TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING

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TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
NOVEMBER
2008

QUALITY
HALLMARK OF
CIGAR MAKING
MODESTA FONDEUR
A CIGAR LOVING LADY
7 NEW WONDERS

               FOCUS ON NORTH AMERICA

     TERRELL, DARRAH
       AND ELIADES
                – ON A MISSION FOR SNUS

    PLUS! DEDICATION IMPROVES ENVIRONMENTAL HEALTH
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
Editorial

A record-strong quarter
O
          ur recently published results confi rm a                              Physicians in the UK presented a report indicating
          strong performance in all our product areas.                          that smokefree products have a role to play in the
          Our snus products continue to deliver                                 battle against harmful cigarette smoking. It is parti-
strong growth in Scandinavia and the US , and our                               cularly interesting that another EU country has pre-
succesfully launched Red Man moist snuff product                                sented such fi ndings and demonstrates, once again,
is now available throughout the US market. Several                              how preposterous the EU ban on snus is. Snus plays
new products have been launched in Scandinavia,                                 an important role for the Swedish public health,
including General Extra Sterk in Norway, a great                                and personally, I am convinced that snus has played
snus experience that has been well received by our                              a vital role for the exceptionally low incidence of
consumers.                                                                      tobacco-related illnesses among Swedish men com-
   The cigar segment has held up well despite some                              pared to other Western countries. This has also been
challenging market conditions for European cigars                               established by the National Swedish Board of Health
and for premium cigars in the US. New innovative                                and Welfare in its public health report of 2005. We
products have been launched in these markets, such                              have every reason to be proud of our Swedish snus!
as Macanudo 1968 in the US, a rich tobacco experi-                                 Our North American operations, which account
ence. Your can read more about this                                                          for approximately 30 percent of the
new cigar on page 24. For the other                                                          Group’s sales, will be presented in greater
product areas, Lights, Chewing Tobacco                                                       detail in this issue. We will describe how we
and Pipe Tobacco, we have delivered a                                                        view our future developments for smoke-
solid performance and strong earnings.                                                       free products and cigars. You will also
   Financially, Swedish Match remains                                                        meet Modesta Fondeur, Cigar Master in
strong despite the prevailing global fi -                                                    the Dominican Republic, with 35 years in
nancial crisis. We maintain good liquid-                                                     the industry.
ity and loan maturities are limited this
                                                           PHOTO: MAGNUS FOND

year and next. In these turbulent times it                                                  Happy reading!
is more important than ever to maintain
a solid fi nancial position.                                                                Lars Dahlgren
   In September, the Royal Colleges of                                                      President and CEO of Swedish Match

NO. 4, 2008
Swedish Match Inside is a magazine for Swedish Match shareholders,                 Swedish Match is a global Group with a broad offering of
employees and other interested parties. A total of 50,000 copies are               market-leading brands in smokefree tobacco products,
published in Swedish and 6,000 in English.                                         cigars, pipe tobacco and lights products. The Swedish Match
                                                                                   share is listed on the OMX Nordic Exchange in Stockholm.
PUBLISHER                                 COVER PHOTO
Swedish Match AB                          Chip Mitchell

RESPONSIBLE UNDER LAW                     REPRODUCTION
Henrik Brehmer, Swedish Match AB          Bildrepro

EDITOR-IN-CHIEF                           PRINTING
Annette Kaunitz, Swedish Match AB         Intellecta Tryckindustri
                                                                                                                                                 PHOTO: HÅKAN MOBERG

PRODUCTION                                Swedish Match AB
Karoline Hammar, Swedish Match AB         S-118 85 Stockholm
                                          Tel: +46 8 658 02 00
ART DIRECTOR                              www.swedishmatch.com
Tom Sörhuus, Citat Journalistgruppen AB   inside@swedishmatch.com

2   inside | november 2008
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
NOVEMBER 2008                                   CONTENT
                            14
   PHOTO: CHIP MITCHELL

                                                                                               08

                                                                                                                                                                            PHOTO: CHIP MITCHELL
                            18

                           19                                                                16
                                                                                                                                                                            PHOTO: JERRY LINDAHL
PHOTO: MAGNUS FOND

                          06 |SALES DRIVING GROWTH                                                   16 |QUALITY – HALLMARK OF CIGAR MAKING
                          After ten successful years, Swedish Match in North America is              To maintain a leading position within the premium cigar
                          continuing to drive sales and focus on innovation. New segments are        category, quality is of the utmost importance. Swedish Match has
                          emerging continuously and the American snuff is rapidly gaining ground.    cultivated a stellar reputation for quality among retailers
                                                                                                     and consumers.
                          08 |INNOVATION IN SNUS AREA
                          Smokefree tobacco is one of the fastest-growing consumer                   18 |ENVIRONMENTAL HEALTH
                          categories in the US. Many players have endeavored to                      Swedish Match North America has a long tradition of working with
                          penetrate the market but few have succeeded. However,                      environmental issues as an integral part of daily business. Read
                          Swedish Match’s innovativeness is ideally suited for                       about a continuous development to increase resource
                          expansion in a dynamic market.                                             efficiency and systems for cleaning and reducing emission.

                          14 |PREMIUM CIGARS SHOW POTENTIAL                                          19 |NEW PRODUCTS
                          A record-breaking year in terms of the number of launches of new           New snus products have been launched. Read about Grovsnus
                          premium cigars – that’s how 2008 can be summarized. However,               Svart and the new member of the snus family General: General
                          current market conditions make it more important than ever to work clo-    Ekstra Sterk, a stronger original portion-packed snus. The snus has
                          sely with customers in order to find new sales concepts and drive sales.   a powerful tobacco taste with elements of citrus and pepper.

                                                                                                                                               november 2008 | inside   3
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
News

Tobacco museum
ready to reopen
In November, the doors will open
to a renovated and cultural-historically
restored tobacco and match museum.

