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MANAGEMENT General Cigar smokes a sleeEer s ogie Tobacco company is streamlining its operations by switching from caretaker back to family style management..The tur.nabout is bucking the trend Putting d~wn a cigar, Edgar M. Cull- man displayed a slender thumb and bent it back~vard at a 45-degree angle. "'In our family," he said, "'we have a tradition that a double-jointed thumb indicates generosity of spirit." Top executives at General Cigar Co., Inc., breathe a fervent amen to that. Seven years ago, when Cullman bought working control of. General Cigar from Bush Terminal Co., executives conscious of job-security suspected that Cullman might have another use in mind for his thumb. But Cullman has retained virtually all General Cigar management while kneading new life into the company, and the industry as ,w.ell. • In 1963, General Cigar sold about $70-million in cigars, for around 11% of the market, trailing far be- hind Consolidated Cigar Corp., with $132-million in sales and 21% of the market. By paying too much at- tention to manufacturing te.ehniques and not enough to marketing, Gen- eral Cigar was stagnating. Last year, after five years with Cullman as president, General Cigar's revenues (not all from tobac- co) rose to $220-million, and in the first nine months of 1968 increased 10.8% to $172.6-'mil]ion. It still trails Consolidated Cigar in slqare of mar- ket in dollars, but outsells it cigar for cigar because the bulk of its sales are in the larger-selling lower-priced lines. Opposite approaches, Symboli- cally, the tlip-flop bet~veen Consoli- .dated Cigar and General Cigar in their battle for the stogie market has extended to their sbles of manage- ment, too. ~Vhen ~ullman gained control of General Cigar, Bush Ter- minal had b, een running it as an in- vestment. Under t.he old peo,p.le, management was ]argdy custodial; there was no reaI planning ahead;" Cullman says. Today, at 50, Cullman has ira- posed his oxen personal ;nterests, talents, and style on the company to such art extent that it has reversed the usual trend and passed from management by trustee to family- style management. At Consolidated Cigar, it has been the other way round. The company has been inhaled by conglomerate Gulf & Western Industries, Inc., whose president, David N. Judelson, has said he intends to use it as "the focal point for a large consumer products group." Last week, Ed W. Kelley, formerly executive vice-presi- dent at I-Ieub]ein, Inc., was named ~resident at Consolidated Cigar. I-Ie as no cigar experience. At the same time, Samuel J. Silberman, chief executive for 2.0 years and the son of a former presldent, announced his retirement from active management. Rolling his own. But. if tobacco men have lost their grip. on Consoli- dated Cigar, Cullman zs rolling his mvn variety of family operation at General Cigar. "We like to think we're one big happy family around here," Ctillman beams through a hal~o, of smoke. A,s. a member of a near legendary to bacco family (box, page 74) who was "'diapered in tobacco leaf," as publicist Benjamin Sonnenberg puts it, it isn't surprising that Cullman feels that ~vay. As a tobacco man w.ho gained control of a tobacco business, Cull- man tends to come on strong with the tradition bit. His voice takes on .a near-messianic peal while discuss- m.g the curing of fine tobacco. cigars were cars, he ~vould disas- semble them on weekends. His love for tobacco, ~e cigars m.,ade from them, and the mdusta3, bmlt on them is reflected in the company's new headquarters on Manhattan's Third Avenue. Once past ~ receptionist chirping l-lave a cigar, the VlSltO]; is ~ialfed by powwows of wooden In- ns and a taxidermist's paradise of T108920245

t Edgar ~,~. Cullroan has ~]~cked be ashes oR C:eaeral C~gar hu~ he sh']l f;nds time to pawwov¢ with some of Lke ind~sU'y's o]~es~: sa|esmen. stuffed x:'hite owls. The o~tlces fumlshcd very l~olntedly in a tmdi- I~onal st~-le with v, rilliamshurg re- l~roductions and there is a circular staireaseo '"I wanted to convey the feeling of warmth you get from a personal business;" says Cullman, "'because that's what the cigar business is all about." Ripe for change. When the word got out in 1061 that the Cu]lmans were buying Bush Terminal's 37% of CeneraI. Cigar stock, Chairman (then ~res~dent) ~uhus Strauss calls: .'We all L~ew Edgar before- hand, and were con~dent of his capabilities.'" Owning a third of the company made i~ a lot easier for Cullman to get things done, Says one company o~icial: "Julius Strauss did a great ~ob, but he had to sell his program to the board of directors, too. Edgar has less of a selling iob to do." "General Cigar was ripe for a change be~or.e I came in. Sales wer,c off and the ~ma~.