Beretta Tube Gets Even Better

MAY/JUNE 2011 VOLUME 14 n NUMBER 3

Good news surrounds some state tobacco taxes this year. Will retailers run with the The State of momentum and fight for their states? Cigarette Taxes

ALSO IN THIS ISSUE D&R Does Right by Perique

Marketing Tips from Have a Cigar!

How to Fill, Light and Smoke a Pipe PUBLISHER’S LETTER BY ed o’connor

TPE 2011— What’s the Buzz?

Over the past almost 20 years of walking the aisles of to- cent). Open-ended questions were asked in the survey in bacco trade shows, I’ve observed attendees, exhibitors, order to drive at underlying feelings and specific selling members of the press, individuals using an alias, and results. The information obtained was studied and then the borrowed-name-badge folks all asking one another converted to an overall HQ assessment. the same questions: “How’s the show? How’s the atten- dance? Is anybody selling anything?” Let’s consider this TPE 2011 Success Survey last item and its importance to you. 5.7% You know as well as I do that if you ask 10 people about “Less-than-satisfactory” a show, you’ll hear many opinions, ranging from “It was great” and “I’m coming back next year” to “It’s the wrong time of year,” “It was just OK,” “It sucked,” and “I’m not 17.1% 26.4% coming back next year.” “Fair” “Very good” Because it’s you assessing the quality of the specific shows you patronize and support, isn’t it important to know from your suppliers and exhibitors how it went? Was the show good for them? If so, they’ll be back next 51% year, along with other new-to-the-show exhibitors who “Good” heard the buzz. That’s important, because it assures you of maximum exposure to both the new and the tried-and- true items to stock your shelves. Shelf space is your No. 1 product. How you use it determines your success. Happy exhibitors invest in the show to improve their show selling and prospecting experience. Their investment helps you Exhibitors with very good results: Exhibitors with fair results: to stock your shelves. 37 of 140, or 26.4 percent 24 of 140, or 17.1 percent

Here’s how a good show computes for you; it should Exhibitors with good results: Exhibitors with less-than- offer: 71 of 140, or 51 percent satisfactory results: 8 of 140, • a wide array of great products, the lifeblood of your or 5.7 percent business • great show discounts Of the 140 survey respondents,108 (77 percent) indi- • attractive, inviting and welcoming booths cated good or very good results. Only 8 (5.7 percent) indi- • new-product samples and special intro prices in cated less-than-satisfactory results. addition to show specials The bottom line? A show with a high Happiness Quo- • seminars offering real world information to help solve tient provides a solid return on your support and patron- your real world problems age. It fosters a year-to-year increase in quality exhibitors, quality buyers, and quality press coverage, which drive To summarize: A trade show with good exhibitors offers upgrades to the show, thereby accelerating the cycle of good products at great prices to help you efficiently use success. your shelf space. Thank you for your support and attendance, and thank We wanted to know the Happiness Quotient (HQ) of you for your friendship. See you at TPE 2012. Meanwhile, the TPE 2011 exhibitors. To determine this, we distanced I wish you good selling. the HQ from the he-said-she-said opinions and created a As a former mentor used to say: “Keep it in the road.” more accurate overview assessment by commissioning a survey. Best to you, Of the 195 exhibitors participating in TPE 2011, we re- ceived survey responses from 140 companies (72 per-

4 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 NEWS & TRENDS MAY/JUNe 2011

FDA Intends to Regulate E-Cigs

In a victory for manufacturers, the FDA will comply with court’s decision and regulate electronic cigarettes as a tobacco product.

In April, the FDA issued a letter sion: bination with other FDA-regulated “to provide stakeholders and the • The FDA intends to propose products. As mentioned, the FDA public with information, in light of a regulation that would extend has already issued a draft Guidance a recent court decision, regarding the agency’s “tobacco product” on this provision, which it intends to the regulation of products made or authorities in Chapter IX of the finalize. derived from tobacco.” The letter FDCA—which currently apply only • “Tobacco products” marketed states that between 2008 and 2010, to certain specifically enumer- as of Feb. 15, 2007 and which have the FDA determined that electronic ated “tobacco products”—to other not been modified since then are cigarettes “were unapproved drug/ categories of tobacco products considered “grandfathered” and device combination products and that meet the statutory definition are not subject to pre-market re- detained and/or refused admission of “tobacco product” in Section view as “new tobacco products.” to those offered for import by Sot- 201(rr) of the act. The additional A “tobacco product” that is not tera Inc. and other manufacturers.” tobacco product categories would “grandfathered” is considered a After Sottera Inc. challenged that be subject to general controls, “new” tobacco product and adul- determination in court, the U.S. such as registration, product list- terated and misbranded under the Court of Appeals for the D.C. Cir- ing, ingredient listing, good manu- FDCA, and therefore subject to cuit, in Sottera, Inc. v. Food & Drug facturing practice requirements, enforcement action, unless it has Administration, 627 F.3d 891 (D.C. user fees for certain products, and received pre-market authorization Cir. 2010), issued a decision that the provisions regarding adultera- or been found to be substantially e-cigarettes and other products tion and misbranding, as well as equivalent. The FDA has already made or derived from tobacco can to the pre-market review require- developed a draft Guidance ex- be regulated as “tobacco products” ments for “new tobacco products” plaining how manufacturers can under the Federal, Food, Drug and and “modified risk tobacco prod- request a determination from the Cosmetic Act (FDCA) and are not ucts.” FDA that a “tobacco product” is drugs/devices unless they are mar- • The Sottera decision states that “grandfathered.” keted for therapeutic purposes. products made or derived from to- The FDA letter states that the The FDA letter states that the “gov- bacco can be regulated under the agency looks forward to working ernment has decided not to seek fur- Tobacco Control Act unless they are with all stakeholders to ensure that ther review of this decision, and FDA “marketed for therapeutic purposes,” the existing authorities granted the will comply with the jurisdictional in which case they are regulated as agency are harnessed to best pro- lines established by Sottera.” drugs and/or devices. The agency is tect and promote the public health. In so doing the FDA plans to take considering whether to issue a Guid- The letter was signed by: the following steps to ensure that ance and/or a regulation on “thera- Lawrence R. Deyton, M.S.P.H., M.D. appropriate regulatory mechanisms peutic” claims. Director, Center for Tobacco Prod- govern all “tobacco products” and • Section 201(rr)(4) of the Tobac- ucts and Janet Woodcock, M.D. all other products made or derived co Control Act prohibits the market- Director, Center for Drug Evaluation from tobacco after the Sottera deci- ing of “tobacco products” in com- and Research.

12 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 NEWS & TRENDS MAY/JUNe 2011

Highlights Retail Going Strong FDA Guidance In a survey of 160 convenience stores Issued on Penalties and tobacco outlets representing nearly 11,000 stores, 43 percent of respondents In April, the FDA issued a final Guidance Document on civil fines said they increased their store count over and no-tobacco-sale orders for tobacco retailers that are now in the past three years despite the economic effect. The 12-page Guidance Document explains how the FDA downturn and legislative challenges. Eighty- will assess fines on retailers who violate the federal tobacco three percent of c-store respondents to the compliance checks and regulations. In it, the FDA explains that NATO/CSP-conducted survey reported that any specific retail location with five repeated violations within they plan to increase the square footage a 36-month time period after a first violation will be subject to dedicated to tobacco products this year, an FDA-issued no-tobacco-sale order prohibiting the sale of to- while 68 percent of tobacco outlets said bacco products from that location for a specified period of time they would expand their tobacco product or indefinitely. and accessory inventory. Retailers should examine the entire document for guidance, but the following question-and-answer section from the docu- Newport Beach, California ment about the potential repercussions of acceptance of fake Approves Ban on Smoking identification is particularly relevant: in Open Spaces “Does good-faith reliance on the presentation of a false gov- ernment-issued ID constitute a violation of minimum-age re- In an effort to further reduce what it quirements for the sale of tobacco products? perceives to be the public’s recreational With respect to minimum-age requirements for the sale of exposure to secondhand smoke, Newport tobacco products, including regulations issued under section Beach, California’s City Council recently 906(d) of the Federal Food, Drug, and Cosmetic Act (FDCA), voted to give preliminary approval to a good-faith reliance on the presentation of a false government- proposed ban that would outlaw smoking issued photographic identification that contains a date of birth in public parks and open spaces except does not constitute a violation if the retailer has taken effective in specifically designated spaces. (Those steps to prevent such violations, including: designated areas would be away from athletic courts and fields, playgrounds, and •adopting and enforcing a written policy against sales to minors; areas considered to be at high risk of fire.) A •informing its employees of all applicable laws; date for a formal vote by the council has not •establishing disciplinary sanctions for employee yet been scheduled. noncompliance; and •requiring its employees to verify age by way of Georgia Smoke-Free photographic identification or electronic scanning device.” Ordinance Threatens Jobs

