News & Trend

March/April 2007

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Tobacco Plus Expo Negotiates Tobacco Sampling and Use At Show

The Tobacco Plus Expo will continue to allow smoking and sampling during show hours despite the new smoking restrictions in Las Vegas

The show has just concluded successful negotiations with the Las Vegas Convention and Visitors Authority and the Southern Nevada Health District to insure that Tobacco PlusExpo attendees and exhibitors will be able to sample and use tobacco products during the show.

The Tobacco Plus Expo, Tobacco Outlet Business Magazine, and NATO, which endorses the show, are in the forefront in protecting consumer rights to use and purchase tobacco products. Paul Walsh, the publisher of Tobacco Outlet Business states “we are committed to the rights of retailers and wholesalers to sample the products they are purchasing for their customers”. Tobacco Plus Expo is the largest tobacco show in the United States. It brings the tobacco supplier and buyer together in one place to do business.  In order to do this, sampling of tobacco and tobacco products is of the utmost importance.  You can do that at the Tobacco Plus Expo, which may not be the case at a number of other industry shows.”

Be sure to register today at https://www.smart-reg.com/web-reg/tpe07/ to attend the show which takes place April 26 – 27, 2007. Not only will you see a broad array of tobacco products, but you will also be able to sample them as you walk the show.

Philly Bans Blunts

Philadelphia’s new anti-drug law makes sales of flavored blunts illegal.

The sale of flavored blunts, wood pipes, water bongs and other items decreed “drug paraphernalia” has been made illegal in Philadelphia by a new bill signed into law by Mayor John Street. The law is seen as a response to a community crusade against c-stores selling such items known as “Not in My Neighborhood” by residents who view the flavored products as associated with marijuana.

Responding to the new law, c-stores, gas stations and other retail outlets must immediately remove the items from store shelves. •

General Tobacco Debuts Web Site

The new site is dedicated to 32 Degrees.

Miami, Florida-based General Tobacco has launched theperfectionofmenthol.com, a new Web site dedicated to its newest brand: 32 Degrees. Included in the promotional information are events, games and sweepstakes, the company said.

A menthol line with four varieties—Full, Mild, Light, and Max flavor—32 Degrees features modern packaging and a price-value price point.

The brand extends the manufacturer’s line of price-value products that currently include GT One, Bronco, Silver, and Vaquero.

“Theperfectionofmenthol.com will provide smokers with the brand’s latest promotions, as well as updated information in relation to the brand,” says Doreen Colondres, marketing director for General Tobacco. •

Imperial To Buy Commonwealth

Deal for $1.9 billion opens new market, dampens merger buzz, and raises FDA concerns.

In February, Imperial Tobacco Group PLC agreed to buy U.S. tobacco company Commonwealth Brands Inc. for $1.9 billion.

The London-based manufacturer of Lambert & Butler and JPS cigarettes and Rizla rolling papers described the purchase of Kentucky-based CBHC Inc., parent of Commonwealth Brands, as a “low-risk entry” into the U.S. market. Commonwealth Brands, which makes USA Gold and Sonoma, currently holds 3.7 percent of the U.S. cigarette market. Imperial anticipates completing the deal, which represents optimism about the U.S. market and litigation risk—by April.

The announcement quelled rumors of Imperial bidding on the larger firm of Altadis SA, and also speculation that Imperial itself was an acquisition target for Japan Tobacco Inc. Imperial CEO Gareth Davis reportedly has stated that while the company’s strategy is to grow organically and through acquisitions, no other purchases are currently planned. But the acquisition may hit a stumbling block should proposed new laws that allow the Food and Drug Administration (FDA) to regulate the tobacco industry come to fruition. New bills recently introduced in the U.S. House of Representatives and the Senate would give the FDA the authority to regulate the tobacco industry—putting a potential hitch in the British company’s plan to expand into the U.S.

“It could lead to a more complex tobacco regulatory climate,” asserted a statement by Imperial.

