CAO shutting down?

[Renavatio]

Rumors surfaced yesterday that CAO International headquarters in TN will be closed and the employees laid-off.


At first, our sources said that “CAO is moving to Virginia”, but after further probing we found out that General Cigar will take over the distribution of the CAO Cigar line from their existing facility in Virginia.



This is a result of the Swedish Match and Scandinavian Tobacco merger that was completed last month. General Cigar is owned by Swedish Match, which is now owned by Scandinavian Tobacco, which bought CAO a few years ago, in January 2007. This seems like a typical corporate merger consolidation.

What does this mean for fans of CAO cigars?

We can only speculate as CAO and General Cigar have not returned phone calls placed over 24 hours ago. No official announcements have been made, and a survey of retailers shows that the trade has not been informed of this situation either.

So, what do we think may happen?

General Cigar tends to focus more on the mass-market, and is more “corporate”, where CAO, while not small, leans more towards producing “boutique-style” cigars.

This leaves us wondering. With CAO Cigar distribution changing to General Cigar, will the CAO line change? Will some of your favorite CAO cigars be discontinued?

Larger corporations like General Cigar usually require a certain level of sales to maintain certain products. Something that might be even worse than seeing your favorite CAO cigars discontinued is if General decides to change the "recipes". What if the bean counters run their spreadsheets and find some lower-priced tobacco that can be used to add more profits to the bottom line?

I don’t know about you, but I’d stock up on my favorite CAO cigars right now.

Cigar smokers aren’t the only ones left wondering either. Pipe smokers have their own questions as there wasn’t even word if General Cigar will be distributing the CAO line of pipe tobaccos, and the even more in-demand and scarce Dunhill pipe tobaccos.

You can read more about it on PipesMagazine.com

 

[thegoldenmackid]

Get it straight from the source, Huber himself:
http://www.tikibaronline.com/2010/11/rock-n-rolled-last-waltz.html

I'll just copy and paste myself on this one

1. CAO will move to Richmond, VA - hq of General Cigar Co. This will likely take place over the next two months, Jan. 1 is likely a target.
2. Jon Huber, Director of Lifestyle Marketing for CAO, will not be moving to VA
3. A lot of CAO reps are now working for Toraño. Toraño and CAO had a deal, similar in some regards to JC Newman and Fuente. Toraño made cigars for CAO (like a lot of other companies) and CAO distributed Toraño. The old man, Charlie Toraño, wanted none of being part of General Cigar Co., so he broke off the distribution deal and went out alone.
4. CAO doesn't make their own cigars. As part of the deal General assumed all of CAO's current deals. So, at least for the time being, CAO's cigars should not change. It's unclear how long this will last, but CAO will change. The prices General pays for raw tobacco is a lot different than CAO, it's unclear if General will be okay with other companies, like Toraño, producing cigars for CAO
5. Cigars International is part of the deal, this means CAO will definitely become more heavily associated with the General-owned retail outlet
6. This likely will mean a death to a lot of CAO brands, the first to go is the Rock & Roll and the Rock & Roll tour. Burn's is likely the last time this will occur according to Jon, however... he did say that the deal isn't the larger issue. Rather, after three years, CAO needs to move on from R&R.

If you want a parallel, look at General's takeover of La Gloria Cubana 11 or so years ago. There were a few differences. First, Ernesto Perez-Carrillo, founder of LGC in the US, had a ten year contract and non-compete. This made him a General employee and more importantly unable to work for any other cigar company for ten years. However, Ernesto's control over LGC was obviously a joke. Furthermore, since leaving, LGC has just become another brand. It seems as if Jon and other CAO heads will likely avoid these non-competes, but that remains to be seen if that is truly the case. In order to avoid the non-competes, you normally have to sacrifice a severance project. There are a few differences between LGC and CAO. First, is that Ernesto had the ten year contract and was at General, the second is that LGC made their own cigars...

 

[Thegreekone]

Holy chit!

This is probably the first of many "ripple effects" of that merger.

 

[danthebugman]

Don't touch my America or my Brazilia and I won't have to kill anyone eace:.

Dan

 

[Dread]

Good thing I stopped smoking CAO cigars a while ago, I couldnt of been the only one that noticed a difference in quality over the past 9-12 months or so.