                                                                                     Unscientific snus
The inauguration will be performed
by Swedish Match President Lars
Dahlgren and Johan Brattmyr,
Director of the Skansen Open-air
                                                                                     debate in Norway
Museum, during a ceremony                                                            According to Norwegian media, the
                                                                                     Public Health Authorities wants to
featuring a brass band and a large
                                                                                     wants to reintroduce a cancer warning
amount of pomp.
                                                                                     for Swedish snus. The background is a
   In addition to renovation of the                                                  recently published report indicating that
building, the manufacturing plant will                                               Swedish snus can cause cancer in both
be in full operation. Museum curator                                                 the oesophagus and the pancreas. Patrik
Inga Junhem is pleased:                                                              Hildingson, Vice President, Swedish
   “We have reviewed and renewed                                                     Match Group Public Affairs, believes
our exhibitions and added new                                                        that there is no scientific evidence that
concepts in which we have placed                                                     supports a reintroduction of the cancer
                                                                                     warning for snus, a conclusion that the
tobacco in the context of enjoyment.
                                                                                     EU already reached in 2001. At that time,
Coffee, chocolate and tobacco have         provide visitors with inspiring taste
                                                                                     the cancer warning was replaced by a
similar histories. By linking them,        experiences. In future, we will also      more general warning text.
in part through collaboration with         have cigar tasting at the museum,” says      “This type of disinformation makes
the museum restaurant, we hope to          Inga Junhem.                              it difficult for the more than 100 million
                                                                                     smokers in the EU who are seeking a

Final for General Golf
                                                                                     sensible alternative to cigarettes,” says
                                                                                     Patrik Hildingson. “The report has been
                                                                                     criticized in scientific literature due to its
                                                                                     methodological weaknesses. In addition,
                                        General Golf is Swedish Match’s golf         its assertions are not supported by public
                                        tournament in which the Swedish              health statistics. The incidence of these
                                        sales force invite customers to play         cancer types among Swedish men is
                                                                                     among the lowest in the world, and they
                                        together with professional golfer
                                                                                     are the only men in the world who have
                                        Fredrik Jacobsson. The tournament
                                                                                     used snus on a broader scale over the
                                        takes place on five Swedish courses, and     past 200 years.”
                                        the final was held at Bro Hof Castle,           EU’s SCENHIR report 2008, conclu-
                                        outside Stockholm. The competition           ded that snus has a positive effect on
                                        days began with a joint dinner at which      Swedish public health.
                                        Fredrik Jacobsson spoke about life on           Read more at www.swedishmatch.com.
                                        the PGA Tour.
  Swedish Match has had a sponsorship agreement with Fredrik Jacobsson since         Contact us!
2004. His tournaments include competitions on both the PGA Tour and the              Mail to inside@swedishmatch.com
European Tour. During the 2003 European Tour, he won the Omega Hong Kong             or write to: Swedish Match AB, Inside,
Open, Algarve Open de Portugal and Volvo Masters.                                    SE-118 85 Stockholm, Sweden

4   inside | november 2008
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
FOCUS. Swedish Match has enjoyed a number of successes over the past year
– proving the viability of the Group’s long-term strategies. Swedish Match Inside
provides in-depth insight on the strategies for continued growth and profitability. In
this issue we take a deeper look at the US market.

Swedish Match North America Division has substantial
businesses in the strategically important cigar and snuff
product areas. Other product areas such as chewing and
pipe tobacco provide strong cash flows and support the
division’s efforts. PHOTO: MAGNUS FOND
                                                                         >>
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
Focus North America

NEW PRODUCTS AND INCREASED SALES

DRIVING GROWTH
“We have had ten years of success and when looking at at the financials, we
have increased operating income almost four times over the past decade,”
says Lennart Freeman, President, Swedish Match North America Division.
BY: KAROLINE HAMMAR

                                                                                                In the US market, the moist snuff

T
         o be as successful over the next     into profitable business opportunities.”
         ten years there is hard work         Freeman nevertheless describes the             product Red Man was launched in
         ahead. Despite a declining           market as dynamic and concludes that           2007. As the number one brand of
world economy, increasing tobacco             new segments are constantly growing.           chewing tobacco, Red Man has strong
regulations and a tough market                                                               recognition among smokefree tobacco
environment, Freeman is convinced             EXPANDING STRONG BRANDS                        consumers in the US. Expanding
that Swedish Match will continue              “The snuff area is growing rapidly,”           the brand to include the moist snuff
to successfully drive innovation and          he says. “Over the past several years          category provides access to the strong
increase sales in the North American          the US moist snuff market has grown            brand values that Red Man represents:
market.                                       by more than six percent per year.             quality, heritage and tradition. There is
   “With the existing conditions in           So far in 2008, ACNielsen estimates            also an increased interest in the US for
the US, sales of luxury goods, such as        market growth to be in the range of            Swedish snus. In 2007, test sales of the
premium cigars, are not doing as well         seven percent with the value-priced            Swedish brand General expanded and
as before,” he says. “Tobacco regulations     and pouch segments delivering the              increased its presence in New York,
and the ongoing debate about the              strongest growth. More consumers are           California and Texas.
health risks in using tobacco products        entering this category, including those           “We expect continued growth in
are challenges we have to address. This       having, or trying to, quit smoking. A          the moist snuff area due to smoking
tests our innovative and entrepreneurial      broad range of brands, products and            bans and increased understanding
skills, which means we have to find           attractive pricing have further fuelled        of the concept of harm reduction,”
ways to turn tough market challenges          the market growth.”                            Freeman says. “When the message

                                                                     increased its presence across the US. Chewing tobacco:
    This is North America:                                           Red Man. Pipe Tobacco: Half and Half.
                                                                     Production units: Premium cigars are manufactured in the
    Geographical scope: The North American market comprises          Dominican Republic and Honduras. Machine-made cigars
    the US and Canada.                                               are produced in Dothan, Alabama. Moist snuff and chewing
    Product areas: Cigars, moist snuff, chewing tobacco, as well     tobacco are manufactured in Owensboro, Kentucky.
    as pipe tobacco and accessories.                                 The Swedish snus products are manufactured in Scandinavia.
    Major brands: Premium cigars: Macanudo, Partagas, Punch,         Market in figures: About two-thirds of the premium-cigar
    Hoyo de Monterrey, Cohiba, La Gloria Cubana, Don Tomas           production is sold in the US. The US is the world’s largest
    and Helix. Machine-made cigars: Garcia y Vega, Game by           moist-snuff market with a consumption of more than 1.1 billion
    Garcia y Vega and White Owl. Snuff and snus: The traditional     cans during 2007. In the last four years, the moist-snuff market
    American moist snuff Timber Wolf, Longhorn and Red Man. In       has grown more than 6 percent annually.
    2007, test sales of the Swedish snus General expanded and it     Source: ACNielsen