Supported by many Democrats, the proposed legislation could lead to restrictions on advertising, bans of “light” or “low tar” products, larger warnings, changes to packaging and additional rules on the marketing of tobacco to children—all of which could undermine tobacco profitability. (See related story, p. 20.) •

Canada Continues Ad Debate

A decade-old case over promotions lands in a Canadian courtroom.

America isn’t the only country hotly debating restrictions around tobacco advertising. Our neighbor to the north is arguing the matter in its Supreme Court.

Canada was among the 144 countries signing the World Health Organization treaty requiring all-out bans on tobacco ads and sponsorships wherever constitutionally possible as of 2005. Subsequent restrictions enacted by the government in its Tobacco Act of 1997, however, are felt by manufacturers to be so vague and unclear that they could be interpreted as a total advertising ban. Since then, the restrictions have been challenged in court on more than one occasion. A lower-court judge upheld the Tobacco Act of 1997 entirely, but in 2005 the Quebec Court of Appeals ruled it unfair to bar tobacco companies from exhibiting their company names when sponsoring an event. Major manufacturers in the country are holding off on sponsorships pending the top-court ruling.

Manufacturers hope that the court will clarify restrictions in such a way as to allow a “minimal window to exercise our constitutionally protected freedom of expression.” •

New JTI Appointment

Rick Di Donato joins Japan Tobacco.

Japan Tobacco International USA, Inc. hired Rick Di Donato as vice president of sales.

Formerly senior vice president of sales for Liggett, Di Donato will be responsible for leading consumer and trade channel planning, field operations and national key account management throughout the U.S. for the WAVE, EXPORT ‘A,’ and MILD SEVEN Brand Families. He brings a wealth of sales management and tobacco industry experience to Japan Tobacco International USA, Inc. Previously,

Di Donato held the positions of director of sales for Lorillard and vice president of sales for Vector Tobacco. •

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Smoker Friendly Announces 2007 Show

Smoker Friendly® International plans its 11th annual trade show and conference.

The Smoker Friendly Annual Trade Show and Conference will be held at the Millennium Harvest House in Boulder, Colorado, on August 27–29. 

Following educational presentations, category updates, panel discussions and a high-energy trade show with premiere tobacco manufacturers and importers from across the country, the annual Smoker Friendly® Golf tournament will cap the three-day affair. 

“The camaraderie and relationship building at this annual event help Smoker Friendly® retailers be the best operators in their respective markets,” says Terry Gallagher Jr., president of the organization, which is made up of 328 retail stores partnering to produce over $350 million dollars in annual sales. •

AWMA’s Announces 2007 Events

Trade shows, conferences and meetings scheduled for the coming year.

Following on its REAL DEAL EXPO in February, the Fairfax, Virginia-based American Wholesale Marketers Association (AWMA) plans several major events for 2007, including a new sales training program sponsored by The Hershey Company called STEPS II—Systems to Enhance Professional Selling II. This new training program is a three-day seminar on superior selling skills, prospecting for new business, negotiating techniques, and much more.

STEPS II will be held twice in 2007:

• April 15-18, 2007

Garrett Creek Ranch, Paradise, Texas

• November 11-14, 2007 Belmont Conference Center, Elkridge, Maryland

For further information on STEPS II, call 800-482-2962, extension 648.

AWMA also plans its annual “Day on the Hill” in Washington, D.C., May 16-17, 2007. In addition to one-on-one meetings with legislators and congressional staff, special features of the program include a White House briefing and a congressional breakfast meeting at the Capitol Hill Club. For more information, call 800-482-2962, extension 643.

AWMA’s annual Summit & Business Exchange (ABX) will be held September 10-13, 2007, at the Ritz-Carlton Buckhead in Atlanta, Georgia. It will includes a day of business sessions and roundtables, two days of scheduled face-to-face meetings between distributors and manufacturers, and several meals and receptions. Additional information is available by calling 800- 482-2962, extension 642. •

See box below for AWMA events for 2007 – 2009:

Cigarette Theft in Miami

A delivery truck was jumped by armed men.

