La Gloria Miami
The deal was nearly complete. Ernesto Perez-Carrillo, age 25, was sitting at a table with his father, Ernesto Sr. They were in Miami, their adopted home, meeting with cigarmaker Robert Gore, the scion of the family that produced the Royal Jamaica brand in Jamaica for three generations. Political unrest was prompting Gore to look to other countries to expand his production. He had a $125,000 offer on the table to buy El Credito Cigars Inc., the Carrillo family business, a Little Havana operation that rolled cigars for the Miami market under the little-known brand name La Gloria Cubana.
The elder Carrillo was a cigar man, who had purchased El Credito in Cuba in 1948 and reopened it in Miami 20 years later. His son dabbled in the family business, but his heart was in jazz. In the evenings, he would head to smoky bars and play drums, and once he even auditioned with the legendary Stan Getz.
And now, he and his father were ready to sign over the family business. Gore and the Carrillos had agreed upon $125,000, a considerable sum in 1976 for a sleepy cigar factory with only eight to 10 cigarmakers rolling about 300,000 cigars a year. Profits were slim.
"At that time, when you made cigars, there was hardly any profit," Carrillo says today. A sale of 1,000 cigars would net $40, perhaps $50, in profits. "The business wasn¿t doing that well. We were making a living, but it was a struggle."
The elder Carrillo was about to sign over the company to Gore. Then, his son asked to speak to his father outside.
"I had a gut feeling that it wasn¿t the right time to sell the business," says Carrillo. He urged his father not to sell.
It turned out to be the best decision Carrillo ever made. He took over the business for his father, who died in 1980, and the La Gloria Cubana brand went on to become one of the hottest of the cigar boom. El Credito cigar sales (the vast majority of them La Gloria Cubana cigars, plus some El Rico Habanos and La Hoja Selectas) doubled from 1992 to 1995, soaring from 720,000 cigars to 1.4 million.
In 1999, Carrillo finally did sell the company, cutting a deal with Stockholm¿s Swedish Match AB for a sum estimated to be north of $20 million. Instead of a cash payment that could have bought a nice home, Carrillo ended up with enough money to become a philanthropist.
El Credito had long been the Switzerland of the industry, a neutral body admired by most of its peers, but now its Scandinavian owners have put it squarely on one side of a shrinking cigar universe. Swedish Match, which also controls 64 percent of General Cigar Co., is the smaller of two major cigar powers, with annual revenues of about $1.25 billion. Altadis, with $10 billion in annual sales, is the Goliath, created in December 1999 when Spain¿s Tabacalera SA acquired France¿s Seita S.A.
Carrillo is known for his problems with basic bookkeeping as well as for his prowess with tobacco and cigars. El Credito, family company that it was, had irregular books that made selling the company an arduous task. Today, the Swedes take care of finances and administration, freeing up Carrillo's gray matter to concentrate on making better La Glorias.
"They're letting me do what I do, be what I am," he says.
Swedish Match also knows the value of Carrillo¿s Miami factory, the small but highly visible heart of his business located on Calle Ocho, the historic street in the heart of Little Havana. When Carrillo began making cigars in the Dominican Republic in 1995, critics cried out for his Miami smokes, thinking them better than the new versions. Soon, Carrillo plans to give them what they want, a Miami La Gloria packaged distinctively to set it apart from its Dominican cousin. Besides checking the box, another way to tell the difference is by checking the shape¿Miami La Glorias are round whereas most Dominican La Glorias are box pressed, with the exception of some of the newest cigars such as Serie Rs and Hermosos.
"We want to give Miami its own identity," says Carrillo. "We want to come out with new sizes for Miami, made only in Miami." Expect those sizes by this summer.
Step inside Carrillo's Miami factory and it¿s hard to believe that one of the most popular premium cigar brands in America is rolled here. It's a small room with yellowed walls crying for a paint job. The handful of rolling stations face the door, and the workers roll their cigars Cuban-style, without the aid of bunching machines. (Carrillo's Dominican factory uses the Temsco machines.) In one corner, a cigar roller sits smoking a light-colored panetela, a flower in a vase perched on her shelf.
"She likes lighter cigars," says Carrillo, who is known for his fuller-bodied smokes.
La Glorias are made with Dominican and Nicaraguan filler, with Sumatra-seed wrappers grown in Ecuador by the Oliva family. Carrillo's La Hoja Selecta brand used to be a mild smoke, but he recently reblended it to add punch and swapped its Connecticut-shade wrapper for Ecuadoran Sumatra. His original El Rico Habanos were once strong enough to make even a seasoned smoker's knees weak, but a shortage of the high-octane tobacco he relied on for that brand has kept El Ricos off the market for almost two years.
Carrillo has other expansion plans for Miami. Next door to his factory, construction workers are sheet rocking and hammering away to create a posh store for his cigars. There's even a new parking lot out back, ready for tourists.
Most La Glorias are still made in the Dominican Republic,Miami wages are too high, and workers too hard to find to allow a sizeable brand to be made in Miami. That's what pushed Carrillo to the Dominican Republic in 1995.
His Dominican operation was bigger than the Miami enterprise, but quality-control problems plagued it at the beginning. Carrillo admits that his first Dominican La Glorias were poor imitations of his Miami originals, but he thinks he's solved the early problems. "We,ve gone through a learning curve," he says.
Carrillo's Miami rollers make about 600,000 cigars a year. His workforce in the Dominican Republic makes 4.5 million to 5 million cigars a year, and Carrillo hopes to push production to 8 million cigars, bigger than he's ever been.
One of the ways that El Credito will get larger involves the company's relationship with a former competitor, General Cigar.
At press time, Carrillo was preparing to move his Dominican production from a free-trade zone in Pisano to Santiago, a result of the increasingly close alliance between his company and General, maker of Macanudo, among other brands. Another benefit will come when General's sales force, which is four times larger than El Credito's, begins selling El Credito's cigars.
The Swedish Match money has made its mark on Carrillo's company. He once ran the business from a dusty corner of his Miami factory. Today, he sits in a stark, spacious office in his new warehouse and headquarters, which is located a few minutes from his Calle Ocho factory.
The walls of the room are largely bare. A photograph in a frame sits in the in box, waiting to be hung on the wall. It looks as if Carrillo moved in the week before, but he's been there for months.
One memento has been installed. In a corner of his office sits an ornate wooden chair. It's just behind Carrillo, positioned so that a person seated there could peer over the shoulder of the cigarmaker.
"That was my father's chair," says Carrillo. His uncle made it in Cuba, a chair fit for a boss, and it puts everything in Carrillo's world in perfect perspective.
"That chair," says Carrillo, "goes with me wherever I go."
