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April/May,
2001

Boutique Spotlight:
Cusano Cigars
Corojo with Mojo

The cigar industry lately resembles the popular television game show, Survivor. Those who are on the island today may not be there the next time we tune in. But all rules - including the rules of the jungle - have an exception. Tiny Cusano Cigars is a quiet survivor that's making noise with its newest generation of cigars.

By Joseph Finora

The phenomenon has now become commonplace. Gradually, sometimes suddenly, one brand of cigars after another is eliminated due to a Darwinian landscape full of brutal competition, erratic tobacco prices, government regulation, distribution hurdles, and hungry giants flexing economy-of-scale muscle. What was on the shelf one week is gone the next time you turn aroundÉfiguratively, and sometimes literally, up in smoke.

But it's not always this way. With imagination, a sensible plan, and some capital, smaller brands can and do survive. Some can even thrive and grow, posting double-digit gains while others fall by the wayside. Such has been the case with Cusano Cigars, aka, DomRey Cigar Ltd., which last year enjoyed its first 1 million-stick season. This year, they're on track to add another 250,000 to that mark. Quality is their main ingredient. Superior taste is the result. Started by an institutional money manager in 1995, DomRey Cigar was founded by a native New Yorker and virtual accidental tourist to the tobacco industry, Michael Chiusano, who found excitement and passion in the tobacco fields of the Dominican Republic. Today, he's building a brand and grabbing a foothold in an industry that's often criticized for its lack of imagination and willingness to reach for the least common denominator.

Like some of the best discoveries, Chiusano made his by accident. On business in the Dominican Republic to finance a sugar cane dealer, Chiusano met a tobacco processor who gave him some cigars. The two worked on a blend that appealed to Chiusano. Struck by their flavor and steady draw, as well as the fun he was having, Chiusano brought back 100 of the cigars to Boston - where he was living and working at the time. He began giving them out to friends using only his company's letterhead as the cigar band, but in return received rave reviews. A Boston tobacconist then made a surprise order of 100. His next time around Chiusano brought up 50 boxes and then took an order for 500 boxes - 10,000 cigars. His Corona/Maduro then received a very lofty rating in Smoke magazine (a Smokeshop affiliate). This was followed by orders from 50 tobacconists over three weeks. "Word-of-mouth support got us going in the beginning," Chiusano recalls.

"I wasn't looking to get into the cigar business. I was just making stuff I liked and I was a fan of Cuban cigars," Chiusano says, lighting up one of his own products. "It just happened." But a $50,000 investment then followed, and Chiusano acquired a partner, Bill Finley, who become the company's director. The company remains privately financed.

Averting the Don Nobody Stigma
While the founding of Cusano Cigars reads like so many companies that came and went, the company's subsequent survival stands apart. Like a good cigar, the answer lies in several ingredients.

Key to the company's plan currently is the use of an emerging "new" wrapper leaf. A Connecticut shade/Cuban hybrid, the Cusano Corojo is actually the traditional native leaf of Cuba, but grown in Ecuador. The delicate leaf is heavy on taste and burns well, notes Chiusano, stressing "The big guys lost sight of this. Taste can't be compromised. Tobacconists and smokers know this." The wrapper surrounds a Dominican filler and binder.

A Corojo "vintage" was declared in 1996 and Cusano cigars bought the entire Ecuadorian crop. Planted as an experiment, it was originally destined for Cuba, notes Chiusano. Although Corojo is also grown in Honduras, Chiusano claims the Honduran-grown version has an unreliable burn and the Cuban-grown is more susceptible to disease. Chiusano believes Ecuadorian Corojo will set the new standard.

The Cusano Corojos, introduced in 2000, are handmade in the Dominican Republic by Hendrik Kelner, and come packaged in a bright range cabinet-style wooden box with a transparent slide-top lid. The bright orange and black bands help the cigars to stand out on shelves while giving them a more striking look. Frontmarks include Robusto (5x50), Toro (6x50), and Churchill (7x50). All boxes contain 20 cigars. The Xclusivo is a Cuban/Connecticut shade hybrid with a double-fermented wrapper and special filler tobacco. These limited-distribution cigars retail for $10 each and are on back order.

The company also produces a 'Celebrity" series, a high flavor, more modestly priced smoke ($39.99/20-cigar box) designed to be "recession resistant." The Cusano Hermanos include Robustos, Coronas, and Churchills.

"The aim is not to overwhelm the consumer, the smoker," Chiusano notes. "Our blend does not do this." Cuban cigars, he says, can be harsh and overwhelming and draw poorly - and do so at a premium price. Competition, he says, has given the U.S. smoker a good cigar at a good price. Cigars that don't do this will not be around for a very long time he argues. "People won't smoke a $5-dollar cigar every day," he says.

While Chiusano feels the bust in the U.S. cigar business has hit bottom, he also believes one day the U.S.-imposed embargo against Cuba will be lifted. "We can do business with Vietnam and Moscow but not Cuba," he ironically points out. And when that day comes, Cuban cigars will be popular in this country for a period of time but the market will come back to a smoother product as U.S. tastebuds continue to evolve, according to Chiusano. "If the Cuban-embargo ends, it will be a boon and then a slap in the face to retailers."

This is when he believes his secret weapon, the Corojo wrapper, will pay big dividends. "We must maintain quality and good relationships," Chiusano says. We know we need the retailer and the retailer needs good products. We're not selling a homogenized product. We know a lot of cigars don't taste like they used to."

The company is also a member of the RTDA as well as the Dominican Republic's professional manufacturing association, Pro Cigar (Asociacion de Productores de Cigareros de la Republica Dominicana). The group's goal is to protect and maintain the quality of Dominican-grown tobacco. This in turn protects the names of the manufacturers, says Chiusano.

Determining they didn't want to be in the manufacturing business, DomRey closed down its own factory it had operated in the Dominican Republic and outsourced production to Tobaccas Dominicanos. Today, the company has some 400 accounts and all of its business is to wholesalers and retailers. The staff consists of a fulltime salesperson, who does most of his work over the telephone; one customer service representative, and a shipping clerk. Online wholesale ordering is in the works. Product information, retailer ads, and graphics are also coming online. All of their business is in North America, and most of that is in the eastern half of the U.S. They do not sell to discounters or to the general public, although a sample pack with a coupon is available over their website (Chiusanocigars.com). They also send samples to tobacconists and follow up by phone. They are not adverse to giving retailers deep discounts.

Cigars are promoted largely through tastings hosted by retailers. "Tastings move cigars," says Chiusano. "The customer gets [the cigar] in his mouth, and they get a 25% discount per box." While the privately held company does not disclose figures, Chiusano confides that sales are growing at about 25 percent a year.

Tobacco-only stores are also healthy outlets, he says, with superstores among their biggest markets. "Buying tobacco in the supermarket or a store like K-mart has a shame factor. Customers can feel like an outcast. In a tobacco-only shop customers feel comfortable, the help is friendly and knowledgeable, and they work on a low margin. The rise of the tobacco superstore has helped fill the gap left by the shrinking base of tobacconists. "The number of tobacconist shops is down by about 25 percent since the boom days," according to Chiusano's estimates.

"We're selling as much as we can make," says Chiusano. "We're making a good product at the right price and smokers appreciate that. This was our plan all along. It's the momentum that's taken us by surprise."

Cusano Cigars, DomRey Cigar Limited, 2447 57th Street, Sarasota, FL 34243, Tel: (941) 360-8200, Toll-free: (800) 347-1921, Fax: (941) 360-8300, www.cusanocigars.com


SMOKESHOP - April/May 2000