A Macon, Georgia City Council ordinance that would restrict smoking in many public indoor locations—including restaurants Bill to Exempt Cigars from and bars—is under fire by two premium- tobacco retailer associations in Georgia. FDA Regulatory Authority The ordinance, which would ban smoking at many indoor locations but would still In April, a bill (H.R. 1639) was introduced in the U.S. House of allow smoking on streets and in other public Representatives that would exempt large and premium cigars areas, is opposed by both the Georgia weighing more than six pounds per thousand from future regu- Premium Retail Tobacconists Association lation by the FDA. and the International Premium Cigar & Pipe Continued on page 16

14 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 NEWS & TRENDS MAY/JUNe 2011

Smoking Bans Spread Highlights Continued from page 14 By 2020, every state may ban smoking in restau- Retailers Association, who warned that rants, bars and the workplace, says the U.S. Centers passing the ordinance would put jobs, small businesses, and tax revenues at risk. for Disease Control and Prevention (CDC). Chris McCalla, legislative director of IPCPR, told PRWeb that “to ban smoking in Based on the current rate of antismoking-law adoption, every state Macon restaurants and bars will severely may have banned smoking in restaurants, bars and the workplace by reduce these sales, which will translate the end of the decade, according to the CDC. into reduced excise, sales and income The number of states with comprehensive indoor-smoking bans tax revenues for Macon and the state of rose to 25 in 2010, an increase that the CDC dubbed “astounding” Georgia.” and feels is indicative of an ongoing trend. An additional 10 states have laws that ban smoking in workplaces, bars or restaurants, but not in all three venues. Still other states have less restrictive laws, such as requiring smok- Miami Cigar Celebrates ing areas with separate ventilation. Only seven states—Indiana, Ken- tucky, Mississippi, South Carolina, Texas, West Virginia and Wyo- Nestor Miranda ming—have no indoor-smoking restrictions, although some of their cities do. Retailers and cigar smokers enjoyed perks on May 6. In May, Miami Cigar & Company brought back the heralded National Nestor Miranda Cigar IPCPR Criticizes Day. All authorized Nestor Miranda Collection retailers participated in the perks that only a day Nebraska Tax Proposal named after “The Most Interesting Man In The Cigar Industry” could include. On May 6, Miami Cigar—which distributes A proposed tax hike will backfire, Tatiana flavored cigars and Nestor Miranda Col- says the organization. lection cigars, as well as La Sirena, La Aurora, Leon Jimenes, and Ducados cigars—awarded consumers entering any of the authorized retail- According to the International Premium Cigar & Pipe Retail- ers with a Nestor Miranda Collection cigar at ers Association (IPCPR), a recently proposed bill in Nebraska no charge. All the smoker had to do was buy a would raise excise taxes on a variety of tobacco products by cigar—any cigar, made by any cigar maker. The 225 percent, thereby damaging businesses statewide. The pro- twist to this year’s festivities was that the con- posal—Legislative Bill 436—seeks higher tax increases on ciga- sumer had the opportunity to smoke the newest rette and smokeless tobacco products and a higher excise tax addition to the Nestor Miranda Collection, the on other tobacco products, including cigars. If passed, the bill Art Deco (5.5x54). would raise taxes from 20 percent to 65 percent of the whole- “The ‘National Nestor Miranda Cigar Day’ is sale price. Miami Cigar & Company’s way of thanking the “Tax increases of this magnitude backfire in this or any other smokers for their enthusiastic support of the economy,” says Chris McCalla, legislative director of the IPCPR. company’s brands for the past 22 years, and to “They never produce what they are expected to produce and reassert Miami Cigar’s commitment to bringing they always lead to damaged businesses, lost jobs, and lower you great cigars in the years to come,” said a tax revenues overall.” McCalla says higher taxes on tobacco spokesperson for the company. products lead to lost revenues and contraband product, which “Finally, the best holiday of the year has enter the market illegally and don’t show up on the radar for returned,” said Nestor Miranda, in announcing state tax revenues. “Nobody wins when that happens,” he says. the event. “I am very excited to once again show our customers and consumers our appreciation for their loyalty and support.” TOB

16 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 TRADE TALK By Thomas briant

Tax Legislative Update and Regulatory News

By Thomas A. Briant, Executive Director, National Association of Tobacco Outlets With the majority of state legislatures now in session, bills to to decrease the state’s cigarette tax rate by $0.10 per pack raise state cigarette taxes have been introduced in 17 states and $0.98 per pack, respectively; a proposal in New Jersey to and legislation to raise the taxes on other tobacco products scale back the state cigarette tax rate by $0.30 per pack, and a (OTP) is being considered in 13 states. bill in Rhode Island that proposes to reduce the state cigarette rate by $1.00 per pack. Tax Update Below is a brief summary of these tax-increase proposals: FDA Meeting On Feb. 16, NATO representatives met for a second time with California: $1.50 per pack of cigarettes. staff from the FDA’s Center for Tobacco Products to continue Connecticut: $0.40 per pack of cigarettes; discussions on mutual cooperation and communication on 22.5 percent on OTP. matters regarding tobacco regulation. The FDA staff was Hawaii: $1.20 per pack of cigarettes; asked if the agency had a time frame to finalize the Guidance $3.20 per OTP item except cigars. on programs for training retail clerks. In response, the FDA Illinois: $0.76 per pack of cigarettes; staff indicated that public comments received about elements additional $0.25 per pack starting of the proposed clerk-training programs were still being March 1, 2012. reviewed and that the final Guidance Document would be Kentucky: $1.06 per pack of cigarettes; issued when the review process is completed. 12.5 percent on OTP. Maine: $1.50 per pack of cigarettes. FDA Litigation Maryland: $1.00 per pack of cigarettes; On Feb. 25, 2011, Lorillard Tobacco Co. and R.J. Reynolds 80 percent on OTP. Tobacco Co. filed a lawsuit in the United States District Court Mississippi: $0.50 per pack of cigarettes; for the District of Columbia against the U.S. Food and Drug 7.5 percent on OTP. Administration and the U.S. Department of Health and Human Missouri: $0.16 per pack of cigarettes. Services for declaratory and injunctive relief. Nebraska: $1.35 per pack of cigarettes; Regarding the declaratory relief, Lorillard Tobacco Co. 45 percent on OTP. and R.J. Reynolds Tobacco Co. are requesting the court to New Mexico: 32 percent on OTP with minimum declare that the appointments of three of the members of the of $1.66 per OTP item. FDA’s Tobacco Products Scientific Advisory Committee and New York: $1.65 per pack of cigarettes. three of the members of a subcommittee were arbitrary and North Dakota: $0.41 per pack of cigarettes was proposed violated federal law because these members have financial but then defeated. conflicts of interest in that they have been employed in the Oregon: $1.00 per pack of cigarettes; past and continue to be employed as expert witnesses in 55.25 percent on OTP. litigation to testify against tobacco product manufacturers. Texas: $0.12 per pack of cigarettes. Moreover, several of these committee members serve as Vermont: $1.00 per pack of cigarettes; consultants to manufacturers of nicotine-replacement-therapy $1.00 per pack of little cigars. products (such as nicotine patches and nicotine gum) and Virginia: $1.15 per pack of cigarettes; smoking-cessation products, which raises questions about or 40 percent on OTP. demonstrates their lack of impartiality. West Virginia: $1.00 per pack of cigarettes; Regarding injunctive relief, Lorillard Tobacco Co. and R.J. 43 percent on OTP. Reynolds Tobacco Co. are requesting the court to order that the Department of Health and Human Services and the FDA In contrast to these proposed tax increases, there are three not be allowed to receive or rely in any way on a report on states with bills pending that would reduce state cigarette tax menthol in cigarettes from the Tobacco Products Scientific rates. These include two bills in New Hampshire that propose Advisory Committee. TOB

18 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Legislative Update on Stogies

A record number of state bills were introduced this year that could affect cigar- smoking, but that has only strengthened the industry fight.

