News & Trend

March/April 2008

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Retailers Stub Out Tobacco

More mainline retailers seem to be shunning tobacco as part of health conscious corporate initiatives.

As of February 10, Wegmans Food Markets, Inc. no longer offers cigarettes or other tobacco products. “As a company, we respect a person’s right to smoke, but we also understand the destructive role smoking plays in health,” said Danny Wegman in a statement. The company noted that despite the continuing profitability of cigarettes and other tobacco, it has committed to a no-tobacco policy.

Albany, Calif.-based Andronico’s Markets followed suit, announcing that it would stop selling tobacco as part of an overall “Clean & Green” initiative the eight-unit, upscale independent operator is launching.

Andronico’s has been contemplating the move for several years, according to CEO Bill Andronico, who referred to it as part of “a rising consciousness” at the company. Other aspects of the initiative involve energy efficiency, local sourcing, packaging, and other programs to support good health and good eating.

More recently, Pelham, N.Y.-based DeCicco Markets abandoned tobacco, stating that once its current inventory is exhausted the chain’s six supermarkets will no longer offer tobacco. DeCicco opened a new store last year that did not offer cigarettes and has been a “big success,” according to John DeCicco Jr., vice president of operations, who referred to the change as a “moral decision” motivated in part by a desire not to promote underage smoking. •

AWMA Appoints Chairman

Dick Dunham of Stephenson Wholesale Company is the new AWMA head.

The Fairfax, Virginia-based American Wholesale Marketers Association (AWMA) has announced a new chairman: Dick Dunham, VP of operations at Stephenson Wholesale Company, Inc., in Durant, Oklahoma. “Dick Dunham brings invaluable experience from over 30 years in the convenience and supermarket distribution industry to our board of directors,” says AWMA President and CEO Scott Ramminger. “AWMA members know they can look to Dick for leadership on the complex issues which lay ahead.”

Dunham joined Stephenson Wholesale Company in 1995 and, prior to that, was employed by Safeway, Von’s, and Hale-Halsell. An enthusiastic supporter of industry and employee associations, he currently serves on the executive board of the Oklahoma Wholesale Marketers Association and the Southern Association of Wholesale Distributors in addition to his AWMA chairmanship.

Dunham delivered the opening address at AWMA’s REAL DEAL EXPO, the Association’s annual convention, held February 20-22, 2008 at the Las Vegas Hilton Hotel. AWMA is an international trade organization working on behalf of convenience distributors in the U.S. •

Tobacco Sale Ban Proposed

New York drug stores may lose the right to sell tobacco.

Tobacco outlets in New York may benefit if a bill introduced by assemblyman Sam Hoyt (D-Buffalo) passes into law. The bill calls for a ban on sales of any tobacco products at any retail store with a pharmacy.

“In light of the overwhelming evidence of the harmful nature of cigarette smoking on one’s health and the astronomical public health costs posed by tobacco products, it is contradictory and counterintuitive to sell such products in an establishment whose purpose is to provide remedies to health problems,” Hoyt said in a statement about the bill. “Smoking and use of other tobacco products is a major health crisis that we must all take responsibility for addressing. My bill will help ensure that pharmacies are not hindered in that effort by the proximate availability of tobacco products.”

The bill calls for prohibiting the sale of tobacco products in stand-alone pharmacies or any stores that contain a pharmacy. Stores that stock over-the-counter medications would not be affected by the bill. Hoyt also called upon retailers like Tops Food Markets and Wal-Mart to follow the no-tobacco sales approach recently adopted by the grocery chain Wegmans, which discontinued the sale of tobacco products. •

Tobacco Legislation Looming

Several laws loom on the horizon that would raise tobacco taxes or ban smoking.

Both Massachusetts and Kentucky lawmakers are considering raising cigarette taxes. Massachusetts’ Congress leaders, House Speaker Salvatore F. DiMasi and Senate President Therese Murray, are reportedly considering raising the state’s cigarette tax by as much as $1 per pack in an effort to raise an estimated $152 million a year needed for a state healthcare initiative. The state previously raised cigarette taxes by 75 cents a pack in 2002.