6   inside | november 2008
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
Focus North America
                                                                                                           competition is fierce in this category
                                                                                                           and makes it harder to compete.”
                                                                                                           Compared to other large international
                                                                                                           tobacco companies, Swedish Match is
                                                                                                           a rather small player on the US market.
                                                                                                           However, Freeman sees competitive
                                                                                                           advantages.
                                                                                                               “It is not as easy for large
                                                                                                           corporations to have flexible
                                                                                                           production, marketing, sales and
                                                                                                           administration as it might be for
                                                                                                           smaller companies,” he says. “We are
                                                                                                           innovative and can easily adapt our
                                                                                                           efforts, including production, which
                                                                                                           has especially shown in the category
                                                                                                           of machine-made cigars. We have an
                                                                                                           organization with efficient decision
                                                                                                           processes and thanks to our size, we
                                                                                                           can more easily adapt to the market
                                                                                                           and its changing consumer demands.”
                                                                                                              Other important success factors,
                                                                                                           Freeman says, include having the right
                                                                                                           people in the right places with passion
                                                                                                           for the business, and a good leadership.
                                                                                                           “I am proud to say, we have some

                            “W e  a re  in no  -                                                           of the best people in the industry
                                                                                                           although we are a smaller player in the
                                                                                                           US market,” he says.

                            vati v e  an  d c a  n                                                            Some of the big tobacco companies
                                                                                                           have entered the snuff market and

                            eas ily  a d  ap t                                                             are showing strong decisiveness in
                                                                                                           developing the smokefree category.
                                                                                                           This is one of the reasons for the

                            our efforts”
PHOTO: CHIP MITCHELL

                                                                                                           joint venture with American tobacco
                                                                                                           company Lorillard. The venture aims
                                                                                                           to make Swedish Match products
                                                                                                           more visible to consumers on the
                                                                                                           market. A new Swedish snus called
                       of relative low health risks associated   the premium cigar segment,” Freeman       Triumph can now be purchased from
                       with smokeless products is fully          says. “The number of new players          retailers’ cigarette shelves, which will
                       understood, the market will be            entering the markets are increasing,      make snus more visible and accessible
                       enormous.”                                which challenges us to offer a broad      to both cigarette consumers and new
                                                                 selection that attracts our consumers.    snus consumers.
                       ADAPTABLE ORGANIZATION                    The cigar category is more of a fashion      “To go forward, we have to follow
                       Consumer dynamics are different           industry; the consumer appreciates        our consumers, stay focused, be
                       in the moist snuff category and           different flavors, new packaging and      innovative about our strong brands
                       the consumers tend to be more             innovative formats.The volume             and keep refining our business model
                       conservative than in, for example, the    will always be smaller, especially        from year to year. That’s how we will
                       cigar category.                           in the premium segment, it is a           drive profitable growth through new
                         “We have a very strong position in      lifestyle product of higher value.The     offerings,” Freeman concludes. *

                                                                                                                            november 2008 | inside   7
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
Focus North America

    From left: Steve Terrell, Clark
    Darrah and Elliot Eliades
    agree that as competition
    evolves Swedish Match is
    inspired to move forward.

                                                    INNOVATION
                                                    AT THE
                                                    FOREFRONT
                                                    The United States is the world’s largest market for smoke-
                                                    less tobacco, with annual consumption of more than 1.1
                                                    billion cans. Smokeless tobacco continues to be one of
                             PHOTO: CHIP MITCHELL

                                                    the fastest growing consumer packaged goods categories
                                                    in the US with volume growth of more than five percent
                                                    per year over the past several years. BY: SANDY FOWLER-JONES
8   inside | november 2008
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
Focus North America

                                                                            “   Consumers
                                                                                get premium
                                                                                taste at an

                                                                                                       ”
                                                                                affordable price
                                                                                snuff was viewed by many as a product
                                                                                that had a limited growth potential,
                                                                                catering primarily to rural and blue collar
                                                                                consumers. ”Several attempts were made
                                                                                to enter the moist snuff category by many
                                                              tobacco companies. But due to extremely strong brand

T
        he competitive landscape for moist snuff has
        changed over the past several years with two of the   loyalty, most attempts failed,” Steve Terrell says.
        largest US cigarette manufacturers, Altria and RJ        In 1994, Swedish Match North America launched Timber
Reynolds, entering the category.                              Wolf snuff with a value priced proposition. Consumers
   Swedish Match is a strong competitor in this fast          could finally get a premium taste at a more affordable price.
growing market, and has been gaining market share, from
eleven percent to be roughly 12 percent* in volume terms      ACCELERATED GROWTH
since September 2007. The team leading growth and             By 2006, the moist snuff category was experiencing
product development for the North America Division            accelerated growth reaching more than ten percent, led by
includes Clark Darrah, Director of Marketing for Smokeless    the rapid expansion of the value priced segment. Since 2005
Tobacco, Steve Terrell, Product Development Scientist, and    the value price segments have accounted for 89 percent of
Elliot Eliades, Director of New Products and Innovation.      the total growth in the snuff category. Eliades also notes
All three agree that as competition
evolves, Swedish Match has the tools
in place to effectively move forward in
this changing, dynamic marketplace.
    Prior to 1980, American moist

“Smoking bans
 contribute to
 growth in the
 snuff category
* Source: ACNielsen                                                                                 november 2008 | inside   9
TERRELL, DARRAH AND ELIADES - QUALITY HALLMARK OF CIGAR MAKING
Focus North America