~ of the. co,mpany s products was discouraging, Cull- man says. To ~nd out what was wrong, h~ set up a battery of prod- uct tests. The results: The eompany s leading brand, White Owl, w.as revam.p.ed. • Milder c~gars w~th smaller, thinner shapes got a bigger role. They were outside the established price patterns, allowing Ceneral Ci- gar to ask-and get-more for them. • Advertising and sales promotion were shored up with more aggres- sive spending. Better distribution. Since the old Ma and Pa cigar store has been re- l~]aced by supermarkets and drug- stores as the point of sale for most cigars, Cullman decided to beef up the sales force to get better distri- butlan. As befits his personal style, he makes it a. practice to hop a. ~.e%uently. to respect .fi.rst han,d, c~gar displays m, say, Mmneapohs. In Manhattan, he makes the rounds every so often with Morton .G. Meyer, who runs the company's Metropolitan Tobacco division. When the Surgeon General's ]~ort linking cigarette smoking and ealth was issued in January, 1964, Cullman concluded that there would be a permanent increase in demand for cigars. So far, there is little evi- dence he was right, but he has in- stalled highly automated machines that can dispense more than 500 cigars a minute. They are another reason Cullman has fended to em- phasize the big volume, low-priced cigar. Acquisition program. In addition to the revar~.ped marketing strategy and exvans, on programs, Cullman TI08920246

l " . ~ ...... ~='~'" ~'~>~ P~ip Morr~ division, Joseph, Arthur, Edgar, and Lewis Cu~man (left to right) have all been ~.volved ~ the tobacco business. With Cullmar=s, tobacco is a family thing "The Cullmans," one family ad- mirer says, "have tobacco juice in their veins.'" Edgar Cullman of General Cigar is neither the first of his family nor the only Cullman to- day working in the tobacco buM- heSS: • His elder brother, Joseph F. Cullman III, 56, is chairman and chief executive officer of Philip Morris, Inc. (1967 sales: $905- million), fourth-larg.est igarette manufacturer in unit., ~s. . • His cousin, Hugh, 45, is president of l~hflip Morris In- ternational. • His uncle, Howard S. Cull- man, 77, I-Iuda's father, is a member of me aavisor:,, commit- tee of Yhilip Morris' board of directors, a director of Cullman Bros., Inc., the family-run in- vestment trust, and is active in trade associations. Roots. The Cullman involve- ment with tobacco extends back to 19th Century Germany, where Ferdinand Kullmann was a to- bacco merchant. Since then, Cullmans have dealt in tobacco in one form or another. Cullman Bros., whose tobacco farms were acquired by General Cigar in 196,t, was foun. ded m 1892 by Ferdinand's sons, Joseph .and Jacob. Cullman Bros. bought tobacco at auctions in the U.S. and abroad, and sold it to cigar man- ufacturers. The Cu]Imans ~vere also in- volved in other phases of the industry. In 1908, United Cigar Manufacturers, the predecessor to General Cigar, was formed at the home of Joseph Cullman. In 1910, Cullman Bros. began growing, tobacao leaf. Joseph Cullman s son, Joseph, Jr., saw that land in the Connecticut River Valley was being used successfully to grow binder and wrapper tobacco. The land h.e. bought and tobacco grown on ~t have con,tributed greatly to the Cullman family fortune. The next money-making stroke was the formation in 1928 of an investment trust, Tobacco & Al- lied Stocks, Inc., by Joseph's two sons, Howard and Joseph, Jr., to capitalize on th.eir knowl- edge of the tobacco ~ndustry. Major investments. One of its first ma~or investments was pur- chase of control of Webster, Eisenlohr & Co., a foundering cigar ma.nufaeturer. Joseph, Jr., plunged m, made the concern a going operation, and sold out 10 years later for 3~,~ times ~vhat he paid in. Using that money Joseph, Jr., paid $850,000 for control of Ben- son & Hedges, makers of pre- mium-prlo.~d Parliament cigar- ettes. In 1954, he sold the compan~ to Philip. ~Iorris in a well-rolh ~d $22.4-m~Ihon pack.age that brought the Cullmans into Philip Morris management. Jo- seph, Jr., ?vh.o died a year later, • became chmrman of the execu- tive committee; his son, Joseph F. Cullman III was made a vice- president and three years later became president and chief ex- ecutive officer; his nephew, Hugh, ~vas appointed assistant director of market research. Another leaf, Tobacco family though they are, som~ Cullmans have turned over stdl another .leaf. W. Arthur Cullman, 53, an- other of Joseph, J.r:'s sons, !.s professor of marketm.g and d~- rector of graduate business pro- grams in the College of Admin- istrative Science at Ohio State University. Lewis, 49, youngest of the four brothers, runs an invest- ment advisory service, Lewis B. Cullman, Inc. sold General Cigar's directors on a variety of acquLsitions that span the industry from leaf to point of pur- chase: • The purchase of Me~opolitan Tobacco Co., the largest ~holesa.ler of tobacco (plus candy and sundries) in the New Yo~k City area, was de- signed to broaden operations in con- sumer product merch,'md~ng as well as to "strengthen the distributing organization for the company s own products. • The acquisition of Culhnan Bros• t.o.bacco farms ,added large Connecticut land holdings where high-quality shade wrapper tobacco is grown. More land was picked tip wiflx the purchase of the tobacco and landscape nnrsery properties of American Sumatra Tobacco, giving General Cigar an entry into the rais- ing of trees and shrubbery. • Acquisition of Gradiaz, Annis, a small, Tampa-based producer of the /aigh-p 5~ :ed Gold Label brand, broad- ened ':h~ line of cigars. The com- pany's other major br,a~.ds t.o.day include the ..Rob.e, rt Bt.trns ]me (Clg.a.r,- illos and Tipar,llos included), Wd- T!08920247

