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Cigar Aficionado

EXCLUSIVE: C.A.O. Acquired by European Cigarmaker Henri Wintermans

C.A.O. International Inc., the boutique cigarmaker known for its innovative marketing and use of creative cigar tobacco in its blends, has been acquired by Henri Wintermans Cigars. Wintermans, which is based in Holland, is a unit of ST Cigar Group Holdings Inc., one of the word's largest cigar producers. The European company makes miniature cigars by machine, and its leading brands include Café Crème, Henri Wintermans and Nobel Petit.

The price was not disclosed.

ST Cigar Group, according to the company, makes 1.3 billion cigars a year. Wintermans claims the No. 3 spot in the cigar world, behind Altadis and Swedish Match, and has annual revenues of $350 million. The company was founded in 1904 by Henri Wintermans and his brother, Sjaak, and today it makes cigars in Denmark, the Netherlands and Belgium.

C.A.O., based in Nashville, Tennessee, makes many premium cigars under the C.A.O. name, including Brazilia, Italia and Criollo, and also has a considerable flavored cigar business under the name Flavours by C.A.O.

Tim Ozgener, president of C.A.O. and the son of founder Cano A. Ozgener, spoke exclusively with Cigar Aficionado this afternoon an hour after telling his staff in Nashville about the sale.

"Our goal is to be the No. 1 cigar brand in the world, known for quality, distribution, prestige," he said. "It was in an effort for C.A.O. to become more of a global brand. With this deal, we've saved about 20 years," he said.

Ozgener stressed that C.A.O. would continue doing business as usual, with the business headquartered in Tennessee and cigars made in Nicaragua, Honduras and the Dominican Republic. "We're just going to keep on doing what we're doing," he said.

C.A.O. was owned by the Ozgener family. Cano Ozgener owned the majority stake, and children Tim and Aylin owned minority interests. Cano, who has been fighting non-Hodgkins lymphoma, has retired; Aylin has a verbal agreement to stay on with the company and Tim has signed a five-year contract and shall remain as company president.

Wintermans has very little presence in the United States, and no long-filler cigar assets prior to the acquisition. Of the 1.3 billion cigars it sold in 2006, 1.1 billion were sold in Europe, and only 4 million in the United States. Acquiring C.A.O. nearly quadruples its U.S. business in terms of units -- C.A.O. sold about 12 million cigars in 2006, more than 90 percent of them in the United States -- and thrusts it into a solid position in the market for premium, handmade cigars.

"We don't have a real strong presence in America," said Gary Hyams, former managing director of Henri Wintermans Cigars U.K. and the newly named chairman of C.A.O. "We don't have any long-filler [cigar production] but our biggest competitors, Altadis and Swedish Match, do."

"We see C.A.O. as a very niche, unique brand. I love the way they do things," said Hyams.

For much more on this story, see the February 6 issue of Cigar Insider.