News & Trend

September/October 2007

Close Window

FDA on the Way?

Congress continues to press for higher tobacco taxes and FDA regulation.

The Senate approved a bipartisan bill to increase the federal excise tax on cigarettes by 61 cents. Despite assertions from the White House that the bill—which is ostensibly meant to provide health insurance for children in low-income families—“goes too far in federalizing health care,” the bill was passed 68 to 31.

A similar measure passed in the House of Representatives on a vote of 225 to 204. That bill would increase the federal excise tax by 45 cents per pack, and also reduce federal subsidies paid to insurance companies offering private health plans to Medicare beneficiaries, the report stated. Funds from both measures—only one of which will go into effect—would be earmarked for the State Children’s Health Insurance Program.

While President Bush is likely to veto the bill, the issue is likely to be debated in the 2008 presidential and congressional campaigns, as a part of the controversy about universal coverage for health care.

Meanwhile, the Senate Health, Education, Labor and Pensions Committee signed legislation that would allow the U.S. Food and Drug Administration (FDA) to regulate tobacco products by restricting advertising, mandating stronger warning labels, and requiring the removal of dangerous ingredients from cigarettes. The measure would also standards for “reduced-risk” tobacco products, which would no longer be able to be be marketed as safer than regular cigarettes without such FDA verification.

An amendment added to the bill would reportedly require more prominent and graphic warning labels on cigarette packages, similar to those in place in Canada, and included clove cigarettes in the legislation’s ban of flavored cigarettes. The bill also calls for tobacco companies to fund FDA oversight with an initial $450 million in annual fees, approximately 2.5 cents per pack.

“Giving FDA authority over tobacco products will not make the tragic toll of tobacco use disappear overnight,” said Edward Kennedy (D-Mass.), who helped author the bill. “However, FDA action can play a major role in breaking the gruesome cycle that seduces millions of teenagers into a lifetime of addiction and premature death.”

Most manufacturers continue to oppose the bill. R.J. Reynolds’s sponsors a web site, www.nocigtax.com, that encouraging adult smokers, wholesalers, retailers, growers, and others opposed to increased taxation to contact their elected officials and voice their opinion.

An exception is Philip Morris USA, which has embraced the concept of FDA regulation. “We remain steadfast in our support of effective regulation of tobacco products,” the company said in a statement after the committee vote. •

Stores Fight Federal Cigarette Tax Hike

The proposed increase in the federal tobacco tax spurred the Petroleum Marketers and Convenience Stores of Iowa to launch a campaign against the hike. Dawn Carlson, the group’s president, reportedly got on Radio Iowa to tell listeners that such a hike will increase the likelihood of robberies stores where cigarettes are sold, putting employees at risk.

“Our main concern is to make sure that these individuals are operating and working in a safe environment, so that adds more expense for our businesses,” she said. Higher cigarette prices are already leading to more theft and black market activity. (CLICK HERE FOR cover story, “Stop Thief!”)

Another increase, say the Iowa merchants, will mean stores will require more employees, stronger security measures, and more security cameras. •

Republic Tobacco Appoints Manager

Mickey Falconburg leaves Smoker Friendly for a role at Republic.

Glenview, Illinois-based Republic Tobacco, a major Roll-Your-Own/Make-Your-Own Supplier, has hired Mickey Falconburg, formerly VP of sales and marketing at Smoker Friendly, as Western Zone Manager.

“Mickey is an extremely valuable addition to our team,” says Steve Sandman, who joined Republic Tobacco as VP of sales and marketing from Altadis in April. “His extensive retail and operations experience, as well as his strong distributor ties, make him perfect for this role. We’re very excited to get going and continue growing,” Sandman stated, “Mickey’s decision to work on the manufacturer’s side of the table wound up being Republic Tobacco’s good fortune.”

Falconburg’s employment prior to Smoker Friendly included 12 years of management positions at Total Petroleum, Gasamat, and 7UP Bottling. He received his degree in Business Administration at the University of Northern Colorado in Greeley, where he had his first retail stint managing a small gas/c-store during his senior year. A third-generation Coloradian, Falconburg grew up farming and ranching in the rural southeast corner of the state.