Retailers in the state express concern that such a tax hike would send smokers over the border, where their sales and tax dollars will be lost to neighboring New Hampshire, or to the Web.

Meanwhile, Kentucky’s Democratic Representative David Watkins of Henderson, filed a bill that would triple the state’s tax on cigarettes, from 30 cents to $1. Watkins has said that his main motivation is to reduce teen smoking rather than to support the state budget, but also estimated the 70-cent hike would generate $300 million annually.

Kentucky Governor Steve Beshear and Republican Senate and House leaders voiced opposition to any tax increases, noting that the tobacco tax was increased three years ago from 3 to 30 cents.

In Virginia, Democrats are making passage of a smoking ban a key part of their agenda, according to Senate Majority Leader Richard L. Saslaw, who says Governor Timothy M. Kaine is backing the plan. Local groups, however, continue to oppose the effort, pointing out that tobacco has a long and venerable history in the state.

“Let’s face it, tobacco has paid a lot of bills and touched a lot of lives in southern Virginia,” Frank Malone, executive director of the Tobacco Farming History Museum in Mecklenburg County, told The Washington Post. “It built the community, and it created jobs for people. You learn not to preach too hard against what makes you money.”

Other states, including Mississippi, Ohio, and Kansas, are also reportedly mulling legislation to raise tobacco taxes. •

Snus Testing Under Way

PM and RJR are putting snus on store shelves.

Phillip Morris USA plans to bring Marlboro Snu—its new smokeless, spitless product—to Indianapolis in March. The pouch product has already been on store shelves in Dallas/Fort Worth as part of the company’s test of the concept,

according to a company spokesperson. Available in four flavors—Rich, Mild, Mint, and Spice—Marlboro Snus were designed for adult smokers interested in smokeless products as an alternative to cigarettes—a consumer segment prompted by smoking bans.

“We are pleased with the initial reaction by adult consumers, wholesalers, and retailers to Marlboro Snus in the Dallas/Fort Worth test market,” reports Roy Anise, VP of brand management, smokeless for PM USA, who added that the company plans to build upon the learnings from that market, as well as its experience with Taboka (another smoke-free, spitless pouch product), in Indianapolis. The introduction of Marlboro Snus in Indianapolis coincides with the discontinuation of PM USA’s test of Taboka, which has been in test runs in Indianapolis since 2006.

Meanwhile, R.J. Reynolds is also testing snus in Indianapolis, where it debuted Camel Snus in July 2007 after initial test runs in Portland, Oregon, and Austin, Texas. Camel Snus are also being tested in five other cities: Columbus, Ohio; Dallas/Fort Worth; Kansas City, Missouri, Orlando, Florida; and Raleigh, North Carolina. The company has reportedly stated that one reason it chose Dallas/Fort Worth as a testing ground was that Marlboro Snus were being tested there. RJR hopes to gauge not only consumer interest in snus, but how Camel will stack up against competing entries in the category. •

Smoking Ban in Cars

A new law bans smoking in cars when children are present

California motorists who light a cigar or cigarette in cars in which one or more minors ride will face a fine of $100, according to a new law. Even if the car is parked on private property, such as a driveway, the ban will be enforceable, say lawmakers.

Smoking restrictions have become common in the past few decades but have always been directed at workplaces, public buildings, restaurants, airplanes, and other gathering spots. This law marks the first time that such a ban affects activities taking place on private property. Senator Jenny Oropeza, the Long Beach Democrat who proposed the new vehicle-smoking law, is also proposing legislation that will ban smoking on state-owned beaches or parks.

Anti-smoking advocates argue that states are obligated to protect minors and have a long history of banning activities, such the purchase of alcohol or cigarettes and the use of seat belts and safety seats, as well as restricting the use of cellular phones in vehicles.

Audrey Silk, leader of New York-based Citizens Lobbying Against Smoker Harassment, expressed opposition to the measure, pointing out that it’s only a matter of time until the same arguments are used to ban smoking in private homes where minors live. Other critics note that the new ban is one of many recent legislative efforts to control personal behavior in ways that range from banning soda pop in schools to requiring skateboarders to wear helmets.

