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The aroma of a well-made cigar is so magnetic to Joseph Chiusano that he's back in the business — even though it's one of the most heavily regulated industries in the country.
Chiusano and his brother Michael Chiusano ran Cusano Cigars of Bradenton for more than 10 years. But the brothers sold the $8 million, 20-employee business in 2009 to Basel, Switzerland-based Oettinger Davidoff Group, a cigar conglomerate with more than 3,000 employees worldwide.
Both Chiusanos worked in Oettinger Davidoff's Pinellas Park office for a short time. They left the firm last year. Joseph Chiusano, however, didn't stay away from the business for long. “Cigars are a passion,” says Chiusano, pronounced Coosano. “Making a cigar is like being a chef. It's a labor of love.”
It's also a laborious process littered with taxes, regulations and legal requirements. Indeed, several other Gulf Coast cigar firms have shut down, been bought or consolidated over the past decade, despite the Tampa area's prominent cigar history.
The industry is also still reeling from the controversial SCHIP tax passed in 2009. That federal excise more than doubled the tax on a cigar, from 20.7% to 52.7%. The money went to the State Children's Health Insurance Program. “Tobacco,” says Chiusano, “is an easy target.”
Chiusano nonetheless launched Bradenton-based C & C Cigars this past summer. The firm has three handmade lines of cigars manufactured in the Dominican Republic and distributed nationally through its office in a Bradenton industrial park. It sells directly to retail shops, distributors, and catalogs. Its first shipment went out in October.
Chiusano says he spent into the six figures to launch C & C Cigars. Suggested retail prices range from $3.99 to $4.49 a cigar. All three lines will be offered, initially, in three sizes of 18-count boxes.
The firm's cigars are aimed at the experienced cigar smoker, not the customer who seeks a onetime purchase, says Jeff Aronson, who works in sales for the firm. Chiusano says the firm's strategy is to go for the Ford or the Toyota of cigars, not the Ferrari, in deference to the recession.
“It's far from the boom times,” says Chiusano. “So we are trying to make products that are for an everyday cigar smoking person.”
In launching C & C Cigars, Chiusano first built an operating system and database of potential customers. He used many of the same contacts from the previous business. The company, now with four employees, rents space in the building that previously housed Cusano Cigars.
The second phase was to actually make the cigars. Chiusano says that's a lengthy trial-and-error process, an effort to find the just-right mix of soil and climate. He hired a liaison for product control at the factory in the Dominican Republic where the cigars are made.
The company also spends time in regulatory purgatory. For example, Aronson says insurance is a challenge, given not many carriers provide product liability coverage to a company connected to tobacco.
Plus, the company pays fees to several government agencies, such as the USDA, because of previous tobacco lawsuits. The FDA might also begin to oversee the industry, which could bring more rules and costs.
Chiusano says the industry has been punished by mistakenly being lumped in with cigarettes for regulations and governance. It's a position cigar lobbyists have championed for years, with little success. “Cigar smoking is enjoyable and relaxing,” Chiusano says. “It's more of a social event than cigarette smoking.”
Chiusano says he'd like to grow C & C Cigars to a 20-employee business, just like Cusano Cigars was. But he worries that more rules and regulations could bury the business.
“You don't want to make a big investment if you don't know what's going to happen in the future,” says Chiusano. “We want to know that if we make an investment, it will not be torpedoed by some regulatory agency or another tax.”
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