 

[iCraig]

Hopefully this doesn't change much. I enjoy a lot of CAO's lines and would like to be able to continue to enjoy them.

 

[dpricenator]

There will always be cigars to smoke, CAO was never the best cigar on the market, nor the best value. While some lines were better than others, as a whole just decent cigars.

 

[GoingPostal]

yeah solid smokes, and i did have a couple of construction issues recently coincidence. the only smoke i really loved was the CAO Lx2, i can do without the rest.

 

[CbusDave]

CAO sticks started me down this slippery slope and some, like the Brazila and Lx2, have become favorites. It will be sad to see them become another mass-market brand the likes of Macanudo...

 

[Nickerson]

I love CAO cigars. Brazilia... my first love. Italia is great, VR is an amazing smoke, La Traviata is fantastic, black is well rounded, etc.

I hope the quality doesn't go down.

 

[SkinsFanLarry]

Skandinavisk Holding A/S (SH)(CAO) holds 51% of the shares in the new Scandinavian Tobacco Group, with the remaining 49% of the shares being held by Swedish Match AB (SM)(General Cigar). Jørgen Tandrup, Chairman of SH and the former Scandinavian Tobacco Group (STG), is Chairman of the Supervisory Board and Conny Karlsson, Chairman of SM, holds the role as Deputy Chairman of the Supervisory Board.

 

[thegoldenmackid]

Hi, this is Victoria McKee Jaworski (PR director of General Cigar) and wanted to respond. We are pleased to have CAO in our portfolio and are fully committed to carrying on the brand with the same quality and consistency that retailers and consumers have come to expect.

From another place...

On 26 April 2010 it was announced that the parties had signed an agreement to form a new company by combining all the tobacco business of Scandinavian Tobacco Group A/S (STG) with the cigars and pipe tobacco business of Swedish Match AB (SM) (with the ex- ception of its US mass market cigars). After having obtained the required approvals from a number of national competition authorities, the transaction has now been completed with effect from 1 October 2010.

 

[Kidrock]

CAO Cigars and my Uncle John giving me my first cigar are the reasons why I'am a cigar smoker today. Sadly, I have not had a CAO Cigar in three years. I loved the fact that they where once owned by a family.

After hearing they got out by "them" I was so heart broken. I still feel a sense of sadness but happiness that "CAO" was the cigar that got me into the hobby.

Sorry if I sound like Im addressing a room of people at a funeral home...........

 

[vivalanation734]

Meh, nothing to worry about here.

 

[SmokeProper]

Meh, nothing to worry about here.

Lol. Agree.

 

[WhiteWolfIndulgence]

good to see a few PipesMagazine.com members. I know Kevin, met him at a trade show (adult oriented) this past summer. Great guy. I blog for him weekly. look for Art of the Pipe by Sascha Illyvich. I blog on the spirituality of the pipe, the art of smoking it and relaxing for that pure moment of thought between thought. Also, yeah I better stock up on CAO Vanilla pipe tobacco and get my GF the moontrances.

Guess I need a bigger humidor!

 

[thegoldenmackid]

I think that CAO's parent is taking over everything but the cigar merger... so you might be fine.

 

[vince]

Yes, CAO assisted in my transition into the premium game. My first real cigar was a CAO
Black. I'm sad to see them go since they hold a dear place in my heart and the name always took me back to the greatest day in my life...the day I became a cigar smoker.

That being said, I'm more disappointed that they sold out to the nationals dawgs vs. regroup and produce the niche smokes today's smokers are really looking for!

 

[torin]

Not a huge CAO fan but this is some interesting news...

 

[CWS]

Step One: We are buying your company. It is a good fit with ours and we value your brand and your people. Nothing will change and everyone is needed
Step Two; Now that we own your company we think little changes may improve your product and bottom line. We love you people though.
Step Three: We spent a shit load of moneybuying your company and we need to recoup those expenses FASTER. We need to lower costs and overhead (See overpiad senior managers and middle mangement)
Step Four: We really dont need your plants or people becaues we can make your product locally cheaper. Lay off all the staff and lower the quality on your ingredients. We will cut huge overhead costs, make loads more money and pay of the acquisition debt.
Step Five: What was you name again?