A little while ago myself and a group of other online media gentlemen were flown down to General Cigar’s Dominicana operation to see how they do business. It was a real pleasure to meet the affable folk of General Cigar, and one such notable personage that I met on the trip was Dan Carr, President of General Cigar. The following are some of the questions I got to ask Mr. Carr when I was down in the Dominican Republic:
Cigar Brief (CB): What do you see the role of your company being in the current market place?
Dan Carr: Given our size and how our brands are put together we like to take on the lead of growing the category. We want to bring more adult smokers in. Today there is – we think- roughly around 3.5 million cigar smokers. Now there are 300 million adults in the U.S. So how do we reach more of that adult audience.
The second thing is probably on legislation, we take a very active role and we invest very heavily there, we have our own groups to support not only that but then we also support different associations and obviously given our size we support at a very high level. And we personally are very active with all the different legislators.
And then the other thing is bringing people into the lifestyle in different ways than they might expect. We are always working hard on brand awareness and how to become better known in more places.
So these are kind of the roles that we’re taking and what we are trying to do within those roles is to make sure that our brands and the brand essence and the brand positioning is sharp and that we have the most relevancy we can have with our brands. And with that comes obviously a lot of innovation, so we want to lead with innovation and we do that by having only the highest quality and most consistent product out there.
CB: How is your company responding to the downed world markets, and have you seen a major impact on your company’s bottom line?
Dan Carr: Yeah, I mean, again this is a data starved industry, so we try to seek out as much data as we can. But what we have found is that around 2007, when there was a little boom going on, we thought that the overall industry produced around 340 million cigars. Today we think it’s around 241-242.
So what’s happened? Well first big thing that’s happened are the bans. We’ve got 40, over 40 states now with either partial or full bans, where three to four years ago we were in the 20s to high 20s, so you’ve seen there is a lot of activity in that front which is the biggest issue because it takes away the occasion. Essentially it is robbing a person of an opportunity to enjoy a cigar. So, if they can’t smoke it, then we can’t make it. And then you couple that with tax, and that every state is willing to add more cost to the price of the cigar and finally you throw in the economy, where people said, oh God.
For us we’ve been doing a lot to work against these threats. First of all, we’re obviously making sure that the price points are relevant and that our cigars like Partagas and our Mac 1968 and other brands have had their prices rolled back.
We’ve also come in with smaller cigars as well, so that people can enjoy them since their occasions to smoke are dwindling. And then the other thing that we’re making sure that we’re hitting all the different price points for everybody, we’re doing more contract manufacturing and private labels as well for lots of the different cigar companies that are out there as well as for our customers. So we’re kind of supporting our customers on every price point possible.
CB: Can you further explain your involvement in the political and legislative sides of the cigar industry?
Dan Carr: Yeah, I mean obviously the political environment is very complex and it’s not something you can just kind of show up and say, “I’m here and I’d like it done this way.” We’ve been doing it for years, I mean ever since I’ve been with the company (over 16 years now) we’ve been involved very aggressively. One of the benefits of being part of Swedish Match at that time and now it’s Scandinavian Tobacco Group is that they see the value of leading there and putting resources against it, so it enables us to do it. And then we are also very active in the association sides for both the CRA as well as the CAA, Cigar Association of America, and Cigar Rights of America and we’re working with them and coupled with the IPCPR which is the retailer trade association and we’re blending that together with kind of where we have our folks which, we have folks in over half the country at the state level as well as being extremely active on the federal level. So, that’s again another place where we think we should take a lead role, but we want to do it in a way that gives us the best outcome.
CB: How do you feel about the rise of boutique cigar manufacturers and has it caused you to change your approach to the current market?
Dan Carr: Yeah I mean,– I was at the IPCPR show this year and I walked down the isle and there were companies I have never even heard of. And it’s kind of scary to be honest with you. I think the commitment; the ability to compete in the industry today is so different than what it was even five years ago. The cost, the infrastructure, the things that you need to do to have a viable business and to be able to meet the needs of the cigar market has changed so dramatically.
So yeah, I mean, we’re like any company, we look at what everybody else is doing. Having said that, we are also kind of focusing on where do we want to go and what’s the vision and it’s kind of where I spend a lot of time and for us it’s really activating all of our brands and having them have specific space that they can own and then making sure that we’re putting the right vehicle, tools, and engagements in there for our customers and the consumers. And we kind of just lead and we go forward from there, it’s really how we approach it.
I can say we’re honestly doing a lot of listening. The listening part has really been helpful because at the end of day what’s neat about this industry is that a lot of the owners, who are in the store, and who have been in the business for like I said two to three years and even all the way up to 30-40 years have a lot to say. We really do learn a lot from them.
CB: A lot of our readership would like to know what your plans are for CAO?
Dan Carr: We are extremely excited to be a part of the brand. If you go back a little bit on General, it started around ’62 with the Cullmans. I got to work for Mr. Cullman for a long period of time, he taught me a lot of different things, he also really set a lot of the foundation of the company for how we still do things today
In fact we just celebrated our 51st anniversary, which not a lot of companies can say and it also hopefully is a testament to his hard work and legacy. But if you look at the company overall, we’re basically set up through acquisitions. So we go ’62 and then in ’97 we do Villazon and aquire some fantastic brands, and then we move to around 2000 where we acquire Ernesto Carrillo and EL Credito and made a great and long relationship with that brand. Overall the acquisitions we have made have been fantastic.
And then we acquired CAO – and if you look at each one of the brands pre-CAO, they’ve all been really fantastic acquisitions for us but more importantly, we’ve kept everything the same.
So to elaborate further, how we source the tobacco or grow the tobacco or blend it or ferment it or roll the cigars or how we are going to market them remains the same. Now we also bring some different innovation to the lines. To give an example we could look at Hoyo. Hoyo is a prime example because, we just came out with the Reposado which is all immersed in cedar it gives a whole different taste but it fits the brand, but when it comes to Hoyo Excalibur, if you want your number ones, I mean, it’s what you are going to get. And same thing if you look at Punch Rothschilds. On the other side of the equation when it comes to CAO, I mean what we need to do is we need to learn the brand, we need to live with the brand, we to smoke the brand, we need to figure out all the different tobaccos, we need to understand how the brand was created and developed so well, and how the fan base, and the loyalty were created.
So again, obviously, we are not going to change anything but what we will do and what we’ve just done and we’ve been excited about is adding and creating new lines and bridging them together with the old lines. If you look at the packaging to the cigar and the position of the cigar we try as best we can to have it mirror the image of the lines before it.
So we’re really excited about that, and we think that there is a lot more we can do with CAO in the days and years ahead.
Stay tuned for part II of our interview series with Mr. Carr as he talks to us about what goes into brand consistency and loyalty, what he wants you to walk away with after smoking one of their cigars, and how he got into the business.