“People engage in activities that I adamantly disagree with, all the time, in the comfort and privacy of their homes,” Assemblyman Anthony Adams (R-Hesperia), told the Sacramento Bee. “I have no business, as a legislator, interjecting myself into their private lives.”

Other lawmakers opposing the ban point out it could be used as a precedent to spark legislation that would regulate children’s consumption of food such as hamburgers or french fries because of health risks from trans fats.

“It’s getting crazy—soon you won’t even be able to smoke in your own house,” says one state resident. “This is America, isn’t it?”

Meanwhile, Republican Governor Arnold Schwarzenegger is joining forces with Democrats in the state to push a ballot measure that would increase cigarette taxes by $1.75 per pack to fund health insurance. •

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Retailer Vindicated

Charged with selling counterfeit Newports, a Denver retailer wins a dismissal.

Isaac Engida, a Denver retailer, spent two years battling against Lorillard Tobacco after being charged with trademark-infringement in 2006, after a Lorillard employee purchased two packs of counterfeit Newport cigarettes at his store. When charged, Engida claimed that he bought the cigarettes from a larger retailer without knowing that they were counterfeit. During subsequent searches of his store authorities found no Lorillard products, either counterfeit or genuine.

Lorillard, however, continued to press charges against the 52-year-old Ethiopian immigrant, who reportedly tried to act as his own attorney in U.S. District Court in Denver. Engida, who is a U.S. citizen, has said that the legal scuffle eventually forced him to sell his store.

Recently, Engida won a ruling that will force Lorillard to cover the fees of the court-appointed attorneys who were brought in to help with his case. U.S. District Judge Lewis Babcock’s ruling on the case stated described Lorillard as “vexatious, oppressive, lacking foundation, and intended to harass and intimidate the defendant.” Babcock

pointed out that Lorillard pursued the case despite having only two packs of allegedly counterfeit cigarettes “after employing the full resources of the U.S. government” and being “well aware that defendant was an Ethiopian immigrant who lacked the resources to defend himself in such protracted and lengthy litigation.” •

Virginia Weighs a Smoking Ban

The state’s governor wants to end smoking in eateries.

Democratic Governor Tim Kaine has proposed banning smoking in all eating establishments in Virginia for the second year running. In a state where cigarette maker Philip Morris USA is one of the state’s top employers, support of the proposal by Virginia residents reflects a major shift in social mores.

Cigarettes, after all, helped revitalize Virginia after the Civil War, and the cigarette industry employed one out of every 15 Richmond residents as recently as 50 years ago. In fact, even today, some 5,800 Virginia residents are employed by PM USA.

The state’s restaurant and hospitality lobby has countered the proposal with a measure that would allow restaurants the option of banning smoking rather than forcing it upon them. Already, according to an article in US News and World Report, many Virginia restaurants have made that switch, including the iconic Tobacco Company Restaurant in downtown Richmond.

But Kaine continues to push for a complete ban, arguing that it’s the only way to protect restaurant workers in hazy environs. •

Crackdown on Illicit Tobacco Trade Planned

Delegates meet to discuss international collaboration in fighting illicit trade.

Representatives from 35 countries in the Region of the Americas gathered recently to discuss ways to combat black market tobacco trade, smuggling, and other illicit activities.

Combating illicit trade is a key provision of the world’s first international public health treaty, the Framework Convention on Tobacco Control (FCTC) of the World Health Organization, reports Laurent Huber, director of the Framework Convention Alliance on Tobacco Control (FCA), an international alliance of hundreds of non-governmental organizations created to support the development, ratification and implementation of the FCTC.

Held in Montevideo, Uruguay, the gathering involved skill-sharing on the illicit trade of tobacco-which the FCA dubs “a global crime that contributes to higher rates of tobacco-related disease and death, helps finance criminal and terrorist groups, and robs governments of billions of dollars in revenue.”

“Tobacco smuggling, counterfeiting, and illicit manufacture of tobacco products are a transnational problem that will require international participation in a comprehensive system,” notes Dr. Eduardo Bianco, an international tobacco control policy expert and spokesperson for the Framework Convention Alliance. “The countries taking part in developing this historic illicit trade protocol have a lot at stake-and a lot to gain.”