                                                                             “”Snus presents a
                                                                               great opportunity
                                                                               for us
                                                                                in the US, with several tobacco companies
                                                                                introducing snus or ’snus-like’ products. Snus
                                                                                presents a great opportunity for us,” Eliades
                                                                                says.
                                                                                   Terrell agrees: ”No other tobacco company
                                                                                is better poised to capitalize on the US snus
                                                                                market than Swedish Match. There are several
that: “A proliferation of smoking bans as well as higher tax     key factors for success in terms of development and growth.
rates on cigarettes contribute to the growth as cigarette        We must challenge ourselves to create innovative snus
smokers migrate to the category.”                                products for the US markets. The product development
   The growth of moist snuff should continue as consumers        groups within North America and North Europe have a
look for alternatives to cigarette smoking and have the          long and strong relationship and this teamwork is vital to
opportunity to enjoy the existing and new products in            successful snus products in the US.”
the moist snuff category, according to Darrah. “Currently,
we have approximately 12 percent of the US snuff                 INNOVATION TO MEET UNIQUE NEEDS
market. Our objective, however, is to see both short-term        Swedish Match North America faces strong competition
and long-term share growth. We are clearly headed in the         by well-financed competitors. However, Terrell and Eliades
right direction. In several states we have market shares of 15   agree Swedish Match is the original snus and is the sole
percent or more.”                                                reason for the ‘Swedish Experience’ because it is a sensible
   “The current economic conditions in the US favor              alternative to cigarettes and other smoking products,
continued growth in the value priced segments and                foremost because it does not deliver toxic pyrolysis
Swedish Match North America has the momentum. We are             products.
well positioned to leverage opportunities,” says Darrah.            “We will leverage this unique quality in the US,” they say.
  Over the past two and a half years, Swedish Match share         As Swedish Match North America looks to the future the
on the North American market has grown by more than              major growth drivers will be continued organic growth and
two percentage points, achieving new all-time highs.             significant new product innovations targeted to meet the
                                                                 unique needs of smokers and current smokeless consumers.
SNUS – A GROWING TREND                                           Swedish Match is well positioned to successfully compete.
Innovation has always been at the forefront                                                  “We have a comprehensive under-
of the marketing strategy for Swedish Match.                                              standing of tobacco consumers. This
   “We have created the value price                                                       gives us a clear advantage as we look
segment with Timber Wolf, developed the                                                   to optimize our snus offerings in the
fast growing price brand with Longhorn                                                    marketplace. As the manufacturer of
and is redefining the premium price snuff                                                 snus, we see continued opportunity
segment by offering a Red Man moist snuff, a                                              to provide consumers with less
premium brand at a respectable price. Most                                                harmful alternative tobacco
recently, snus has become a growing trend                                                 products,” Eliades says. *

10   inside | november 2008
Focus North America

INFORMATION BRINGS ADVANTAGES
Gary Poehlmann, Vice President Sales, Swedish Match North America Division, stresses the need of business intelligence: ”The
data we have at our disposal provides us with the business intelligence we need to make good decisions in deploying our resources.
Moreover it enables us to distinguish ourselves with a competitive advantage when we are working with customers.”
BY: KAROLINE HAMMAR

M
             ulitple data sources           recently introduced a faster and more        store owners is something I’m very
             provide Poehlmann and          efficient version of our trademarked         proud of. Add to this our strong
             his team the ability to        category management process, and             leadership and excellent brands, and
identify specific opportunities by          next year we will roll out other new         I’m very confident that we are well
geography, brand, chain group, and          software and hardware to the sales           prepared for the future.” *
individual stores.                          team. We also have a new online
   “Our database includes                   learning management system which
information on 166,000 stores. We
know how many cans of snuff
each store sells and have developed
                                            provides an easy and efficient way to
                                            conduct training courses.”                                 Facts
a routing system for our sales              PREPARED FOR THE FUTURE
representatives that target the highest     When it comes to the challenges                 SALES NORTH AMERICA
volume stores. From there, we               ahead, Poehlmann is very clear about            • Four regional offices across the US
establish distribution goals for our        what he thinks Swedish Match                    and a national accounts team based
                                                                                            in Richmond.
brands, and track and measure our           biggest advantage and asset is.
                                                                                            • The sales organization is divided into
progress against those goals. That             “Our salespeople are simply the
                                                                                            account teams who handle distributors
same data serves as the foundation          best in the business. All the data in           and chain groups such as McLane and
for our category management                 the world won’t get you anywhere                7-Eleven, and retail teams who focus on
activities, where we are the                without talented and dedicated                  retail store activities.
leader in providing other tobacco           employees. The personal relationships           • The sales force has 396 employees and
products category-expertise to our          and trust they have built with our              254 of them are territory representatives.
customers.”                                 largest customers and individual

INVEST TO ENHANCE
LEADING POSITION
The competitive nature of the
smokefree business in the US is
increasing as cigarette consumption
continues to decline and consumers
are gravitating toward other
alternatives. Snuff sales are growing
at accelerated rates year on year.
   “The continued robust growth
of the snuff category here has
encouraged nearly all tobacco
companies to want a piece of the
action, including the large cigarette
companies. This requires that we                                                                             Gary Poehlmann thinks
                                                                                                                                            PHOTO: CHIP MITCHELL

sharpen our skills even further, and                                                                           Swedish Match sales
continue to invest in the technology                                                                          people are the best in
and training needed to stay ahead                                                                                      the industry.

of the pack. Toward that end, we

                                                                                                            november 2008 | inside     11
Focus North America

                                                                                                                                                     PHOTO: CHIP MITCHELL
SMARTER, BETTER
AND MORE EFFICIENT
Rusty Warnick, Vice President Operations & Supply, Swedish Match North
America Division, says factories must constantly re-evaluate processes to
find new ways to compete effectively in a powerful dynamic industry.
BY: KAROLINE HAMMAR

“
             We must continuously          Efforts in the Owensboro plant                                produce all the chewing tobacco
             search for innovative      have been made to create a demand                                for the tobacco company National
             streamlined processes,”    driven manufacturing.                                            Tobacco in a co-packing agreement,
he says. “Our ultimate goal is to set      “By driving leaner inventory                                  beginning in 2009. This will allow for
customer expectations at levels that    levels and adopting efficient pull                               increases to chewing tobacco volumes
are difficult for our competitors to    manufacturing processes, we are                                  on production lines that have seen
meet.”                                  guaranteed to have the right product                             steady declines over the years.
   Swedish Match North America has      at the right time,” Warnick says. Lower                              Dothan’s strength is in its versatile
three plants: Owensboro in Kentucky,    inventory levels also mean lower                                 workforce which is focused on
Dothan in Alabama and Santiago in       working capital.                                                 innovation. A spirit of resourcefulness
the Dominican Republic. All three          In addition, Owensboro will also                              exists at the plant which encourages
plants have demand driven production                                                                     creativity. One example is the way
and are continuously working to                                                                          employees reduced costs through
improve flexibility.                                                                                     development of special equipment
   “Each plant has tremendously                                                                          from concept to implementation. In
dedicated workforces who take                                                                            addition the Dothan plant has been
pride in the products they produce.                                                                      successful with its work on the new
However, the industry challenges are                                                                     Cigarillo foil pouches.
immense. Economic fluctuations,                                                                             “Santiago’s highly motivated
the possibility of the US government                                                                     workforce focuses on becoming more
requiring the Food and Drug                                                                              efficient by learning new ways to
Administration to regulate tobacco,                                                                      improve work processes. We reduce
and increased competition with                                                                           waste, and at the same time we do
cigarette manufacturers entering the                                                                     production quickly and at a lower
category are some of the challenges                                                                      cost. At all of the plants there is a
we face. Therefore we are constantly                                                                     new mindset where we switch from
finding ways to improve our                                                                              being reactive to being responsive and
                                                                                  PHOTO: CHIP MITCHELL

operations in production, product         Packaging is fun when
                                                                                                         proactive. At the end of the day the
management, customer support,             the process is smart                                           employees’ commitment to excellence
inventory and warehouse procedures,       and efficient.                                                 is in alignment with our company
in order to gain a competitive edge.”                                                                    values.” *

12   inside | november 2008
Focus North America

                                                Facts
                                     OWENSBORO FACTORY
                                     • The Owensboro factory was built in
                                     1972.
                                     • The facility produces products in three
                                     major groups: chewing tobacco, snuff
                                     and pipe tobacco.
                                     • The Quality and Environmental Mana-
                                     gement Systems are ISO certified.
                                     • The factory has 222 employees.
                                     • Owensboro is located 120 miles west of
                                     Louisville, Kentucky.