• iarn Penn, "White Owl, and Corina cigars. Stress on research, l~ro~uct design and product research are empha- sized. "I'm involved in more tests and examinations than ever before," says George B..R.eiehart, vice-presi- dent for advertising. "He is outgoing in areas he feels he knows," says Reichart of Cull- man. In advertising m.eeting.s, for example, Cullman eonslder.s h~mseff kno~vledgeable, and makes it a prae- Lice to air his views first. "This puts the rest of us on the spot to defend our thoughts, ff we disagree,'" ae,!chart says. Edgar butts in where he feels he's best;' exclaims Edxvard Lillen- field, vice-preside.at in, charge of non- tobacco pureha,s.mg, 'bnt he ,]eaves areas he doesnt know aI.one. It is in the areas of marketing and finance that Cullman decidedly feels most at home, and it is in these areas that he devotes most of his efforts. Most of his marketing plo.ys are in one way or another designed to break axvay from the old Garment District or mobster image of a tele- phoiae pole in the mouth, and to emphasize slender, with-it new shapes (box). His feeling for finance, and his experience there, comes fro.m the years hespent as a partner In the family-owned Cullman Bros., • Inc., brokerage house, members of the New York Stock Exchange, I-Ie stayed on at Culhnan Brothers for several years after buying into General Ci~% before elevating Strauss to ehmrman and assuming the presidency himself. Career man. A Yale graduate majoring in economics, Cullman joined the family tobacco business, Cullman Bros., shortly after World War II. Ther.e he wa.s responsible for the growing, packing, and sell- ing of more than 600 acres of what tobacco men call "Connecticut Shade" wrapper tobacco. Edg,,ar pronounces "Connecticut Shade as th6ugh he were savoring each syllable. He is also fond of the very profitable business General Cigar has in the leaf, which it sup- plies to most of its competitors. With his competitors, Cullman is active in the Cigar Institute of America, through which the industry is attempting to join combat with that most implacable of all the stogie's foes: Womanhood, which tends to associate the cheroot with spittoons or politics, whichever is lower. It may be that Cullman will sue- eeed. Among those ladies who have been haown to pull resolutely on a cheroot now and then: Mrs. Edgar M. Cu/lman. End 76 Menz~m~nt ~lim cigar boosts Steve McQueen tycoon image in recent film. i laking cigars socially acceptable Steve McQueen is in; Ed~vard G. Robinson is out--at least as far as cigar men are con6emed. It has nothing to do with act- ing abi!ity. It's because Me- Queen, m The Thomas Crown Affair, sips at long, slim cigars as though the.y were gob]ors of fine xvme. Robinson, on the other hand, chomped away at big, fat cigars in gangster roles. The association with mob- sters helped put a damper on ~w befell the reeling andustry iJ~ ;ar conwamption.. A. second the late 1920s when Ameri- can Tobacco's George 3¥ashing- ton Hill, as an inducement to tr'r his own machine-made (,rome cigars, launched ads asklng~ "Why run the risk of igars made by dirty yellowed gets and tipped in spit?'" Jes fell from 8.5-billion cigars in 1920 to 5.5-billion by 1939. Although machines took over ",rat manufacture so sxvfftly at the hand-rolling image long since ceased to be a factor, sales of ci~:ars, at about 8-billion .a rear, t,z ,e never again attained e peak of the early 1920s. Good odor. Until the Cigar In- stitute of America came along in 1940, nobody did much about the image problem. The insti- tute, a~ ado association formed by the manufacturers, resolved to restore cigars to good odor. Pictnres of Winston Churchill anff ot~er famous persons puff- ing contentedly on stogies, ac- companied by laudatory re- ]eases, ~vere circulated in such profusion that the term puff piece took on nexv meaning. Emissaries were dispat.ched to Hollywood to wheedle e~gars out of the mouths of bad guys and into the hands of good guys. The in.s.titute didn't n.eglect women, e~ther. It met the. mdus- try's most powerful and ~aplac- able foe~ head on; Mowe pro- ducers were beguilec~ into equipping leading men .x_vith a cigar to brandish in clinches. Still, cigars were cigar~-untl] someone got the ideabf sea.ling them down to resenable c~gar- ettes, which by then women had accepted who]eheartedly. Thus, the big, fat cigar was deemphasized in favor of slim panatelas. ~..V, rappyr tobacco was grown with lighter colors; blends xvere made milder. In 1948, General C~iga.r launched the Cigarillo-a cross between the cigar and an all- tobacco cigarette. This soon was fol]owed by the Tiparillo-a Cigarillo with a plas- tic tip. Then came the creation ,o,f advertising slogans such as Should a gentleman offer a lady a Tiparillo?" Today most women will tol- erate a cigar. The institute esti- mates that 100,000 even smoke them, and not all of them are lady wrestlers, either: Elizabeth Taylor, Mia Farrov.; and Lauren Bacall light one up at times. TI08920248

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