By Renee Covino

hen it comes to cigar or commend them to their respective J. Glynn Loope Executive Director legislation, the “united” state legislators. On its website, www. of Cigar Rights Wstates of this country are not cigarrights.org, the CRA offers links to of America exactly united. With state legislatures pages for each state and its legislation, as back in session, this year brought the well as links showing how to contact the introduction of many varying and appropriate state representatives. entirely new packages of anti-tobacco “We’ve certainly had our hands full types of bills—many affecting cigars. In this year,” says Loope. fact, “right now there are a record number Here is a snapshot of some of the most of bills like this that are pending across significant legislation in the country as the country,” J. Glynn Loope, executive far as stogies are concerned (state names director of Cigar Rights of America are shown alphabetically): (CRA) tells Tobacco Outlet Business. Alabama: Smoking bans are pending The good news is that as the year has here, “which we think will end up being progressed, not all are turning out badly— defeated in one fashion or another,” some have already been defeated and a Loope relays. Committee on Revenue and Taxation. number of them are actually favorable to Arkansas: There is opportunity here “In the wake of a horrid tax increase a the cigar industry. And much of this can for a tax cut bill, according to Loope. “You couple of years ago, this legislation will be attributed to the continuing fight of have to appreciate any legislation that bring relief ” to Arkansas, Loope says. industry organizations such as the CRA has language in it that says, ‘Encouraging California: This is where “the worst and its members. in-state purchase of certain tobacco smoking ban legislation in the country is Regardless of what each bill stands for, products,’ ” he says. That’s part of a bill pending,” says Loope. He also calls it “a they all require a constant watch and the that had already passed the Arkansas sweeping piece of tobacco prohibitionist involvement of as many industry players House of Representatives at press time legislation that seeks to close every as possible to either protest, support and was awaiting the Arkansas Senate existing exemption to enjoying perfectly

20 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 legal tobacco products in the state of defeat of it, in part through a petition on exemptions and we’re hoping it outright California.” The bill would essentially ban its website. dies in the Senate the way it has for the smoking in all retail tobacco businesses, Illinois: Very positive legislation in last several years.” private clubs, hotel lobbies, bars, taverns, Illinois would roll back some “serious Kentucky: Here, a “nasty” OTP tax banquet rooms, warehouse facilities and sections of their smoking ban for bars increase proposal is pending as well as a employee break rooms. “And we don’t have and taverns that have alcohol licenses statewide smoking ban, Loope relays. former Gov. Arnold Schwarzenegger to withstanding,” Loope explains. In effect, Maryland: A very drastic proposal protect us now with the power of the a “smoking license” would be issued if to raise the OTP tax to 90 percent veto pen,” Loope maintains. “Make no certain criteria are met. The legislation “appears to be defeated for the year,” mistake: This is a very real threat to your would also allow smoking again in Illinois says Loope. This horrendous tax was passion for fine cigars. It not only affects casinos with the caveat that it would be a “hard piece of legislation and would the entire state of California, but sets a in effect only if adjoining states also have shut down numerous tobacconists,” horrid precedent for the entire nation.” did not ban smoking. The state went in he explains. It was defeated thanks to Florida: Pending legislation would this direction because a Federal Reserve the outstanding efforts of the Premium surrender state control of outdoor Bank study documented that the state of Cigar Retailers Association of Maryland, smoking bans to local governments. Illinois had lost more than half a billion International Premium Cigar & Pipe “We don’t want that—that would put dollars in gaming revenue in the last three Retailers Association (IPCPR), the Cigar that under control of individual local years specifically because of its smoking Association of America and the CRA governments that would love to ban ban, according to Loope. Maryland members who contacted their smoking outdoors, especially on the Indiana: A statewide smoking ban legislators. The matter seems to be put to beaches in Florida,” says Loope. “This proposal is pending in Indiana that’s been rest—for now at least. type of back-door legislation needs to “amended, amended and yet amended,” Minnesota: Progressive legislation is stop.” The association is working for the says Loope, “and now there’s a lot of also alive in the form of smoking-ban

22 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 rollbacks in this state. Certain criteria FDA Threat Still Looms would have to be met, such as separating the smoking area from the dining area—“the type of things that the cigar The Food and Drug Administration’s possible involvement in stogie regulation industry can live with,” according to is “the most dangerous issue concerning the cigar industry,” maintains J. Glynn Loope. “It would be a very positive move Loope, executive director of Cigar Rights of America (CRA). for Minnesota” and set a good example On April 26, 2010, the FDA published a notice in the Federal Register of its for others, as Minnesota was one of the intent to regulate cigars under the Family Smoking Prevention and Tobacco first states in the country to pass smoking Control Act passed by Congress and signed into law by President Obama in bans, he explains. 2009. Cigars had originally been excluded from the law, but the law also allowed New York: A proposed $1 tax-cap for the FDA to come back later and establish regulatory authority over cigars. bill on premium cigars to help augment Nothing came immediately of this, but then on Dec. 20, 2010, a brief posting the 75 percent OTP tax that passed last in the Federal Register by the Department of Health & Human Services year had a lot of “traction” in the state suggested cigars could come under regulation by the FDA as soon as June 2011. legislature, according to Loope, with the Loope mentions that “there is an effort to get some type of an exemption “hope that it will dramatically help the passed,” namely in the form of “political pressure from Congress to get the FDA state of the cigar business in the state of to back off cigars, because cigars were not a target of that legislation in the past,” New York.” While it did not make it into he says. “It was about cigarettes and smokeless.” the state budget, the CRA commended But Loope is not holding his breath—nor should the industry. “It’s an overly the New York Senate for including the zealous agency—they’re after Prohibition—it’s an activist agency in that regard, “language” in their version. Moreover, where the bureaucrats show up to work trying to figure out how to put this this is still standing legislation that would industry out of business,” he says. “The laundry list of things that they could accomplish the same goal, Loope says, consider to do to the cigar industry is dangerous, threatening and has to be noting that “this legislation is critical to taken very, very seriously.” both the consumer and retail tobacconist So what can cigar manufacturers and cigar retailers do? “You have to keep community in the state of New York.” pressure on your respective members of Congress to tell the FDA to back off South Carolina: For the first time in premium cigars, that’s the bottom line,” says Loope. the state’s history, a statewide smoking ban He adds that it may help to get the message out that cigars are an all-natural has been introduced in South Carolina. product. “What comes out of the ground is what you are smoking; it doesn’t Washington: Positive legislation to have chemically-infused characteristics,” Loope states. restore some cigar-smoking freedom The FDA aside, health activists and anti-tobacco groups are also part of the also exists in the state of Washington. problem. Associations such as the American Heart Association, the American This legislation would roll back “serious Cancer Society, the American Lung Association “have done an absolutely chunks” of their smoking ban statute, masterful job of lumping together every tobacco product into the same which makes it very similar to Minnesota’s demonized pot,” states Loope. “Frankly, the cigar industry should have better proposed legislation, but adds “stiff fees differentiated itself from other tobacco products 20 years ago.” that the cigar association can live with,” But there is hope. “It would have helped us on the political side if we were according to Loope. This translates to a better on the public relations side, but I think that’s something that can happen $5,000 licensing fee to smoke shops and now,” according to Loope. “We will not be the first industry to claw our way a $15,000 licensing fee to restaurants that back from political Armageddon.” want to allow smoking on the premises. And part of that “good PR” that Loope mentions has to come from cigar “We think it could generate $4 million manufacturers banding together. “If we don’t find a way to work together, we’re per year to the state,” says Loope. “It’s going to be cut out one by one,” says Harry Preston, national accounts manager got some decent traction and it’s already for J.C. Newman Cigar Co., a “huge” supporter of the CRA, as Preston puts it. passed the House committee, so that’s a

very positive thing.” TOB

24 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 How to Fill, Light and Smoke a Pipe Make sure your new—and experienced—pipe smokers get the most out of this tobacco tradition.