                                     DOTHAN FACTORY
                                     • The Dothan factory was built in 1939,
                                     with additional buildings added in 1953
                                     and 1986.
                                     • The facility produces machine made

“Each planted
                                     cigars.
                                     • The Quality and Environmental Mana-
                                     gement Systems are ISO certified.

has dedicatwho
                                     • The factory has 210 employees.
                                     • Dothan is located in the south east of
                                     the US state of Alabama.

work force n                         SANTIAGO FACTORY

t a k e p  r i d e i                 • The Santiago factory manufactures

                            ”
                                     small and large natural and homogeni-

the    p r o d  u c t i o n          zed wrapper cigars.
                                     • The factory has 747 employees.
                                     • Santiago is located in the Dominican
                                     Republic.

                                                     november 2008 | inside     13
Focus North America

PREMIUM CIGARS SHOW
FUTURE POTENTIAL
The premium cigar industry in the US is facing some challenges,
but, in the face of these challenges, Swedish Match’s business has
seen steady growth and positive trends this year, with the potential
for sequential growth in the fourth quarter of 2008.
BY: KAROLINE HAMMAR

D
           an Carr, Senior Vice                 investing in our innovation platforms           The future potential of premium
           President Sales & Marketing,         are critical components to our strategy      cigars is bright as consumers continue
           Swedish Match North                  moving forward.”                             to be open to new product ideas.
America Division, describes the                    New smoking trends stress the             Dan says, “We have
external challenges confronting the             importance of speeding up innovation         five new
cigar business as a downshifting of the         and re-evaluating strategies on how to       product
economy, inventory readjustments,               go to market.                                launches
and increasingly strict legislation activity.     “We’ve strategically and aggressively      this year,
   “It’s important to remember the              invested within our infrastructure this      the most
industry has withstood legislative              year for both the sales and marketing        we’ve
and economic threats before. We                 functions.”                                  supported
feel we’ve assessed the situations                                                           into the
confronting us and we’re well                                                                market,
positioned for the future,” he says.
General Cigar, a subsidiary of Swedish
Match, is market leading in the
                                                            Facts                            with each
                                                                                             initiative
                                                                                             designed to
premium cigar segment in the US                                                              meet a different consumer trend. Our
with fully integrated tobacco growing,
                                                 GENERAL CIGAR CO                            new Macanudo 1968 with its fuller
processing, and manufacturing                    General Cigar Co, a subsidiary of Swe-      bodied taste profile was exceptionally
capabilities.                                    dish Match, manufactures and markets        well received at the International
                                                 handcrafted cigars for the premium
  “We see multiple opportunities to                                                          Premium Cigar and Pipe Retailers
                                                 market. Passionate about delivering
                   expand the premium            cigars of the finest quality, General
                                                                                             Associations Annual Convention and
                   cigar category.               Cigar produces Macanudo, Partagas,          Trade Show. The Excalibur Legend
                   Leveraging our                Cohiba, Punch, Excalibur, Hoyo de           was also designed to meet the full-
                   extensive and unique          Monterrey, La Gloria Cubana and seve-       bodied taste profile.”
                   quality tobaccos              ral other industry leading brands, which       Other launches include La Gloria
in the marketplace, staying relevant             are sold through tobacconists nationwide.   Artesanos de Miami, a super premium
with each of our brand equities, and                                                         limited edition cigar, a new line

14   inside | november 2008
Focus North America

                                                            Dan Carr and Debo
                                                   Mukherjee, General Manager
                                                     business ventures discuss
                                                       business opportunities.

    se e m   u lt ip le
“We            e s  to
oppor tu n iti
      d  th  e  p r e m  -
expan          a t e g or  y”
ium ciga  r  c
                                                                                       PHOTO: CHIP MITCHELL

extension of Cohiba known as Puro
Dominicana, and Havana Honeys,
which is designed to establish General
Cigar as a major competitor in the
premium flavored cigar segment.
   “When the economic situation
influences the sales of luxury items
such as premium cigars, it is even
more important to work as close as
                                                     The cigar named Partagas
we can with our customers to find                    is one of many cigars that
concepts that will help their business.            makes General Cigar a major
Bringing in new consumers and                       competitor in the premium
increasing our value to our customers                           cigar segment.

is our number one priority.” *

                                                      november 2008 | inside      15
Focus North America

                                              PHOTO: JERRY LINDAHL

                i s a  n  i n t e g r a l
“Qu  a l i t y                     w   e
     t o  f  e v  e r y t h i n g
pa r                     o d  u c t i o n ”
do i  n  c  i g a r  p r
 16   inside | november 2008
Focus North America

                         QUALITY AND
                                                                                                                                     New tobacco plants

                         TRADITION

                                                                                                                                                             PHOTO: JERRY LINDAHL
                         Jhonys Diaz, General Manager of the Swedish Match tobacco plant in the Dominican
                         Republic, has a lot on his mind at this time of the year. Inside asked him about his
                         commitment to producing high-quality cigars. BY: VICTORIA MCKEE

