CWNews
HEARD IN THE HUMIDOR for June 26, 2009
Highlights of the week in cigars and smoking from
For the week of June 29-July 3, 2009
Oettinger Davidoff, a privately-held firm, did not disclose any terms as per its usual practice, but it’s the third time – after Avo and The Griffin’s – that it has purchased a company or brands which were made at the Oettinger-owned Tabadom complex in Santiago, Dominican Republic, where its famed Davidoff brand is also made. It’s also the company’s second major purchase in less than a year as it acquired Camacho Cigars in October 2008.
The purchase of Cusano gives Davidoff 13 more brands in its overall stable, which is quickly nearing the roster size of U.S. market behemoths General Cigar and Altadis U.S.A. By adding the Cusano 18, Cusano 59 Rare Cameroon, Cusano Corojo ‘97, Cusano Flavored, Cusano Habano LXI, Cusano bundled lines (four brands: CC, M1, MC, P1), Cuvee, Perfect Cut and the Dutch-made Agio and Panter cigarillo lines, the Davidoff family of companies now has 49 U.S.-marketed brands on offer: Davidoff of Geneva: 15; Camacho Cigars: 21 and Cusano Cigars: 13.
The key to the transaction is Cusano’s success in placement of products at the lower end of the cigar-sales spectrum, in convenience stores, tobacco outlet stores and similar locations. Its excellent bundled cigar lines and the Perfect Cut machine-made brand have wide distribution in places where Davidoff products are never seen. The 48-year-old Michael Chiusano’s relentless travel on behalf of his brands, along with that of his staff – including his brother Joe – created the reach that interested Davidoff.
"We are gaining access to several new distribution channels in the USA," noted Oettinger Davidoff chief executive Reto Cina, "including the so-called C-stores through subsidiary CTS Concepts LLC and tobacco outlet chains through DomRey Cigar, Inc." He called Chiusano "an innovative thinker" and confirmed that he would continue as president of Cusano Cigars.
Following the pattern it established with the acquisition of Camacho Cigars last year, Davidoff did not announce any changes in the operations at DomRey, which has 16 U.S. employees and 10 contracted sales representatives and an additional 20 employees in the Dominican Republic.
"Our family is honored to have been selected and welcomed into the Oettinger Davidoff Group," said Mike Chiusano. "In the world of cigars, there is no higher compliment than to become part of the Davidoff family. We are proud to become members of such a respected team."
>> The new SCHIP tax and smoking restrictions have claimed one of America’s iconic cigar factories: the Hav-A-Tampa plant on Riga Boulevard, which will close at the end of August.
The Hav-A-Tampa brand, made in Tampa since 1902, will not die, but will move to the Altadis U.S.A. plant in Cayey, Puerto Rico, where several of its other machine-made brands are currently produced, including the popular Phillies line.
"This decision was reached based on many factors and only after a thorough review of our manufacturing operations and the increasingly challenging environment in which we operate," said Janelle Rosenfeld, Altadis U.S.A.’s Vice President for Marketing and Corporate Communications. "The recently introduced State Children’s Health Insurance Program (SCHIP) increased the Federal Excise Tax on cigars to an unreasonably high rate and has caused a significant reduction in consumption.
"In addition many states have increased and/or are in the process of increasing state excise taxes on top of the new Federal Excise Tax rate. These tax increases along with ever-expanding government regulations and increasingly prohibitive smoking restrictions cause reductions in our manufacturing requirements. This forces us to combine production and unfortunately our Hav-a-Tampa facility is not large enough to absorb our total mass market production needs.
The factory closure will eliminate 495 jobs according to Altadis U.S.A. as noted in a report in the Tampa Tribune. A Hav-A-Tampa distribution center in Tampa, with 150 staff, is not slated for closure, however.
According to the Tribune story, "Demand for Hav-A-Tampa cigars has fallen off significantly recently . . . For example, a single Hav-A-Tampa cigar cost about 60 cents before the legislation and now costs about 80 cents in Florida." Rosenfeld added, "Unfortunately, due to decreasing consumption, the once-large production numbers have declined to the current point necessitating the move of production."
>> Alan Rubin and his Alec Bradley Cigar Co. team have been busy. They just introduced their new Select Cabinet Reserve and have now announced another new cigar, the Alec Bradley Family Blend.
National Sales Manager George Sosa noted that "Alan [Rubin], Ralph [Montero, vice president] and I were constantly being begged by our Dads to make a nice, medium-bodied cigar in a Robusto size with a Cuban pigtail [head]." Finally, we decided to create a special cigar just for them with a marvelous aroma.
"Actually, it turned out to be such a great blend, we started smoking it in the office, and decided to offer it at Alec Bradley cigar events as our promotional ‘mystery’ cigar. The cigars had no bands, and were so well received, we had a lot of smokers asking to buy it."
Originally called the "father’s blend" in-house, it was changed to the "Family Blend" and released on June 7 in time for Father’s Day. Made in Honduras, the blend comes only in a 5 1/2-inch by 50-ring format, featuring a Criollo ‘98 wrapper grown in Honduras, an Indonesian binder and Honduran and Nicaraguan-grown seco and viso filler leaves. The result is medium in body and offered, so far, only in chests of 50. The signature of the fathers of all three Alec Bradley executives – David Rubin, Miguel Montero and Reinaldo Sosa – is included on all chests.
Rubin confirmed that the Family Blend will be continued as a standard-production cigar. Sosa noted that "The cigar is a knockout with an incredible medium body, and loaded with multidimensional flavor. Of course, the best part is, each box will also have our three heroes’ signatures on them."