am still surprised to learn how many be packed down with a medium pressure, times to ensure a good light. An ideal light seasoned pipe smokers have never and the top pinch should be the most firm. will have a white ash all the way across the top Ilearned the right way to pack, light and I tell pipe smokers that first they should pack with no black or unburned tobacco. You must smoke a pipe, though it’s not uncommon for their pipes like a child, next, like a woman, and tamp down the tobacco as you smoke, as this novice pipe smokers. After all, you need all finally, like a man. keeps the draw and the tobacco at the same three “Gs” to get a good smoke—a good pipe, Draw on the unlit pipe to determine if it consistency. That white ash will continue to good tobacco, and good smoking techniques. was packed correctly. The resistance of the move down. The most common mistake is to You can sell your customers the first two— tobacco should be the same draw as a lightly pack the pipe too tightly, which will cause it pipe and tobacco—but you have to take a rolled cigar—you should not have to suck to burn down the middle or down one side. little time to explain and demonstrate good your teeth in. The nice thing about packing Smoke it slowly. Now comes the smoking techniques. So I’m going to share your pipe lightly is that if the draw is too best part—you are ready to smoke and savor with you my veteran industry experience— light, you simply press the tobacco down your pipe. Smoking should be done with slow, what I call the Frank Blews way to fill, light firmer on top. But if the draw is too difficult, even puffs. Don’t be a freight train and try to and smoke a pipe. you must dump out the tobacco and repack smoke all the tobacco in 10 minutes. Tamping Fill in pinches. Hold your pipe, the pipe. If you don’t start all over, it will be while smoking is important—always tamp look inside the bowl, and blow through the very difficult to smoke and you will have a the edges; the middle will take care of itself. mouthpiece. Tap it against the palm of your bad experience. If the pipe goes out—this is not uncommon, hand to make sure that any tobacco left in it, or Light and look for white. particularly if you start talking and relaxing— anything from your pocket that inadvertently With a properly packed pipe, you are ready to just tamp and relight. Expect that if you’re not got in there, is out. A clean pipe is a sweet pipe. light it. Put the pipe in your mouth and place puffing on your pipe and drawing air down Now you are ready to fill your pipe using the a flame down over the tobacco and draw in into it, it’s inevitable that the light will go out. “pinch” method in stages, whereby the tobacco with a couple of deep puffs. At the moment But having to relight it is a small price to pay is gradually laid more consistently and with an of lighting, the surface of the tobacco will for a sweet and savory pipe experience. It is increasing pressure. The first pinch that you rise (due to the moisture in the tobacco), so also recommended that you keep pipe cleaners put on the bottom should be very light; get be prepared to tamp the edges with a tamper handy; using pipe cleaners while smoking will the air bubbles out by lightly pressing down and relight it. (I do not recommend tamping keep the pipe clean, dry and sweet. Enjoy! with your forefinger and concentrating on the with your fingers as you could possibly burn Up next: The care and cleaning of edges of the bowl. The next pinches should them!) You need to do this step three or four pipes. TOB

Tamper Filling a pipe • Blow through the mouthpiece. • Glance into the bowl and tap it against the palm of your hand. • Fill the pipe in pinches of tobacco (The first pinch should be lightly done, with subsequent pinches done gradually and more consistently laid with an increasing pressure of LIGHTING A PIPE the forefinger concentrating on the edge of the bowl.) •Place flame over tobacco draw. At the Firm • Draw on the pipe. The resistance of the tobacco should be the same moment of lighting, the surface of the draw as a good cigar. tobacco will rise. medium • If the draw is too light, another press with the finger is called for. • Tamp the tobacco, leaving a rounded top. • If the draw is too difficult, repack the pipe. • Relight. light • The above procedure may be done a number of times to ensure an even light.

The Frank Blew’s way to fill, light and smoke a pipe.

26 FOR A GOOD SMOKE: TOBACCO OUTLET BUSINESS • Good Pipe Frank Blews MAY/JUNE 2011 • Good Tobacco • Good Smoking Technique CATEGORY MANAGER Cigarettes Smoking Stats Cigarette consumer statistics show a large, albeit declining, market.

t’s a widely known fact that smoking is on the decline in the United States. Who Smokes? But smoking rates vary widely by region and by smoker demographics. By Gender: IBecause knowing your market and your customer can only enhance More men (23.5%) than women (17.9%) smoke. your business, TOB offers this peek into the statistics of smoking. By Age: Smoking is most common among Americans who are between the ages of 25 and 44 (24%).

Alabama 22.1% Of those between the ages of 18 and 24, 21.8% Alaska 21.5% Arizona 15.9% smoke; and 21.9% of those between the ages of Arkansas 22.3% California 14% 45 and 64 are smokers. Just 9.5% of Americans Colorado 17.6% Connecticut 15.9% older than 55 smoke. Delaware 17.8% District of Columbia 16.2% Florida 17.5% Georgia 19.5% Who’s Quitting? Hawaii 15.4% Idaho 16.9% In 2009, about four in 10 current smokers Illinois 21.3% Indiana 26% (42.5%) reported attempting to quit smoking Iowa 18.8% Kansas 17.9% over the previous year, with non-daily smokers Kentucky 25.2% Louisiana 20.5% (approximately 55%) being more likely than daily Maine 18.2% Maryland 14.9% smokers (approximately 40%) to have tried to Massachusetts 16.1% Michigan 20.5% quit. Minnesota 17.6% Mississippi 22.7% Missouri 25% Montana 18.5% Where Smokers Live Nebraska 18.4% Nevada 22.2% Across all states, the prevalence of cigarette New Hampshire 17.1% New Jersey 14.8% smoking among adults ranges from 9.3% to New Mexico 19.4% New York 16.8% 26.5%. See bar chart at left to have a look at the North Carolina 20.9% North Dakota 18.1% smoking population by state. Ohio 20.1% Oklahoma 24.7% Oregon 16.3% Pennsylvania 21.3% Rhode Island 17.4% The Ban Bandwagon South Carolina 20% South Dakota 17.5% By the end of 2009, statewide laws ranged Tennessee 23.1% Texas 18.5% from complete smoking bans in workplaces, Utah 9.3% Vermont 16.8% restaurants and bars (22 states), to partial Virginia 16.4% Washington 15.7% coverage (four states with two of the three areas, West Virginia 26.5% Wisconsin 19.9% six states with one of the three areas), to no Wyoming 19.4% coverage (19 states with no areas completely 5% 10% 15% 20% 25% 30% covered).

Source: “Tobacco Control State Highlights 2010,” CDC Behavioral Source: All statistics from the U.S. Centers for Risk Factor Surveillance System (BRFSS), 2007-2008. Disease Control and Prevention.

As of 2009, approximately 20% of U.S. adults smoked regularly, according to the U.S. Centers for Disease Control and Prevention (CDC).

28 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 The State of By Renee Covino Cigarette Taxes Surprising good news surrounds some state tobacco taxes this year. Will retailers run with the momentum and fight for their states?

30 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 t’s one of those “sure bets” for tobacco retailers: With the annual cycle of state legislatures in session comes the certainty of proposed cigarette (and other tobacco) tax hikes. This year is no different—at Ipress time, 17 states introduced bills to raise their cigarette taxes (and 13 states considered legislation to raise their OTP taxes). But along with that expected law-making scenario came a very surprising one in 2011— three Northeast states introduced bills to conversely decrease their state cigarette tax rates. More positive/stable news comes in the form of tobacco tax hikes being rejected, reduced bills being passed and, in related legislation, the rolling back of certain provisions in some state smoking bans. “This looks to be good news” for the state of state tobacco taxes, according to Nik Modi, a tobacco analyst with UBS. “You would think with state budget deficits as big as they are, more increases would have gone through by now,” he tells Tobacco Outlet Business. “I think states are figuring out that raising cigarette taxes does not necessarily mean they will generate more revenue as consumers cross borders to buy their products.” That’s indeed the reasoning behind why New Hampshire, New Jersey and Rhode Island have considered reducing their taxes—they’re hoping to draw smokers from bordering states and increase their revenues. TURNING ON A DIME? For example, New Hampshire’s 10-cent- per-pack tax-reduction proposal (from $1.78 a pack to $1.68) is backed by a study conducted for the New Hampshire Grocers Association by economics professors at Southern New Hampshire University, which found that lowering the tax this way would generate up to $13 million in additional tax revenue for the state. According to the association’s president, John Dumais, cutting the rate by a dime would cost the state tobacco tax revenues, but, more important, would also result in an offsetting increase in state taxes collected from consumers renting hotel rooms, eating in restaurants, and buying alcohol, lottery tickets and gasoline. Ultimately, Dumais believes, the net result would be not a state revenue loss, but rather an incentive for tourists to visit the state