                         “
                                     During this time of             General Cigar. It is an integral           for two generations of the same family
                                     year, I work to oversee         part of everything we do in cigar          to have worked in the factory.
                                     production of the new           production. In my role, I uphold the          How do you create new cigars?
                         products we debuted in July at the          company’s commitment to quality by            “I am a member of General
                         International Premium Cigar and Pipe        ensuring the tobacco is properly cared     Cigar’s new product-development
                         Retailers Association, which is the         for and that the people who handle         team. As such, I consult with Cigar
                         annual tradeshow for the premium-           it are well trained. I also oversee our    Masters Daniel Núñez and Modesta
                         cigar category,” he says. “This effort      quality-assurance team to make sure        Fondeur by providing my input on
                         entails ensuring that we are fulfilling     that every cigar is handcrafted to         prototypes developed for the US and
                         shipments of new and established            perfection.                                international markets. We also work to
                         products. I am also working to plan            Another way we maintain the             develop cigars that will meet the needs
                         production for the remainder of this        quality of our products is to retain       of our consumers, based on input given
                         year and next year.”                        employees. Many of the skilled             to us by key executives from our sales
                            How is quality maintained year           artisans who work in our Dominican         and marketing teams. New product
                         after year?                                 factory have been working with us          development is an exciting process. I
                            ”Quality is a hallmark of                for decades. In fact, it is not unusual    truly enjoy creating new cigars together
                                                                                                                with my colleagues.”
                                                                                                                   How do you stay on top
                                                                                                                among competitors?
                                                                                                                   “To maintain our leading
                                                                                                                position within the premium cigar
                                                                                                                category, quality is of the utmost
                                                                                                                importance. After all, General Cigar
                                                                                                                has cultivated a stellar reputation
                                                                                                                for quality among retailers and
                                                                                                                consumers. Still, we are never able to
                                                                                                                rest on our reputation. We are only
                                                                                                                as good as the cigars we bring to the
                                                                                                                marketplace.”
                                                                                                                   What inspires you?
                                                                                                                   “The passion that our employees
                                                                                                                have for our products. I am also filled
                                                                                                                with pride when I walk through the
PHOTO: FRANKLIN FILION

                             Jhonys Diaz oversees that                                                          factory and speak with our employees
                             every cigar is handcrafted                                                         because their commitment to making
                             to perfection.                                                                     the best cigars in the market is evident
                                                                                                                in everything they do.” *

                                                                                                                               november 2008 | inside   17
Focus

DEDICATION IMPROVES
ENVIRONMENTAL HEALTH
With dedication and enthusiasm all employees at the North American
facilities work for the development of environmental well-being. Swedish
Match has a long tradition of working with these issues as an integral
part of daily business. BY: KAROLINE HAMMAR

“
            The importance of            unit. It could include using low            on unused land at the tobacco farm
            environmental issues is      energy light bulbs in the factories to      in the Dominican Republic, noise
            increasing in pace with      save trees by not printing documents        reduction initiatives at the factory
more stringent requirements and          unless necessary.”                          in the Dominican Republic, several
increased awareness on the part of          The production processes and raw         water and waste reduction projects at
consumers, customers, suppliers and      materials being used in the factories       the two factories in Honduras, fuel
authorities,” says John Danhauer,        generally have limited impact on            reduction projects in the Dothan
Manager Utilities & Machine              the environment and approximately           Alabama factory and reductions in the
Shop at the Owensboro plant              80 percent of Swedish Match’s raw           use of chemicals and chemical waste
and Environmental Coordinator            materials are renewable and production      reductions in the Owensboro Kentucky
for the Swedish Match North              handles environmentally harmful             factory, just to mention a few.
America Division. “That’s why            substances to only a limited extent.           “Effective the end of November
we continuously have to develop             “We have made great efforts in           with the registration of the factories
processes to increase resource           all environmental areas including           in Honduras, all manufacturing
efficiency and further develop systems   reduction of energy, waste reduction,       facilities in the North America
for cleaning and reducing emission.”     reductions in water use and reduction       Division will be ISO 14001 registered.
   “At the same time as we develop       of discharges to air, land and water.       This would not be possible without
our processes it is as much about        The manufacturing facilities in             the dedication, interest and enthusiasm
everyone taking small steps in           the North American Division                 shown by everyone who works at
everyday business. The search for        have implemented approximately 40           these facilities for the environmental
items with negative environmental        environmental projects in the past year.”   health and well-being of our planet,”
impact originates at each business           Examples include reforestation          says John Danhauer. *

18   inside | november 2008
New products

                                                                                                                                         7 NEW
                                                                                                                                       WONDERS
                                                                                                                                   Giftbox 2008 is here, the
                                                                                                                           theme is The New 7 Wonders.
                                                                                                                                  Over 100 million votes for
                                                                                                                                 the New 7 Wonders, were
MATCH BOX IN                                                                                                                received and revealed during

CHRISTMAS DESIGN
                                                                                                                           a spectacular live event in Lis-
                                                                                                                             bon, 2007. Each wonder has
We are celebrating Christmas with a trendy                                                                                  its own exciting history, which
decorated series. This design is available in all                                                                            you can read more about on
match brands, all over Europe.                                                                                                          the back of the box.

HOYO DE MONTERREY EXCALIBUR LEGEND
                                                                          HOT SNUS
                                                                          GROVSNUS SVART
As the boldest expression of Hoyo de Monterrey Excalibur, Legend
begins when spicy Nicaraguan tobacco from the mainland is paired with     Grovsnus Svart is a new rough, masculine and black
a proprietary tobacco from Nicaragua’s remote volcanic island of Ome-     tobacco experience. It is a coarse-grained snus,
tepe and blended with a powerful Dominican ligero. The new Legend         packed in a black portion. This snus has a full-
is in keeping with the growing demand for full-bodied cigars that smoke   bodied, intensive tobacco taste with a hint of
smoothly and effortlessly.                                                vanilla, leather and aniseed. Behind the hint of
                                                                          the new flavors you find the clear and recogni-
                                                                          zable Grovsnus taste.

                                                                          BETTER AND TASTIER ONICO
                     EXPRESS YOURSELF                                     A new version of Onico, our tobacco- and nicotine-free

                     WITH A CRICKET                                       product, is launched. In cooperation with the Insti-
                                                                          tute of Odontology at the University of Gothen-
                     With this new concept Cricket gives you the          burg, we have developed a new recipe based
                     opportunity to customize your own lighter.           on oats and cacao fiber. The rare risk of root
                     Each blistercard of three lighters includes six      decay that occurred in the past will be nearly
                     fluorescent stickers. Express yourself and write     non-existent with the new recipe. The New
                     messages on your lighter.                            Onico feels slightly richer and the color is darker,
                                                                          making it more similar to ordinary snus.

                                                                          AN EXTRA STRONG GENERAL
                                                                          A new member of the snus family General is
                                                                          born: General Ekstra Sterk, a stronger original
                                                                          portion-packed snus now available in the
                                                                          Norwegian market. This snus has the classic
                                                                          General taste, with a powerful tobacco flavor with
                                                                          elements of citrus and pepper. The box is black
                                                                          with a discreet red stripe and contains 22 portion
                                                                          packages.

