April 1999
Volume 26
Number 2

Consolidated Cigar's French Connection

by Jonathan Bell, European Editor

Few American retailers know much about France's Seita, but its influence will certainly be felt in time as the new owner of Consolidated Cigar.

"Say that again?" was probably one of the more common of the incredulous comments heard across the country - or at least in those circles occupied with the sales, distribution, and marketing of tobacco products - when the announcement came late last year that U.S.-based Consolidated Cigar Corporation had been acquired by a French company called "Seita." The consumer might not know or particularly care who owns his or her favorite tobacco trademark, but those in the trade have a more vested interest, and such news concerning the country's largest cigar manufacturer is naturally of particular importance to them.

So, what exactly is this foreign presence, this Seita, into whose hands have now passed such valuable cigar labels as Dutch Treats, Antonio y Cleopatra, Dutch Masters, Muriel, Backwoods, Don Diego, Te-Amo, Montecruz, and Henry Clay, not to mention U.S. marketing rights to the prestigious H.Upmann, Montecristo, and Por Larranga brands? Think back to your favorite French movie, or to any movie shot in Paris, and that cigarette or cigar burning seductively in the love scene was almost certainly made by Seita, the largest tobacco product manufacturer in France. Although rich in trademarks, to Americans its most notorious brands would be Gauloises and Gitanes cigarettes, and Pleiades cigars.

Actually, Consolidated could not have gone to a more experienced, international, or sympathetic owner. Seita is one of the oldest and most respected tobacco companies in the world. And although it is French - as quintessentially French as cognac or champagne - it has long been present around the world and successfully manages a growing number of subsidiaries and tobacco-related investments, from the Philippines to Poland, from Switzerland to Finland. In addition to making and marketing cigarettes, cigars, smoking tobaccos, and matches, Seita is also France's leading distributor of tobacco products. Distribution is, in fact, the company's second most profitable activity. All this means that the company has a long expertise in everything related to tobacco, from leaf growing and processing to large-scale manufacturing and distribution operations. On a daily basis, Seita is interfacing with retailers and consumers in widely varying cultures around the world.

Formerly "Societe Nationale d'Exploitation Industrielle de Tabacs et Allumettes," the French people themselves long ago shortened the name, thankfully, to simply Seita - and the company is now officially denominated as such, pronounced say-ta.

Once France's government-owned monopoly controlling everything relating to manufacturing, distributing, and selling tobacco products and matches, Seita has evolved into a publicly held company, with about 52 million outstanding shares. Well over 50% of the stock is held by a vast number of small investors, including many of France's 35,000 tobacconists. There is no single large controlling interest, and government participation has fallen to 5%. The company employs about 8,000 people, and has ongoing manufacturing in four French cigarette-making factories and one large cigar factory, located in Strasbourg. Since 1993, Seita has been led by chairman and chief executive office Jean-Dominique Comolli.

In 1998, Seita sold 63.1 billion cigarettes, a seemingly awesome figure but actually quite modest in comparison to such mega-weight global marketers as Philip Morris, BAT-Rothmans, and R.J. Reynolds. In France the company held the leading position in sales, with 35.1% of the cigarette market, followed and consistently pressed by Philip Morris, with a 32.9% share of sales. Changing fashion in cigarette preferences has driven Seita, which once completely dominated the French market, to go international with its smokes.

This initiative has been successful, and international cigarette sales - combining those of its own making with those by foreign subsidiaries - have doubled since 1994, and presently account for more than 50% of sales. In Germany, for example, Seita's Gauloises is now among the top ten brands. Seita also markets a number of other cigarette brands in various foreign markets: its ZPT Radom subsidiary in Poland sells Popularne, one of the top two brands on the Polish market; sales of Gitanes have been flourishing in the Middle East; Seita markets Parisiennes in Argentina, Royale, and Alain Delon brands in Cambodia, and Fine cigarettes in Vietnam.

As director of both the Cigar Division and of the International Development Division, Charles Lebeau (left) plays a central role in Seita's recent, rapid expansion, including the acquisition of Consolidated Cigar Corp. Jean-Dominique Comolli, (right) chairman and chief executive officer of Seita since 1993, has been instrumental in focusing the company on international expansion.

Seita also leads in sales of smoking tobacco in France, mainly with roll-your-own tobaccos. The company has 44.3% of this extensive, domestic market. Its brands include Caporal, Gauloises, and Amsterdamer.

Expanding Cigar Activities
But for Americans, cigars are surely the most interesting of Seita's activities, particularly so after it acquired 24% of the U.S. cigar market through the purchase of Consolidated Cigar. Seita can claim to be one of the oldest cigar making companies in the world; it can now also claim to be the largest. Combining its own sizeable production with that of subsidiaries, including Consolidated, the annual Seita Group cigar volume reaches 1.6 billion units.

France is the largest cigar market in Europe; total sales there last year exceeded 1.6 billion cigars. This represented an expansion of 3.7% over sales in 1997. Seita itself held a 39.6% share of the French market in 1998, with sales of 607 million cigars. Leading trademarks include Ninas, Havanitas, Picaduros, and Fleur de Savane brand families.

Internationally, Seita achieved sales of about 80 million units last year. In Spain, the most important foreign market for Seita-made cigars, the company has more than 25% of the small cigar market and 2.8% of the overall market.

In the U.S., the company's distinguished Pleiades family of large cigars, hand-rolled in the Dominican Republic, has continued to gain and will figure prominently in Consolidated's future marketing efforts, along with the subsidiary's established line of premium cigar labels.

Consolidated had sales of $299 million in 1997, with more than 900 million of its units passing over the counter. Seita, by itself, reports sales of 19.3 billion French francs in 1998 (US$ 3.3 billion). Including Consolidated sales, total cigar sales in the new Seita Group are expected to represent about 21% of turnover.

If you're ever in Paris, take a stroll along the Seine, on the left bank, across from the Grand Palls. It's not only one of the world's greatest urban landscapes, it's also where one finds Seita, at home in an imposing tribute to French Art Deco architecture, at 53 Quai d'Orsay. What could be more French? What could be more international? If time permits, be sure to visit the Seita Museum. Through the years it has mounted some impressive exhibitions by artists from around the world, as well as displaying a wealth of artifacts pertaining to the history of tobacco. This museum is perhaps the clearest statement of all to the values that have given Seita its special status in the global tobacco community.

SMOKESHOP - April 99