3131 TOBACCOTOBACCO OUTLET OUTLET BUSINESS BUSINESS MAY/JUNEMAY/JUNE 2011 2011 Legislators said the move to lower taxes was necessary to help small businesses rebound by strengthening their competitive advantage over neighboring states.

t o shop. Further, New tax rates of $2, $2.24 and $2.51, Hampshire does not respectively. have any state sales tax, At press time, the bill was in the which is added incentive. hands of the New Hampshire Senate. Supporters of the tax No decision was made yet, but cut maintain that the meager naturally, there is opposition. A recently 10-cent reduction was chosen released study by PolEcon Research, as a first step to prove their point. commissioned in part by Campaign The reduced-tobacco-tax bill did for Tobacco-Free Kids, disputed the pass the New Hampshire House of New Hampshire Grocers Association Representatives in mid-March with study, which found that the tobacco tax overwhelming support. Legislators said decrease will lead to a $9 million drop the move to lower taxes was necessary in state revenue. to help small businesses rebound Still, an AP report quoted the New by strengthening their competitive Hampshire Senate Finance Committee advantage over neighboring states chairman as saying he believes the Maine, Vermont and Massachusetts, Senate will support the cut. If approved currently with per-pack tobacco by the Senate, the cigarette-tax-cut

32 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Beyond the surprising tax-cut proposals and smoking ban rollbacks, rejected tax hikes are also adding positive news to the state of state tobacco taxes.

bill would then go to its Democratic of Cigar Rights of America (CRA). a later proposal wanted to double it to governor, John Lynch, who does not (See p. 20 for more details on pending $1.28. Regardless, Heineman told the support it. But the House and Senate, legislation affecting cigars.) Associated Press that “this is the wrong led by Republicans, could override a time to increase taxes.” veto by the governor, AP reported. REJECTED AND REDUCED Reduced-tax bills are being passed in As for the two other states also bucking Beyond the surprising tax-cut proposals states such as Vermont, which voted 16- the tobacco tax trend: Rhode Island’s and smoking ban rollbacks, rejected tax 14 against a bill that would have raised proposed bill would cut its tax by $1, to hikes are also adding positive news to the state’s excise tax on cigarettes by $1 $2.46 per pack; New Jersey is considering the state of state tobacco taxes. North from $2.24 to $3.24 per pack; however, reducing its tax by 30 cents to $2.40 per Dakota’s House of Representatives, for a day after defeating the $1-a-pack pack. No recent updates were available instance, rejected a bill to raise the state’s increase, the Vermont Senate did vote for either state at press time. cigarette tax by 41 cents, which would in favor of a smaller increase—53 cents, Related to the surprising cigarette-tax have brought it from its current 44 cents making the per-pack state cigarette tax reductions, some states are considering to 85 cents. Lawmakers defeated the $2.77. reversing parts of their smoking ban proposal 68-26. But the Vermont Grocers’ Association legislations, which could affect tobacco And in Nebraska, Gov. Dave (VGA) opposes any tax hike, saying it retailers as much as cigarette taxes. Heineman stated in March that he hurts local businesses in light of New Illinois and Minnesota are two such would not sign any cigarette-tax bill Hampshire’s lower tax rate (which is states with legislation pending for that reached his desk. A state proposal perhaps about to get lower). The VGA smoking ban rollbacks, according to in February looked to more than triple cites a recent study by Dr. Art Woolf of J. Glynn Loope, executive director Nebraska’s cigarette tax to $1.99 a pack; Northern Economic Consulting that

34 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 If Vermont had maintained the pre-1970s status quo with New Hampshire, there would be 3,000 more retail jobs and $540 million more retail sales in Vermont’s border counties.

showed that each time Vermont has Association of Tobacco Outlets, and losing money.” increased its sales tax rate, the retail Cigar Rights of America. And Cohen was able to show that sales gap between Vermont and New to them over the course of a long and Hampshire has widened. Specifically, ONE CAN MAKE A DIFFERENCE struggling (for his business) three before 1969, per capita retail sales in And then there’s one tobacco retailer, years. At first, the state’s revenue went Vermont and New Hampshire were the Barry Cohen, owner of the recently from $8 million to $9 million after it same. Now, Vermont’s per capita sales renamed Barry’s Smoke Shop, who raised the OTP tax in ’98, according are reportedly 60 percent that of New single-handedly fought his state of to Cohen. But then it dropped to $7 Hampshire’s. New Jersey’s OTP tax from 1998 to million, and that’s when he convinced “If Vermont had maintained the pre- 2001 and got it rescinded from 48 legislators that many New Jersey 1970s status quo with New Hampshire, percent to 30 percent. Granted, it was a tobacco consumers were shopping out there would be 3,000 more retail jobs “constant battle” and took three years of of state, such as in nearby Philadelphia. and $540 million more retail sales in solid lobbying to do it, but, he says, it’s “Obviously, showing them the Vermont’s border counties,” notes Jim “absolutely worth it” to fight. numbers—their failing revenue Harrison, spokesperson for the VGA in “The thing about laws is anyone can numbers, not mine—is what made the a recent association press release. change them,” he tells Tobacco Outlet difference,” Cohen relays. The industrywide groups supporting Business. “When I started speaking with Retailers may want to run with some the states’ fights against cigarette our legislators about lowering the tax, of the positive industry momentum and other tobacco taxes include the they said they would never lower it and and apply Cohen’s logic to their state International Premium Cigar & Pipe that it was a ridiculous conversation. fight. Because despite the good news Retailers Association, the National But it isn’t ridiculous when the state is that surrounds some of the states

36 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Black Market Allure Rising

What’s the scariest threat posed by tobacco diversion unit of the ATF, told Justice Department reported 71 new increased cigarette taxes? That’s easy: USA Today in April. prosecutions referred by the bureau, the increasingly dangerous black market This criminal activity is being tracked a 39 percent increase from the year it fuels. by the Bureau of Alcohol, Tobacco, before, according to records compiled Since 2007, 27 states have raised their Firearms and Explosives (ATF), which by the Transactional Records Access cigarette excise taxes, inspiring some recently reported 357 open cases Clearinghouse at Syracuse University. drug and weapon traffickers to add involving cigarette smuggling in 2010, U.S. statistics show that smuggling cigarettes to their illegal ‘product lines,’ compared with a handful a decade costs states and the federal government Larry Penninger, acting director of the earlier. During the 2010 fiscal year, the about $5 billion. WA NH $3.025 $1.78 ME VT $2.00 MT ND $2.24 $1.70 44¢ MN MA OR $1.578* $2.51 RI $1.18 NY $3.46 WI $2.00 and over SD $4.35 ID $2.52 CT State Cigarette Excise Tax Rates $1.53 57¢ MI $3.00 WY $2.00 60¢ PA $1.99 - $1.00 IA $1.60 NJ Per 20 Pack NE $1.36 $4.35 OH NV 64¢ $1.25 80¢ IL IN DE 99¢ - 68¢ UT 98¢ 99.5¢ $1.60 WV $1.70 CO VA 55¢ MD 84¢ 30¢ CA KS KY $2.00 79¢ MO 67¢ - 42¢ 87¢ 17¢ 60¢ NC 45¢ TN 62¢ 41¢ - 28¢ OK AZ SC WA NH $1.03 $2.00 NM AR 57¢ $3.025 $1.78 ME $1.66 $1.15 VT $2.00 MT ND $2.24 AL GA 27¢ - 17¢ $1.70 44¢ MS 42.5¢ 37¢ MN 68¢ MA OR $1.578* $2.51 RI LA $1.18 TX NY $3.46 36¢ SD WI ID $4.35 CT $1.41 $1.53 $2.52 57¢ $3.00 AK MI WY $2.00 $2.00 FL 60¢ $1.339 PA IA $1.60 NJ NE $1.36 $4.35 OH NV 64¢ $1.25 80¢ IL IN DE UT 98¢ 99.5¢ $1.60 WV $1.70 CO VA 55¢ MD 84¢ 30¢ KS $2.00 CA MO KY 87¢ 79¢ 60¢ HI* 17¢ NC $3.00 45¢ TN 62¢ OK AZ SC $1.03 $2.00 NM AR 57¢ $1.66 $1.15 AL GA MS 42.5¢ 37¢ 68¢

LA TX 36¢ $1.41 AK $2.00 FL $1.339

HI* $3.00

*Hawaii *Minnesota breakdown of tax stamp price is: The tax will 48¢ Excise Tax increase 20¢ 75¢ Health Fee on 7/1/11 35¢ Prepaid Sales Tax

Note: Federal excise tax is $1.01 per pack.