A truck driver for H.T. Hackney in Miami was attacked and robbed of his cargo, $100,000 worth of cigarettes in early February. The 33-year-old driver, Ivan Fernandez, was locked into the delivery truck by the gunmen, who wore masks and gloves and carried handguns.

Fernandez had reportedly been on his way to deliver cigarettes to a Walgreen’s store when he was jumped by the two men. He was forced into the cooler in the back of the truck. The suspects then ran off with 40 cases of cigarettes. Fernandez managed to signal a passerby by taking off his shirt and waving it outside the truck and yelling, “Get me out of here,” in Spanish, according to a police report. The incident is viewed as further evidence that tax hikes and price increases are prompting cigarette-focused crimes. •

Trouble from Dems on Capitol Hill

The new Democratic Congress may mean trouble for manufacturers.

With the changes on Capitol Hill, Republican allies of big tobacco are now in the minority. That fact has pundits speculating that the public may see a resurgence of ideas like a federal excise tax increase and giving the Food and Drug Administration authority over cigarette manufacturing and marketing.

Bills calling for FDA regulation are already before the House and Senate. For Philip Morris, which could well benefit from such a situation, the shift in power may be a boon. FDA regulation of cigarettes has been a looming possibility—but never a reality—for several years now. Efforts to give the government body authority over tobacco companies have been rejected by the U.S. Supreme Court in the past.

Most tobacco companies oppose the concept, in part because the FDA would likely ban descriptors such as “light” and “mild” and require health risk warnings to cover a minimum of 30 percent of cigarette packs—a development widely viewed as potentially hurting manufacturer profits, particularly those of smaller manufacturers.

But Philip Morris likes the idea of FDA regulation—a position its rivals contend is more about its hope that resulting restrictions would limit competitors’ ability to infringe on the brand power of Marlboro and siphon share from the powerhouse manufacturer.

Competitors such as RJR have been said to gripe that FDA regulation is the “Marlboro Monopoly Act.” In fact, RJR reportedly recently stated that it would oppose any legislation that it believed “conveys an unfair advantage on the largest manufacturer,” and that the proposed legislation could create an anticompetitive environment in the U.S. cigarette market.

Republicans’ antiregulatory sentiment has stymied passage of FDA regulation in the past, but the Democrats’ win in November means tobacco regulation could surface again. •

Camel’s No. 9

The RJR brand goes pink and black.

R.J. Reynolds Tobacco is giving its flagship Camel brand a new look aimed at women smokers. Camel No. 9’s name is reminiscent of a certain perfume brand and its packaging—a black box with a pink edging

and logo has a Victoria Secret look.

Ads for the product are similarly feminine, featuring flowers and a slogan “light and luscious” that evokes a yummy dessert. At present, Camel buyers are predominantly male—a fact that RJR is clearly hoping to change. The manufacturer already has two women-oriented products, Capri and Misty, and appears to be going after competing brands geared toward women, such as Virginia Slims and Eve, with Camel No. 9.

Critics, however, are attacking the new ad campaign, calling it an unwelcome effort to target women. •

Defeat for PM

Court ruling on Statute of Limitations.

California law does not presume that smokers are aware of hazards of smoking, said the Supreme Court recently in a unanimous ruling.

The ruling is in response to an inquiry from an appeals court reviewing the dismissal of a case against Philip Morris by longtime smoker Leslie J. Graham. The court requested guidance as to whether state law applied a presumption of awareness that smoking cigarettes is addictive because the Judge who dismissed the case did so in part because the plaintiff’s causes of action were time barred due to the Statute of Limitations. Writing for the Supreme Court, Justice Carlos R. Moreno said the plaintiff’s causes of action “did not begin to accrue until the physical ailments themselves were, or reasonable should have been, discovered.” •