This article appeared originally in German on August 5, 2018, in the digital magazine Zigarren Zone under the title Wie die La Casa del Tobaco und Condega die Welt eroben. Photos and original texts by Vasilij Ratej. Translated in Spanish by Annete Meisl.
We are in Valencia (Spain), a hot Saturday, July 28, 2018, shortly before midnight. Annette Meisl (founder and owner of La Galana) and I just landed in Valencia with one mission: to record a video interview on Sunday with Ramón Zapata, a Madrid businessman based in Valencia who has several tobacco-related businesses. Among other things, Zapata is the second largest distributor of premium cigars in Spain. His company is called La Casa del Tabaco, founded three years ago only. Yes, that’s it! It is only three years old. An impressive story of success.
Ramón Zapata comes to pick us up and take us to the Marina Beach Club Valencia restaurant. There he has planned a dinner together with David González, export manager of Gesinta International Tobacco Company, another company owned by Ramón Zapata. The streets of Valencia at this time are full of people and cars. I freaked out It is so crowded that we did not find a free parking lot.
Ramón is talking to David by phone with David and as he’s ordering our dinner. But we still can not find a place to park. So David orders the dinner to take away and we pick him up to go all together to the hotel where we were hosted, The Westin Valencia. It’s already Sunday, almost 2:00 a.m. We sit at the hotel’s terrace and enjoy the delicious dishes we have brought from the Marina Beach Club. Next, we smoke a small and magnificent Olive. I think it’s from the O Series, the Petit Perfecto. Oliva is one of the brands distributed by La Casa del Tabaco, a cigar distributor owned by Ramón Zapata in Spain. Ramón delights us with some anecdotes about his impressive career.
It’s already 3:00 a.m. Bedtime. We had scheduled to meet on Sunday at 9:00 a.m., but given the lateness of the hour, we decided to postpone the appointment for 10:30 a.m. After breakfast at the beautiful hotel The Westin Valencia, Ramón takes us by car to the facilities of La Casa del Tabaco, which is about 50 minutes from Valencia. A new building, that now seems to be small regarding its activity. Ramón has in mind to buy an additional warehouse to expand the facilities. We start by visiting the shipping and packing department.
We went up to the first floor. Wow, how beautiful! A great lounge, a cosy walk-in cigar humidor, a nice bar and a sensational meeting table.
(Photo above) Does it look familiar to you? It looks like a Partagas Serie Limitada. In the video interview, Ramón Zapata will tell us his point of view about it. But we can anticipate this: when Ramón bought Condega Cigars in 2015, his first intention was to change the design of the ring but was adviced not to do so. Because the same cigar, but with a new ring, has another flavour for many smokers.
This fact was tested with Don Jose cigars: after the redesign of the ring, sales went down dramatically. For this reason, Ramón decided to create a new line of Condega Cigars, the S Series, will a new ring design.
We sit around the conference table to watch a video clip that begins with a slow-motion reproduction of the growth of a tobacco seed. Pretty nice! I have never seen something like that. The video shows all processes involved in the hand-made production of a cigar: farming, harvesting, fermenting, producing and shipping to the whole world for the pleasure and joy of premium cigar smokers. A wonderful video reserved exclusively for the guests of La Casa del Tabaco. In the video interview, Ramón will give us further information. By the way: all the profits of LCT goes to an NGO that helps disabled children. In the interview, Ramón will talk about this social aspect.
How cigar business works
Ramon Zapata explains how the cigar business works. «The highest segment is the super premium segment: top quality at a very high price. This business segment is very small because only very few manufacturers can get high-quality cigars and sell them at a high price. The sales numbers are therefore quite small». Ramón draws a graphic on a whiteboard and continues the explanation: «Then we find the premium segment: high quality for a good price. This is where Condega is placed. For example, our Robusto is at € 3.90. There is no cigar in the market with this quality/price ratio, no brand can compete with us». Smile satisfied because he knows how successful this strategy can be. “The next segment is the standard and it works like this: good quality at affordable prices. And in the lower segment, we have low quality at a low price. ”
The Condega brand has existed for many years in Spain, but it was last year when its sales started to be increased by 50 % each year, both in terms of business volume and units sold. In 2015, Ramón Zapata buys the brand with the goal of distributing it internationally. The critics jumped in very quickly: «Ramón, you are destroying the market with these prices!».
But Ramón has a completely different sales philosophy: “I do not see it that way,” he argues. «I earn money for the number of cigars sold. I am not worried because I know how well this can be sold at this price. Normally it is done like this: the producer asks for a certain price for the cigar, let’s say one euro. The distributor also wants to earn money, so he sells the cigars at 6 euros to the vendors of the tobacco shops and tobacconists. Depending on the country in which they are located, these vendors move in different types of the VAT or other taxes applied to tobacco, marketing expenses, transportation, etc. The tobacconist also wants to earn his margin. Therefore, continuing with the example launches the cigar for a final price of 12 euros. All expenses associated with the tobacconist are included in this price. The profit margin, for example, in Switzerland for the tobacco shop is between 25% and 39%. In Spain, it’s only 9%! Because taxes are very high, more 40% of the cigar final price!
Ramón does it in another way. He calculates his profits at the lowest possible price and sells the cigars to the international distributor. In the same way, the tobacconist sells cigars at the lowest price for smokers. Thus, the final consumer receives a premium quality cigar at an unbeatable price. An everyday cigar. And this quality/price ratio is the real reason for the great success of Condega, a brand that is selling “tons” of units. Other brands in the same segment, but much more expensive and of a comparable quality, then sell less. This is his sales secret.
But, you know, in the end, the most important thing is the taste of a cigar. And Condega Cigars have an excellent flavour.
One more thing: all employees at La Casa del Tabaco have travelled to Nicaragua to learn firsthand how the process of manufacturing premium cigars works. All of them have visited the fields and have visited all the departments in the factory where the production takes place. The way Ramón manage the company is nice and charming, so the employees feel engaged with the company philosophy. This is an advantage not many companies can afford.
After lunch, we return to La Casa Del Tabaco. The video interviews are all finished. We smoke a Condega, we talk about the sales philosophy and the expansion plans of the company. At 7 pm we return to the hotel and at 10 pm Ramón comes to pick us up again to go for dinner at a seafood restaurant. Here too: a pleasure hard to describe. I ate oysters for the first time in my life. This is not my thing, hahahaha.
My flight departs at 6 o’clock in the morning. As Spanish taxi drivers are on strike, Aitor Zapata comes to pick me up at the hotel at 4 o’clock in the morning and takes me to the airport. About eight o’clock in the morning I landed safely in Zürich. About 12 o’clock I fall on my sofa and I fall asleep until 7 pm.
This short trip has been definitely unforgettable. The incredible hospitality of Ramón, Aitor and David will always remain in my heart. Annette has also been incredible: she drove the video interview with Ramón and translated from German into Spanish and vice versa all the questions and answers. This series of videos will be broadcast soon on the YouTube channel of Zigarren.Zone.
Here I want to say thanks again. And I promise one thing: I will return to Valencia, but with more time available. I give you my word!