey and Punch wrappers come primarily from Ecuador, although they do get some from Honduras, too. They use Nicaraguan filler, Honduran filler, plus Dominican filler, of course. And of course, we use some Mexican filler, in Canaria d'Oro.
CA: Have you done anything with Indonesian wrappers?
McNamara: No. We have tested it. We have experimented with it. We think that it's a beautiful color wrapper. But we don't like the taste. We wouldn't move to it.
CA: Did General Cigar abandon too early its efforts to grow a wrapper in the Dominican Republic, and basically, years later, has the Fuente family shown it could be done? Do you find yourself at a disadvantage in that you don't have a Dominican wrapper that has been successfully grown in the Dominican Republic, and if that is so, do you have any plans to become a wrapper grower there?
McNamara: I don't see any disadvantage right now. I mean, we can sell everything that we can make. We have developed our brands and have brands in the pipeline that are just as exciting. Cohiba is a good example. It's an unbelievable blend for us. Your own ratings have got it as very positive. Do we want to experiment with different wrappers? We plan to and we have.
CA: Are you successfully growing Dominican wrapper now?
McNamara: Yes, we are.
CA: Is it on any of your cigars?
McNamara: No, it is not.
CA: Why not?
McNamara: We haven't met the standards that we want for any wrapper.
CA: What happens to it? Is it just sold as binder, or filler?
McNamara: We use it as binder or as filler, or whatever.
CA: Do you foresee being able to grow wrapper successfully in the Dominican Republic in the next few years?
McNamara: We're continuing to experiment with wrapper in a number of places. We experiment in Connecticut. We're experi-menting in Cameroon now. We are experimenting in the Dominican Republic and Mexico. Because we do have the expertise in wrapper, we would love to have different tastes from different locations around the world.
CA: General Cigar has some of the best people in the cigar business, and they've been one of the great proponents of experimenting with tobacco in the Caribbean. Do you see this as giving you a competitive advantage over other manufacturers, and if so, why?
McNamara: The Cullman family has been in the tobacco business for almost 150 years and we've only been in the cigar business for 30 or 40 years. They recognize that the quality of the cigar begins with the quality of the tobacco. We are almost obsessed with the quality of tobacco and we will continue to experiment with it and to continue to invest significant funds in the development and production of those tobaccos. We believe that the taste of Macanudo is directly related to the fact that we are vertically integrated and produce our own tobacco. We have special procedures.
CA: What are your guidelines regarding how many years forward you will hold an aged inventory of tobacco?
McNamara: On that I could say, in Connecticut shade two years is the minimum that we usually try to use. In vintage, it's even longer, and we go through a very costly and laborious process of aging and rebulking winter sweat. Which means that it travels to the islands and then it comes back to Hatfield, Massachusetts, and then goes back to the islands. Because we believe all of those steps are directly related to the taste of Macanudo.
CA: How did you design the taste of the Partagas 150, given such a unique find of aged tobacco, aged wrappers from Spain? Do you know what the origin of that tobacco actually was?
McNamara: No, we don't actually know where it was. Except that it was in the inventory of Tabacalera and that they had no use for it. Alfons Mayer heard informally about some very old Cameroon tobacco and went to look at it and it was unbelievable. It was a thousand bales of beautiful aged tobacco, 18 years old.
CA: How many Partagas 150 cigars did you make?
McNamara: Oh, I think we made about 900,000 cigars in total.
CA: And are they all gone? Are they all sold?
McNamara: We've put some aside. Very small quantities for special events. For instance, if we have a special auction or something like that, we have a few boxes that we give away. But we don't have any more to sell.
CA: What did you do for a living before you joined General Cigar five years ago?
McNamara: My career really started at Procter & Gamble where I ran a number of brands. I also worked for Chiquita Brands International. You probably could characterize me as a consumer package goods marketer. I worked on brands like Tide and Scope and Pert shampoo.
CA: What caused you to even consider going into an aging, troubled industry like the cigar industry that, based upon the past, was on a steady decline in the United States?
McNamara: The thing that really attracted me was the challenge. When Edgar Cullman Sr. and Edgar Cullman Jr. talked to me about taking this job on, they said, "We have a very profitable, successful company in a tough industry and we want to know what to do with these brands and what we should do with this company. And we want your help, if you could come, to figure out what the future looks like." The assignment changed somewhat. Because within a year, the core company was right in the middle of the firestorm of the cigar boom. For the last five years, we've just been able to take advantage of the business in front of us. But we do have a broader look for the Macanudo brand to extend well beyond just cigars.
CA: How does your view of the company and the opportunity to build the company differ today than five years ago?
McNamara: I believe that the opportunity is as different as you could imagine. It's an unbelievable opportunity. These are very powerful brands. Particularly Macanudo. But Macanudo, Cohiba and Partagas all have very powerful images beyond the cigar and we believe that there is a tremendous opportunity to link this cigar-smoking habit to a larger luxury lifestyle business. Club Macanudo and the small effort that we have made in logo clothing and the like and some of the accessories we have introduced have all proven that these brands can go well beyond cigars, and we are excited about that. We are prepared financially and management-wise to commit to making those brands bigger then ever.
CA: What is it like working in a public-private family business that is controlled by the Cullman family?
McNamara: The Cullman family is a great set of leaders. They have been in this business for a long time and so the amount of experience and passion that they have for their product permeates the entire company. Long before "total quality management" became business buzzwords, they had a company with a top-quality, job-focused effort. The Cullmans were doing that. They have a personal family passion of commitment to the consistency and quality, and the commitment to that quality I think is unequaled in the industry. But also, we have an incredible well of cigar talent in the company; it is one of the most experienced sets of managers working in the cigar business. There's Frank [Llaneza] and Danny [Blumenthal] at Villazon, and we have both Cullmans, plus Alfons Mayer and Daniel Nuñez on the tobacco side. It's an amazing power base.
CA: Are there many instances where you and Edgar Jr. might take one side and Edgar Sr. the other, or you might take one and they take the other? Or do you pretty much function as a group that you guys jointly agree on the things that matter?
McNamara: I think that what is great about them is that there is an extremely open, healthy dialogue with any issue. When we have a different point of view, everybody gets an opportunity to speak their mind. But then once we realize we have to make a decision, we work very hard at coming to a consensus. They are very easy to work for and they have a lot of knowledge for someone like me coming into the company to pick up quickly.