This is as of Aug. 1, 2010

Source: NoCigTax.com, sponsored by R.J. Reynolds Tobacco Co.

38 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 “A lot of legislators forget this country’s economy was built on tobacco—it is still the biggest cash crop in America and has been for 300 years.”

currently, there are still plenty more 98 cents. A Missouri retail association being spent on antismoking efforts. states that are looking to raise taxes is fighting it with a familiar industry CDC health officials called attention to in 2011. Tobacco outlet retailers and argument, saying it would hurt local the fact that while last year many states other industry members can go to business. They remind state legislators raised their excise taxes on cigarettes, NoCigTax.com, sponsored by R.J. that Missouri’s low cigarette tax rate none used that newfound money for Reynolds Tobacco Co., and click on gives it a clear advantage over nearby controlling tobacco use. their state to get the latest tax update states with higher rates. Cohen offers more fodder for the as well as phone numbers and e-mail For those states that have raised or fight for tobacco and keeping taxes links to contact the appropriate state will raise their excise taxes on cigarettes stable. “A lot of legislators forget legislators to fight increases and praise this year, a report came out virtually this country’s economy was built on reductions. scolding how the money is spent. tobacco—it is still the biggest cash crop Even Missouri, currently with the According to an article published this in America and has been for 300 years,” lowest cigarette tax in the nation at 17 April in the U.S. Centers for Disease he says. “There is no other plant matter cents, was hit with a late April proposal Control and Prevention’s (CDC’s) as valuable except medical marijuana, to raise its cigarette tax by 81 cents— Morbidity and Mortality Weekly Report, and now that is legal because people got which would up the tax on a pack to state cigarette-tax revenues are not the laws changed.” TOB

39 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Performing Through Perseverance

When the he more things change, the more unheated barn—a location that became they stay the same.” That old proverb problematic when winter hit. Moving into going gets tough, Tis particularly applicable to the cigar the basement of the family home proved a industry, where century-old methods of good temporary solution, until Newman’s this cigar company both making and enjoying cigars continue mother realized that the smell and taste of to be practiced today. The traditions of tobacco was permeating all of her canned always manages both are deeply engrained at J.C. Newman fruits and vegetables and kicked him out. to be even tougher. Cigar Co., where the grandsons of founder Fortunately, by then sales were steady Julius Caeser Newman (untraditional enough for the company to have its own spelling intentional) continue to uphold factory in Cleveland. the philosophies integral to the company By 1914, the J.C. Newman Cigar Co. he started in Cleveland, Ohio, in 1895. had grown steadily and was doing quite Central among those is commitment well. Then came World War I, and the to persevering in the face of adversity— practice of sending free cigarettes to troops something the company has managed since overseas—the company’s first big hurdle. its inception, says Eric Newman, president “At the beginning of the war, everyone of J.C. Newman. “Every 20 years or so, a smoked cigars,” says Eric Newman. “But all challenge is thrown at us, but we’ve kept this the soldiers came back smoking cigarettes.” company going for more than a century,” he notes. “We’re now the oldest family-owned All About Economics cigar company in the U.S.” The shift in consumer demand toward Challenges cigarettes was quickly followed by an even bigger hurdle—the post-war economic Through the Years slump. While companies all around J.C. As TOB’s last story on J.C. Newman Newman struggled, Julius Caeser Newman noted, the company was started in an weathered the stormy economy by finding

44 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 a way to make a two-cent cigar. “He some of the big company cigar producers. rolled cigar factory in the Dominican didn’t make any money, but he was able The resulting shortage drove demand up Republic and a machine-made one in to keep people employed throughout, and created a mini-boom—until the war Tampa,” explains Eric Newman. “He which was amazing,” says Newman. “My ended and the government flooded the wanted us to make cigars for him so that grandfather was the first in the business market with the cigars it had stockpiled. he could close his Tampa factory, so my to bring in cigar-rolling machines, which father said, OK, how about if you make enabled us to produce more cigars at Cuban Control hand-rolled cigars for us and we make lower prices.” In fact, a single cigar- Still, J.C. Newman soldiered on, machine-made cigars for you? So we rolling machine produced more cigars in overcoming through careful management each do what we do best, and that’s how an hour than a hand-roller could do in the price pressures brought by oversupply both companies overcame the market a day, at about half the daily wage cost. and big national companies able to grow shift to handmade imports.” Today, J.C. Newman was also the first to use their own tobacco cheaply. The company J.C. Newman’s hand-rolled brands— cellophane tube packaging to protect moved its operations to Tampa, Florida, Diamond Crown, Cuesta-Rey and La cigars and keep them fresh, and the first the center of the United States’ cigar- Unica—are made by the Arturo Fuente to market ‘It’s A Boy!’ and ‘It’s A Girl!’ making industry, in 1953. Then the next family in the Dominican Republic. cigars,” adds Newman, who credits hurdle—the Cuban embargo of 1961— Its Tampa factory produces Factory innovative thinking for the company’s hit. “At that time, most of the cigars sold Throwouts and machine-made Rigoletto early success. in the U.S. were made with Cuban filler, cigars. [ J.C. Newman also manufactures By 1948, Julius Caeser’s son, Stanford, binder and wrapper,” says Eric Newman. cigars in Nicaragua, including its hand- was heavily involved in the business. “Life was good until the embargo, and rolled brand, Quorum (which sells for $2 “While my father was in Cuba watching then one by one, all the Tampa-based to $2.50); El Baton, a full-flavored cigar the tobacco get harvested, he noticed cigar companies started to close their that sells for approximately $7; and Brick that they would throw away the top part doors.” House, a moderately priced, flavorful of the plant,” says Eric Newman. “So he Stanford Newman—Julius Caeser cigar that retails for approximately went to the grower and they worked out died in 1958—got through the aftermath $4.75.] a deal to pack that tobacco and ferment of the embargo by sourcing tobacco it for 75 cents a pound, and the result wrappers from Cameroon. But soon the Bringing on the Bans became a top cigar brand, the Cameo.” company was facing yet another seemingly The most recent hurdles J.C. Newman Later, the Cameo would lose ground insurmountable hurdle: Companies has faced have been on the regulatory when Julius Caeser Newman decided to overseas were able to offer larger hand- front in the form of taxation and raise the price by one cent, prompting rolled cigars at prices comparable to smoking bans. Along with other cigar sales to drop 50 percent. But the J.C. Newman’s machine-rolled brands. makers, the company was hit by an 800 company soon bounced back from that The shift in demand to imports would percent tax increase in 2009—“high even drop, helped somewhat by World War likely have decimated J.C. Newman but by Congress’ standards,” Eric Newman II and the government snapping up for an alliance Stanford Newman forged says wryly. Taking place in the midst of 30-plus percent of the production from with Carlos Fuente. “Carlos had a hand- the economic recession, the hike had a