                                                                                                                           november 2008 | inside      19
The quarter in brief
JULY–SEPTEMBER

                 Results for the third quarter
                 I
                       n local currencies sales for the third quarter of 2008                        declined versus prior year in Europe. Operating margin
                       increased by 8 percent compared with the third                                for cigars reached 20.1 percent (20.5).
                       quarter of 2007. Reported sales for the third quarter                         Group operating profit for the third quarter increased
                 increased by 5 percent to 3,432 msek (3,272). Currency                              by 14 percent to 864 msek (759). In local currencies
                 translation has affected the sales comparison negatively by                         operating profit increased by 18 percent. Currency
                 99 msek.                                                                            translation has affected the operating profit comparison
                 Sales of snuff increased by 16 percent during the third                             negatively by 33 msek.
                 quarter to 992 msek (852) and operating profit increased                            Operating margin for the third quarter amounted to
                 by 26 percent to 483 msek (383).                                                                               25.2 percent compared to 23.2
                 Scandinavian snus sales were up                                                                                percent for the third quarter of
                 20 percent compared to the third                                                                               2007. The income tax rate in
                 quarter of the prior year while                                                                                the isolated third quarter was at
                 volumes measured in number of                                                                                  11 percent, positively impacted
                 cans declined by 2 percent. Snuff                                                                              by the reversal of certain tax
                 sales in North America were up                                                                                 provisions.
                 by 13 percent in local currency,                                                                               Earnings per share (basic) for
                 as a result of both volume growth                                                                              the third quarter increased by
                 and a higher average price for                                                                                 39 percent to 2.63 sek (1.89).
                 the portfolio. Operating margin                                                                                Diluted EPS was 2.63 msek
                 reached 48.7 percent (45.0).                                                                                   (1.88).
                 For cigars, sales increased by 4
                 percent during the third quarter
                 to 936 msek (902). Operating
                 profit increased to 188 msek
                 (185). Cigar sales grew in the US
                                                                                                                                  “In local cur-
                 in dollar terms, as a result of the                                                                              rencies sales
                                                                                                                                  increased by
                 acquired Cigars International
                 business and improved
                                                       PHOTO: PETER KNUTSON

                 performance for machine made
                 cigars. In Europe, sales declined.                                                                               8 percent.”
                 Operating profit increased in
                                                                                                Joakim Tilly, CFO Swedish Match
                 the US in local currency and

                 3 analyst comments
                 1                                                                                                            2
                        Anders Hansson, analyst                               be regarded as temporary. Cigars                       Stefan Mattsson, analyst SEB:
                        Danske Bank:                                          reported earnings in line with market                  “The earnings were favorable.
                        “Earnings were better than                            expectations. The strong cash flow for                 Positive elements included the
                 expected. Snus excelled with strong                          the quarter was also positive. Despite          margins on snus and snus volumes
                 sales and healthy margins. A positive                        the financial situation, Swedish Match          in Scandinavia, which only declined
                 price mix for snus displayed in the                          is one of the few companies that were           2 percent. Lighter products reported
                 US for the first time in five years. The                     able to beat market expectations.               surprisingly strong earnings. Cigars
                 positive deviations within chewing                           Swedish Match is a stable company               delivered somewhat weaker results
                 tobacco and lighter products should                          with strong shares.”                            than expected. The strengthening of

                 20   inside | november 2008
Share development
Between July 1 and September 30 2008                                           9 percent. Over the 12 month period to                Swedish Match share price declined by
the share price of Swedish Match was virtual-                                  September 30, the Swedish Match share                 11 percent, demonstrating the defensive
ly unchanged, at 120 SEK. During the same                                      has significantly outperformed the OMXS30.            characteristics of the Swedish Match share.
period, the OMXS30 index of the 30 largest                                     During this 12 month period, the index
Swedish listed companies, declined by                                          declined by more than 37 percent, while the

Share price and turnover                                                                                                                           Total return

                                                                                                                                       Millions   %
SEK                                                                                                                                    shares
160            Swedish Match (SEK)                                                                                                                40
                                                                                                                                       120
               OMX Stockholm 30 (SEK)
                                                                                                                                                  35
               Turnover, millions of shares per month                                                                                  100
120                                                                                                                                               30
                                                                                                                                        80        25

 80                                                                                                                                     60        20

                                                                                                                                                  15
                                                                                                                                        40
 40                                                                                                                                               10
                                                                                                                                        20
                                                                                                                                                   5
  0                                                                                                                                     0
       2003                          2004                          2005              2006              2007        2008                                   2003 2004 2005 2006 2007
      * Indexed to the initial Swedish Match share price on this graph.

                                                                                                                                                                         July–Sept   July–Sept   Full year

                                                                                                                                                  MSEK                   2008 2007 2007
NET SALES JULY–SEPT 2008                                                              OPERATING PROFIT JULY–SEPT 2008*
                                                                                                                                                  Sales                  3 432       3 272 12 551

Other operations 19%                                                 Snuff   29%      Cigars 21%                           Snuff 54%
                                                                                                                                                  Operating profit         864         759       2 997

Lights12%                                                                             Chewing tobacco10%
                                                                                                                                                  Profit before income tax 747         655       2 662

Pipe tobacco
                   6%                                                                 Lights 9%
                                                                                                                                                  Net profit for the period 665        491       2 056
& accessories
                                                                                      Pipe tobacco
Chewing tobacco 7%                                                  Cigars 27%
                                                                                                                                                                          2:63        1:89        7:80
                                                                                      & accessories   6%          *excluding Other operations
                                                                                                                                                  Earnings per share,
                                                                                                                                                  basic (SEK)

                                                                                   3
 the USD will be positive for Swedish                                                       Jonathan Fell, analyst                       market share, although were are
 Match ahead, although it should                                                            Deutsche Bank:                               a little wary of how competitive
 be remembered that the margin on                                                           “This is a good set of                       dynamics in the US will develop
 snus will be negatively impacted by                                               figures; in particular snuff sales and                next year. Premium cigars in the
 the geographic mix. Stability in the                                              margin performance were ahead of                      US are under pressure, but mass
 company remains strong and its cash                                               forecasts. The core business seems                    market is performing well. Overall
 flow is healthy. Consumers seem to                                                to be moving along very well and                      Swedish Match looks like a good
 be relatively indifferent to increased                                            is on track. Sales of Red Man in                      stock for the current difficult
 taxes and more expensive snus.”                                                   the US are increasing and gaining                     economic environment.”