The December meeting of American Region delegates was a working conference to prepare for an meeting in Geneva when representatives of 151 countries will negotiate an international protocol aimed at eliminating illicit tobacco trade.

“The illicit trade protocol will supplement the FCTC by building on the general provisions included in the Convention, facilitating international cooperation, and providing specific provisions countries must implement if they are serious about reducing tobacco trafficking,” said Huber.

Among the provisions to combat illicit trade being advocated by the FCTC are:

• An international tracking and tracing system of tobacco products;

• Anti-money laundering measures;

• Markings and codes on packs, cartons and master cases;

• A system of record keeping for all imports and exports of tobacco products;

• Obligations for tobacco manufacturers to control their supply chain with penalties for those that fail to do so;

• The criminalization of participation in illicit trade in various forms;

• Increased international cooperation in the sharing of information and prosecution of offenses. •

General Tobacco’s Market Moves

GT moved its headquarters and appointed a new marketing director.

Miami, Florida-based General Tobacco (GT) moved its headquarters to Mayodan, North Carolina, in January, reports J. Ronald Denman, executive vice president of GT, which is the sixth largest tobacco company in the U.S. The company move encompassed the relocation of current warehousing and manufacturing facilities to Mayodan and installation of state-of-the-art equipment.

“The entire General Tobacco team is excited about the corporate move. We have made not only a business but a personal commitment as well to Mayodan,” says Denman.

GT also recently appointed Edgard Aguilar, who has more than 30 years of industry experience, to oversee the company’s marketing policies, objectives, and initiatives, in addition to developing packaging design and promotional strategies for all of GT’s brands. In addition to its flagship brand, GT One, the company distributes Bronco, Silver, Vaquero Little Cigars, and the new premium menthol cigarette, 32 Degrees.

“Our team is very excited to have Edgard on board as marketing director,” Denman. “We are eager to see the innovations and energy he will bring to GT’s marketing communications.”

Prior to joining GT, Aguilar served as marketing director STP division at Brown and Williamson, marketing manager at Phillip Morris in Venezuela and Guatemala as well as the director of customer operations with BAT-Lane Limited. •

Commonwealth Launches Premier Tobacco

A new introduction expands the company’s RYO/MYO line.

Bowling Green, Kentucky-based Commonwealth Brands, Inc., introduced Premier Tobacco to its popular Premier portfolio of products in February, rounding out the company’s line of cigarette tubes, injector machines and other quality smoking accessories.

The fourth-largest cigarette manufacturer in the United States, Commonwealth Brands became aligned with the Premier brand when the company was purchased by Imperial Tobacco PLC in 2007. Imperial owns top-selling RYO/MYO products Premier Cigarette Tubes and Supermatic Tabletop Injectors—which made loose tobacco “a natural fit,” notes Kevin Dunn, OTP brand manager at Commonwealth Brands, who plans to capture 20 percent of the loose tobacco market with the brand within three years. “The addition of tobacco completes the Premier product line, allowing RYO enthusiasts to enjoy their entire smoking experience with a name they know and have grown to trust.”

“We offer six styles of cigarette tubes, a full line of tube-filling machines—including tabletop and handheld—and the tobacco to complement them,” adds Dunn. “We can be a one-stop shop for a retailer’s OTP line.”

Featuring a fine blend of Virginia, Burley, and Oriental tobacco, Premier Tobacco is available in three varieties: Premier full-flavored, Premier Menthol, and Premier Light. Each blend is available in either 6 oz tins, or .75 oz re-sealable pouches, and comes with a supply of cigarette rolling papers.

To support the introduction of Premier Tobacco, Commonwealth will provide retailers with a variety of display options, including a corrugated floor-stand display and wire racks. A variety of point-of-sale signage-including in-store posters, door decals, change mats, leaflet displays and shipper/display units-as well as an in-store consumer promotion will support the launch. “Leaflets will be distributed in stores that give customers the opportunity to fill out a survey and sign up to receive coupons totalling $3.50 in value,” says Dunn, who says that Commonwealth will continue to introduce new products in RYO/MYO, as well as other tobacco categories. “We understand the category and the customer; and we have dominance in certain markets. We will continue to invest behind that understanding to ensure that we deliver the type of products customers want.’ •