 Swedish Match completes its acquisition of General Cigar
Los Angeles, May 2 – The Cullman Era has passed and the Daniel Nunez Era has begun at General Cigar.
Swedish Match confirmed last week that it had completed the purchase of the remaining shares of General Cigar Holdings from the Cullman Family by April 22 and now held complete ownership of the company. With that transaction closed, Daniel Nunez (pictured) was appointed President and Chief Operating Officer of General Cigar, reporting to Lennart Freeman, Chief Executive Officer of Swedish Match North America.
Nunez has been a key player on the production end, with significant roles in blending and product development in the Dominican Republic. Now, he has worldwide responsibilities as General’s leader for not only production, but marketing leadership:
• General’s Macanudo, Partagas, Hoyo de Monterrey and Punch brands are among the nation’s top sellers, with La Gloria Cubana as one of the most celebrated niche brands. Which will receive new support from Nunez and which will fall out of favor?
• General took over the former U.S. Cigar Sales brands and factories last year in a settlement with U.S. Tobacco. What will become of their brands: Astral, the popular Helix and the multiple lines of Don Tomas, a popular pre-Boom brand that has fallen on some hard times?
• Free from conflict with Cuban trademarks, General’s Macanudo and Excalibur brands have significant overseas potential. About the same time as the limited-edition Partagas Cifuentes Seasonal Blend Fall 2004 was introduced in the U.S., a special Macanudo Reserva Anual 2004 debuted in Great Britain and was an immediate hit.
A strong marketing push could position Macanudo in overseas markets as a milder, more subtle alternative to Cuban brands, which have a reputation for strength. Smokers looking for a calmer cigar may not be so keen to try Cuban brands which are fairly mild – such as Hoyo de Monterrey or Fonseca – when a proven, elegant alternative like Macanudo or the Macanudo Gold Label is available.
At the same time, the expense of top-quality medium- and full-bodied Havana cigars could send regular smokers in Europe and Asia to try Excalibur, one of the best values on the U.S. market. If properly positioned, perhaps through a series of limited editions for each region, Excalibur could win new fans with its quality and deep, rich flavors as it has in the U.S.
• Whether in the U.S. or overseas, will General increase its visibility through new promotions?
It already has one of the heaviest promotional schedules of any cigar company, running programs simultaneously for Macanudo (with its swanky Macanudo bus tour), Partagas (roulette tour), La Gloria Cubana (dominoes and rolling contest) and Punch (darts, poker tournaments and photo shoots). It also operates Club Macanudo in New York.
Could it open more Club Macanudos in other cities as a flagship for its brands in key U.S. markets? Even in California, a cigar bar would be legal as an extension of a retail store as long as a majority of its revenue comes from the sale of tobacco products. General had a high-profile second concept in Boston – the Punch Bar – in the late 1990s, but it was later closed.
Would General consider franchising its Club Macanudo or Punch Bar concepts? Anecdotal evidence indicates the timing could be right for new cigar clubs. The Grand Havana Rooms in both Beverly Hills and New York report waiting lists for lockers in their facilities.
• What will happen when Cuba opens?
Swedish Match is the player with the most to lose in this area. Altadis U.S.A., as a unit of Altadis S.A. of Spain and France, is already positioned to sell Havana cigars in the U.S. as soon as the American embargo is lifted of the brands it controls in both the U.S. and worldwide markets: H. Upmann, Romeo y Julieta, Saint Luis Rey, Trinidad, Juan Lopez, Gispert and, of course, Montecristo. Moreover, it has control of J-R Cigars, the largest retail seller of premium cigars in the U.S., to help promote its brands.
Swedish Match and General have the right to sell Belinda, Bolivar, Cohiba, El Rey del Mundo, Hoyo de Monterrey, La Gloria Cubana, Partagas, Punch, Ramon Allones and Sancho Panza in the U.S., but would have to reach an agreement to sell Cuban brands of the same name here. Moreover, some of General’s Cuban-brand trademarks are licensed to others, including J-R.
A significant delay in reaching an agreement concerning marketing of these brands could lead to a big head start for Altadis in establishing market share for their Cuban brands, especially Montecristo, already dominant in other markets worldwide.
So Nunez will have his work cut out for him.
Meanwhile, General’s former top management – Edgar Cullman, Sr., Edgar Cullman, Jr. and David Danziger – will stay on as consultants to the end of the year. According to published reports, there are no restrictions on them to stay out of the cigar business and they could end up as a competitor to their old company.
Tune it tomorrow for more speculation . . . as the cigar burns . . .
~ Rich Perelman
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