46 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 profound effect on cigar sales. Ironically, effects of smoking bans, J.C. Newman that effect saved J.C. Newman’s Tampa began creating Diamond Crown lounges, cigar factory. “We were actually planning branded smoking rooms built into to close it because it was so hard to existing smoke shops. The company now compete,” says Eric Newman. “But has more than 55 lounges across the suddenly, as prices went up the machine- country as well as one of the only cigar made business exploded because of a bars in a major-league sports stadium, surge in demand for value-priced cigars.” the Cuesta-Rey Cigar Bar at Tropicana The move toward value has also driven Field, home to the Tampa Bay Rays. “It’s more sales to tobacco outlet shops just the latest in a series of responses and discount stores, adds Newman, we’ve made to challenges thrown at our who reports that the company’s sales feet,” says Newman. “People love our through those channels have increased products; they just don’t have anywhere considerably. “My father’s philosophy to smoke them. So we found a way to was, ‘People don’t want cheap steaks, they turn that into an advantage.” want a good steak cheap,’ and I think As Newman sees it, cigars represent that’s true of cigars,” says Newman. “So an oasis of relaxation in a stressful I see the outlet phenomenon continuing, world. “Cigars provide a refuge that’s particularly in areas that don’t have increasingly rare in our hectic lives,” he big enough populations to support a says. “Where else can you get an hour of cigar store but where mixing cigarettes, pleasure for $5? For not a whole lot of smokeless, accessories and cigars gives money you can get a lot of pleasure and you enough business to make a living.” share in the bond that cigar smoking Smoking bans have also been a big brings to people in all walks of life. There detriment to the cigar industry. “If you go aren’t many ways to do that.” TOB out to dinner and you can’t smoke there, it’s not as if you’ll smoke two cigars the next day,” he says. “So that’s lost business. But even though bans have a detrimental effect, cigar smoking won’t go away. Prohibition didn’t work 80 years ago and it’s not going to work now.” In part to combat the detrimental

Sharing the Success

Eric Newman was recently recognized by the government of the Dominican Republic for his contribution to the Cigar Family Charitable Foundation. Newman was instrumental in the founding of the charitable organization, which was created by the two families behind Arturo Fuente and J.C. Newman Cigars to provide an education to local children living around Chateau de la Fuente, the Dominican Republic wrapper farm where Fuente Fuente OpusX wrappers are grown. He also serves as a principal in the Cigar Family School, which recently celebrated the graduation of its second high school class. TOB congratulates Eric Newman on this honor. For more information on the charity, or to donate, visit www.cf-cf.org.

48 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Anto and John Mahroukian

Making Waves with JM Tobacco

We may have fished, but this company’s success is no fish story.

t doesn’t get much better than which has been enjoying rapid growth spending a beautiful day on the in recent years. “We had a record year Iwater, catching a few fish and last year, and we’re starting off with a enjoying a few good smokes. And that’s record quarter in 2011,” reports Anto exactly what happened when TOB’s own Mahroukian, president of the company Ed O’Connor recently spent a day with his father founded in 1996. the father-and-son team­—John and While many bemoan the difficult Anto Mahroukian, respectively—behind economic climate, it’s been something JM Tobacco. In between bites, the trio of a boon for JM Tobacco, which has chatted about the goings-on at the Los seen sales pick up since the economy Angeles-based cigar maker. headed south. “The economy seems to Along the way, we learned a lot about have boosted the whole value-priced fishing and a bit about JM Tobacco, industry—you can tell by the many

52 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Building Brands

JM Tobacco has steadily introduced new offerings since its inception more than a decade ago. Some of its more popular brands include: Espanola: This premium cigar was JM Tobacco’s first cigar and is still available today exclusively at tobacconist shops. JM’s Dominican: A hand-rolled, value-priced cigar packed in boxes of 50 and available in eight different sizes in four wrappers—the mild and light- colored Connecticut-shade, the bolder and darker Sumatran, the Connecticut- broadleaf maduro, and the delicate and naturally sweet corojo, at a suggested retail price of $3. In addition to quality and flavor, the cigar is known for its iconic black-on-yellow packaging. JM’s Dominican Classic: A medium- to full-bodied long-filler value-premium cigar available in two wrappers, maduro or Connecticut, and priced below $5. JM’s Dominican Corojo: Also hand-rolled, the Corojo is an all- tobacco cigar featuring a Dominican medium-length filler and Connecticut- broadleaf binder presented in an extra- select corojo wrapper for a delicate, naturally sweet taste. Packaged in boxes of 50 cigars, JM’s Dominican Corojos are available in the same eight shapes as the other JM’s Dominicans and come in a striking red-and-black box.

brands coming out priced right where we are,” Mahroukian notes. “We’ve benefited from that because JM’s Dominican has been around for 10 years and we already have an established name.” Business hasn’t always been so smooth. Like many cigar companies, JM Tobacco has weathered its share of ups and downs. Early on, for example, the company suffered supply issues. First there were the boom years when it had trouble accessing tobacco for its signature $6 Espanola cigar, which sold well. Then the boom waned and supplies were plentiful—so plentiful that the company had trouble competing on price.

54 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 JM Tobacco responded by developing a value-priced cigar—a medium-filler cigar, which is a cigar with pieces of tobacco inside rather than whole leaves. Dubbed JM’s Dominican cigars, they featured a black-and-yellow band, were packaged in an eye-catching yellow box, and retailed for less than $2. The cigars’ heads were punch-cut as a convenience to the smoker. Initially the cigars were made from the ends of the company’s Espanola cigars, which were cut off and discarded. But as sales picked up, JM tobacco began buying loose tobacco from other manufacturers. Over time, JM Tobacco began to build its JM’s Dominican line. Its signature JM’s Dominican cigars now come in eight sizes, and it also offers several different wrappers (see sidebar). The value-priced segment is now the company’s lifeblood, accounting for nearly 85 percent of total sales. “I don’t really believe in having too many brands—I think it dilutes your attention,” says Mahroukian. “What we’re doing is rounding out the one brand with line extensions within the value-priced segment.” The company is also taking advantage of a growing trend toward value premiums. As consumers grow more price-conscious, value has become more John Mahroukian captaining his 30-foot fishing boat. of a focus among cigar smokers. “Instead of buying one $10 cigar, people are buying three of mine,” says Mahroukian. “They still want to golf, but they don’t

55 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 want to spend $20 to $40 for a round of golf and then another $20 to $40 on two cigars.” But the struggling economy isn’t the only reason JM Tobacco is prospering. Much of the company’s success can be attributed to a focus on quality and an ability to adapt and keep things fresh— as well as good old-fashioned legwork. The company’s home state of California has always accounted for the bulk of JM Tobacco’s market share, which is partly because JM Tobacco has historically taken a very grassroots approach to gaining ground. “Our sales force goes out and talks with retailers, provides them with a few boxes of cigars and the name of a wholesaler in the region who they can follow up with when they want more,” explains Anto Mahroukian. “So we’re basically handing the wholesaler a new sale.” While that method of growth is tough to replicate farther afield, Mahroukian has had a lot of success reaching new

56 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 Current IPCPR members will receive a JM Tobacco “Strike Gold” poker chip via USPS, entitling them to play blackjack to win valuable prizes at the JM Tobacco booth.

customers by attending trade shows, such as “Strike Gold” at IPCPR the recent Tobacco Plus Expo, and building alliances with wholesalers such as Lil’ Brown Smoke Shack in Washington state and At IPCPR 2011, JM Tobacco will once again offer show attendees the New Orleans Cigar Co. in New Orleans, chance to “Strike Gold” in its booth (#2401). The company will send Louisiana. “Reception has been great across out a mailer to all current IPCPR members that includes a gold-and- the board, which is partly due to the current black poker chip affixed to a card with playing instructions and a list of climate,” reports Mahroukian. “But we’ve prizes. The grand prize is a 24-karat solid-gold coin. also been working hard on our brand name, “Visitors to our booth can use their poker chip to play a hand of putting every dime we make back into the blackjack,” explains JM Tobacco’s Anto Mahroukian. “Depending on product—which is paying off.” how many consecutive hands they win before their luck runs out, they While Mahroukian sees plenty of receive as much as the grand prize. The prizes are in accordance with challenges for the cigar industry as a whole, their number of winning hands, with no losers.... Everyone walks away he’s confident that JM Tobacco’s experience with at least a sampling of cigars. The top prize will go to the attendee and reputation will enable the company’s who has won the most consecutive hands by the end of the show.” continued growth. “Five years ago, it was still The new JM’s Dominican Corojo will be the star of the company’s a grind to get by, but now we’re having a great booth this year. The hand-rolled cigar made of 100 percent tobacco has time. This is the best year we’ve ever had— a Dominican medium-length filler and Connecticut-broadleaf binder, and we’re hoping to continue that upward presented in a beautiful corojo wrapper. trajectory.” TOB

58 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 trench marketing By Michael Gelfand

Size Matters Have a Cigar!’s walk-in humidor generates lots of “oohs” and “ahs” from customers.