                                                                                                                                                             november 2008 | inside               21
Portrait
MODESTA FONDEUR

                  A cigar-loving lady
                  The tobacco industry has traditionally been dominated by men. After
                  almost 35 years in the business Cigar Master Modesta Fondeur has gained
                  a reputation as one of the most valued cigar masters in the world. She says
                  it is more than cigars; it’s a way of life. BY: JERRY LINDAHL

                  “
                              I was influenced at an        office duties, but I was soon given       the craftsmanship underlying cigar
                              early age. As long as I can   responsibility for managing inventory,    manufacturing. It is so much more
                              remember, both of my          invoicing, payroll and everything else    than just cigars. It’s a way of life.”
                  grandfathers smoked cigars. I enjoyed     that goes on in an office.”                  The tobacco industry is by tradition
                  the smell as a child and was later           Modesta takes a puff from her          dominated by males, and Modesta had
                  able to smoke them myself. Today,         newly lit cigar and continues:            all eyes on her from the beginning.
                  few people react, but 20 years ago,          “At that time, the company had            “Naturally everyone was watching
                  a woman smoking a cigar attracted         only a couple of hundred employees.       me. They were curious to know
                  attention. Today that may seem a          Over time, it grew and my focus           whether I would be able to do the
                  little old-fashioned, but that’s the      shifted from administrative work to       job or not. I have never felt a lack of
                  way it was then,” says Modesta            more practical tasks. In 1978, we began   acceptance from my male colleagues.
                  with a laugh.                             to manufacture cigars here. Because       If you are motivated and do a good
                     “Today, smoking is part of my job. I   I was alone in administration, I was      job, you will get help and respect. I
                  need to keep control over production.     simply forced to learn everything         really appreciate my work and find it
                  It is my responsibility to ensure that    about what was happening in the           stimulating. There is always so much
                  the cigars that we produce are of high    tobacco fields. I found that more         happening. Weather and winds are
                  and uniform quality. Test-smoking         stimulating and more physical. That       constantly changing. Sometimes it
                  our cigars is an important part of my     was how I began to learn more about       rains a lot and sometimes only a little.
                  work. If the quality and the tobacco      cigar manufacturing.                      I then have to take new decisions and
                  blend meet my quality requirements                                                  make adjustments in production.”
                  and thus those of our customers, then     A GREAT CHALLENGE                            So tobacco is one part of the job.
                  everything is as it should be.”           “In 1997, I became the head manager       The other is all the people.
                                                            for the cigar plant. A few years later,      “This job really is about tobacco
                  WHY GENERAL CIGAR?                        we bought the plant in Honduras, and      and people, which makes it intensive
                  “When I finished my degree in             I quickly learned about their culture,    and exciting. If you have tobacco but no
                  economics in 1975, my advisor at the      other types of tobacco and cigar          people who can work with the tobacco,
                  university, who was then also a jurist    manufacturing. Quite simply, I liked      there will be no cigars. It’s that simple.”
                  at General Cigar, asked me to bring       the challenge of the job.”
                  my CV to the office at the plant. My         Today, there are nearly 6,000          SOCIAL RESPONSIBILITY
                  employment coincided with General         employees in the various stages of        When asked about conditions for
                  Cigar’s establishment of its operations   cigar production in Honduras and the      workers in the cigar manufacturing
                  in the Dominican Republic, and            Dominican Republic, which includes        plants, Modesta’s eyes light up.
                  I began working the very same             everything from cultivation to finished     “Here in the Dominican Republic
                  day operations started in earnest.        cigars in boxes.                          and also in Honduras, it should never
                  Initially, my work involved routine          “Personally, I have always respected   be taken for granted that people

                  22   inside | november 2008
Portrait
PHOTO: JERRY LINDAHL

                       For Modesta test smoking
                       is a natural part of the job.
                       Quality has to meet her
                       requirements.

                       can read and write. Women are           is to ensure that the cigars that are
                       often overlooked because they run
                       the household and do not need to
                       be able to read. We want to change
                                                               produced are of high and uniform
                                                               quality. She is also a member of the test
                                                               panel that evaluates the tobacco blends
                                                                                                           In brief
                       that. We have started a program that    that are used. Since a large amount of
                       provides opportunity for our workers    cedar wood is used for cigar boxes, a       MODESTA FONDEUR
                       to receive financial support to learn   replanting program for both cedar and       Favorite cigar: Partagas size 42–44
                       reading, writing and arithmetic. That   mahogany trees has been started.            rings is the cigar I llike the most and it
                       strengthens their self-confidence and      “We try to learn from others’            tastes best when I enjoy it after work in
                       the will to improve their standard of   mistakes. We do not want our land to        peace and quiet.
                       living. When our computers become       become depleted and erode as in our         Age: 57.
                       too old, we donate them to the          neighboring country Haiti.”                 Family: Husband Pedro, daughter
                       schools. It’s important to remember        Today, after slightly more than 30       Mariel and her husband Luis Baez, and
                       that it is not only the workers here    years in the company, Modesta Fondeur       Pedro Jose, daughter-in-law Lorena
                       at the plant who depend on General      is vice president and, together with        and grandson Manuel Enrique.
                       Cigar, but also the family members      Daniel Núñez and Ernesto Perez-             Residence: Santiago, Dominican
                       who do not work here.”                  Carrillo, she is one of the few people      Republic.
                          Modesta is involved in nearly        in the world with unique, cutting-edge      Interests: My family.
                       everything, although her primary task   expertise in cigar manufacturing. *

                                                                                                                           november 2008 | inside   23
Rich, dark and unexpected
– Macanudo 1968
Ever since the first Macanudo cigar was rolled, America has embraced its quality and consistency, making it this
country’s favorite premium cigar. To commemorate its origin, General Cigar presents Macanudo 1968 which
is named to commemorate the year that General Cigar purchased the Temple Hall factory in Jamaica.
BY: VICTORIA MCKEE

Cigar Master Daniel Núñez is proud to introduce           it tastes like no other cigar I have ever smoked,”
Macanudo 1968, a limited edition collection made          Núñez says.
solely of proprietary tobaccos.                              This new line is particularly special because
  “It is with great pleasure that I present this          it celebrates Daniel Núñez storied career in the
cigar. We developed the seeds used in each of the         premium cigar business. He has exceeded all
cigar’s components and selected specific growing          expectations, having created a new cigar that
regions to enrich the blend and its aroma. So             is destined to enjoy the success of previously
unique are the tobaccos used in Macanudo 1968,            released incarnations of Macanudo.
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