Republic’s previous Western Zone Manager, Rob Miller, has been named national accounts manager for the zone, and will be responsible for handling key retail chains. Miller has extensive experience in sales and marketing at these accounts, as he previously specialized in the convenience channel at both American Tobacco and Commonweath.

“We are confident that both of these new appointments will positively impact Republic Tobacco's growth to the next level,” stated Sandman. •

To top of column 2

Park Smoking Ban in L.A.

A fire prompted the California city to ban smoking in parks.

L.A. Mayor Antonio Villaraigosa signed a ban on smoking in Los Angeles parks into law at a ceremony in Griffith Park, where a fire believed to have been started by a lit cigarette broke out three months ago.

Prior to the law, smoking was prohibited within 25 feet of playgrounds and at beaches. Now smoking, lighting, carrying, or discarding any tobacco products in city parks and beaches are illegal.

“This law will allow us to take back our environment, reclaim our public space and enjoy the great outdoors,” Villaraigosa told the L.A Orange County Register. “Our parks and beaches are national treasures, and we must work to protect these areas and preserve the health and safety of all Angelenos.”

Smoking is still permitted on city-operated golf courses, and in certain areas at the Autry National Center, the Greek Theater, and Los Angeles Zoo. By special permit from the Recreation and Parks Film Office, smoking will also be allowed in parks for filming purposes. •

Texas Cig Sales Drop

A $1 per pack tax hike prompted a 22 percent decline.

Since cigarette taxes jumped from 41 cents to $1.41 per pack in Texas, cigarette sales are reportedly down 22 percent. The decline has merchants speculating that smokers are turning to cross border purchasing and Internet sales to avoid the hefty tax.

Tax experts point out that initial effects of tax hikes are hard to gauge due to consumer stockpiling. But in the six months since the increase the state has sold approximately 484,000 tax stamps as compared to 620,000 stamps sold in the first six months of the previous year.

Meanwhile, stores in neighboring Louisiana, where the tax is just 36 cents per pack, are doing a brisk business, suggesting that the increase is not causing smokers to quit as some lawmakers promised, but simply sending them over the border. •

13 Smoker Friendly Stores Bought

The Cigarette Store Corp. now has 99 locations.

The Cigarette Store Corp., which runs Smoker Friendly and Gasamat tobacco and gasoline retail outlets and is an operating partner of Smoker Friendly International, recently purchased 13 Smoker Friendly stores in southern Colorado from the S.R. Flaks Co.

These stores bring the company’s total store count to 99, a number that includes The Cigarette Store Corp.’s newest location in Brighton, Colorado, as well as a planned store that will open in Sheridan, Wyoming.

The Cigarette Store Corp. is a member of the Smoker Friendly Authorized Dealer network, a licensing and private label program operated by Smoker Friendly international. •

New UST CEO

UST Inc. has named Raymond P. Silcock SVP and CFO

Greenwich, CT-based UST Inc. (NYSE:UST) has appointed Raymond P. Silcock, 56, as senior vice president and chief financial officer. A finance executive with global consumer products experience, Silcock will be responsible for accounting and financial reporting, subsidiary finance, tax, tgreasury, and financial strategy.

"We believe that Ray Silcock brings an extraordinary depth of strategic planning and corporate financial experience to UST, as well as a valuable global perspective," says US president and chief exectuive officer, Murray S. Kessler.

Silcock joins UST from Swift & Company, the world's second-largest meatpacking company, where he was executive vice president and chief financial officer. Prior to that, he was executive vice president and chief financial officer, the world's largest private label soft dring bottler.

In addition to his tenures at Swift and Cott Corp., Silcock spent 18 years with Campbell Soup Compnay, Serving in progressively more responsible roles, culminating as vice president for finance for the compnay's bakery and confectionary division. He also served as chief financial officer of Delimex Holdings,Inc., a market leader in Mexican frozen food which is now part of H..J.Heinz.

I look forward to joining UST and helping to advance the company's strategy by capitalizing on its strong financial position and cash flows," says Silcock. •