eing a successful entrepreneur usually requires lots of research and considerable subject matter expertise—and Bmore than a healthy dose of hard work. But when Mike Nicoletti first decided to get into the retail tobacco business, he dove in on not much more than a hunch. It was early 1994, back when Nicoletti was a mechanical drafting engineer, and one of his six-month-long stints was coming to an end. “Rush Limbaugh was on the radio, and an issue of Cigar Aficionado with him on the cover had just come out, so he was talking on and on about cigars,” he recalls. “Hearing him made me want to go pick up a few, and it occurred to me that the only place around here where I could get them was in downtown Hartford, which is on the other side of the Connecticut River.” Opportunity was knocking. With his current job coming to an end and no firm engagements waiting to kick off, Nicoletti threw caution to the wind and decided to open his own cigar store. “I figured, ‘What the heck, I’ll give it a shot.’” That meant quickly identifying an appropriate storefront in South Windsor for his first Have a Cigar! store, followed by building its humidor and stocking it with product purchased by tapping his savings and maxing out lots of plastic. As it turns out, Nicoletti’s hunch was right—his epiphany occurred at just the right moment. “I timed the boom in cigars perfectly, I was very fortunate,” he says. “The business just took off, and it was insane for a few years there, to the point where I couldn’t keep enough cigars in the store.” Both Nicoletti and his business have matured since then. He no longer has to work seven days a week, and he’s come to better understand the ebb and flow of product and market trends. After thriving during the heady insanity of the cigar boom years, he’s built

62 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 a faithful clientele at two stores since then by putting himself in his customers’ shoes, figuring out what they’re thinking, and then catering to their wants and needs. In doing so, he’s created a collegial atmosphere where he’s the cigar curator responsible for stocking an incomparably giant humidor—cigar sales represent more than 90 percent of his revenue—and his customers come to reap the rewards of his efforts and relax in the comfy confines of an in-store man-cave where they can smoke their cigars, watch sporting events on a large-screen TV, play pool, and enjoy the lively company of their peers.

The largest walk-in humidor in New England Nicoletti is good at spotting opportunity where others see obstacles. For example, soon after the success of his initial store, a customer who was associated with a nearby shopping mall approached Nicoletti about a corner storefront that was available. “I went over to look at it, and I immediately noticed all of the out-of-state cars in the parking lot, and my eyes lit up,” he says. (The flagship of the shopping center, which is located just off Route 84 on the Hartford Turnpike in Vernon, Connecticut, is Rein’s Deli, a legendary five-star pastrami- stuffed pit stop for hungry travelers making their way between New York and Boston.) cigars from me. It’s a neat thing for the clients there, and it fits in He also didn’t shy away from putting his Cuban-born mother- perfectly with the industry.” in-law in charge of the second Have a Cigar! location, in well- heeled Glastonbury. “She’s got a heavy accent and a map of Bigger is Better Cuba on the wall,” he says. “It gives her instant credibility in the The Vernon location’s constant and diversified flow of well- market, even though she learned everything she knows about fed interstate foot traffic attracted Nicoletti, but what really

64 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 and so far, no one’s called to dispute the point. His rationale for the "humungidor"? “When you’ve got a humidor this big, customers figure you’re going to have whatever they’re looking for. I could fill it up just with Macanudos, for gosh sake, but I have the room to stock it with brands that are much harder to find, and I can give shelf space to products that won’t see the light of day in your average store,” he explains. “You have to carry the big brands, but a smaller store just wouldn’t have room for the Rocky Patels, La Flor Dominicanas, and Perdomos.” caught his eye was the added benefit of the store’s significantly larger footprint. It inspired him to think big, both literally and Trial, Not Error figuratively, about the future, and he quickly decided to take the Stocking his humidor with the right cigars—the top-quality, Vernon location and make it his new headquarters, after which well-priced cigars his clients will want to buy—is the tricky part, he soon sold the Windsor location. but Nicoletti incorporates his own tried-and-true method of Nicoletti readily admits the store was larger than what he homespun marketing research to determine what his customers actually needed at the time, but he leapt at it because the new will buy: He gives his regular customers samples and asks them space would allow him to define the centerpiece of both his what they think. “I received some Vallejuelo cigars—the Gran store and his store’s brand—namely, his giant humidor. “It’s Toro and Robusto Gordo [which had received 92 and 93 points, huge by any standard,” he says. “In my first store, the humidor respectively, from Cigar Aficionado]—but I wasn’t sold on them, was 12 feet by 12 feet, which is already pretty big, but that space so I gave them out to my best customers, the ones who hang quickly got used up. When I moved into the Vernon location, I out in the store a lot, and asked them what they thought,” he knew I needed to expand things.” At 30 feet by 15 feet, Have says. “I ask them to tell me whether it’s good or bad the next a Cigar! proudly boasts what Nicoletti claims to be the largest time they come in. They appreciate the free cigar, and I benefit walk-in humidor in New England—a sign out front declares it, from the free input.”

Taxing Matters

When asked what he sees as the biggest challenge lying by phone to some of the local state senators and reps to ahead for Have a Cigar! and the industry as a whole, Nicoletti explain my viewpoint. But I mostly leave it in the hands of didn’t waste any time with pretense. “Taxes, no question people like Chris Topper of Topper Cigars and some of the about it,” he says. “These states that go back to the sin tax… local tobacco farmers who went to the capitol for hearings. our biggest challenge is convincing these idiots that if you Our last governor wanted to go to 90 percent tax a few years raise taxes from 20 percent to 100 percent, you’re not going ago, and I believe that group actually was able to kill that to get five times the same revenue. You’ll get less revenue.” cigar [tax] increase. But since then they did raise it from 20 And the problem will only be compounded when retailers percent to 27.5 percent. suffer from sales lost to tax hikes, he adds. “These pinheads “The larger point is that people will pay a little more for need to take into account that they’ll be putting people convenience, but they aren’t stupid or masochistic. Taxes out of business, which means they won’t get any sales change behavior—like the luxury yacht tax that had to be tax revenues anymore. If they’re going to slap a ridiculous repealed several years ago because the tax decimated jobs percentage on it, cap it. If you think people will pay $100 for yacht builders, sellers and anything connected to them. more for a box of cigars or a carton of cigarettes, you’re How much higher do you think cigarette [taxes] have to go crazy. They’ll just go to a different state or buy their products before organized crime starts killing people over them? You on the Internet. There’s a readily accessible market online can buy a truckload in South Carolina for $30 per carton and that avoids taxes; politicians need to understand what people in New York City would happily pay $80 instead of they’re really doing here.” the $110 or more they [pay] now. That’s a profit margin the “In the past I have written to several politicians and talked mob takes note of.”

66 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 In the case of the Vallejuelos, the customers loved them, and so he brought them into the store, and it’s a practice he repeats How to Stock a Monster Humidor time and time again. He also focuses on keeping price points low. You can sell a lot of good cigars in the $5-to-$6 [range],” he Where to start: “When I first started out I made contacts says. “If it’s $8 to $9, you might not get people to try it, let alone at the major manufacturers like General Cigar and Altadis. sell it. It’s up to the cigar to be decent for the money, but people You could fill up most humidors with their products alone are more inclined to try cigars in the less expensive range.” because between them they have just about everything.... If you throw in Arturo Fuente, you could start a shop with The Benefits of Advertising those three. As the boom died down and everyone had While Nicoletti is a big believer in the if-you-build-it-they-will- their own cigars, some smaller newer companies had come aesthetic, he has employed some traditional advertising— good reputations. I’d read about them and either pick up in the yellow pages and in online and cable TV commercials the ones with the higher ratings and give them a shot or shown around male-oriented shows—to make sure people my customers would ask for them. An example would be know about the store, the humidor, and the smoking lounge. the Acid cigars from Drew Estate. I originally wondered to “People call because of the ads; they definitely bring in myself, ‘Who’d smoke that?’ but now I carry 15 different business,” he reports. ones and they all sell.” Although he senses that the paid advertising pays off, Nicoletti says its effectiveness is hard to track. “You have an advantage in the tobacco business in that there won’t be six stores like yours on every block,” he says. “If you want a cigar, you go online and find the store closest to you. Your ad doesn’t need to prove you’re the best dry cleaner or the best plumber. You just have to advertise your presence so people who are looking can find you.” His approach to in-store events is similar—the return on the investment isn’t entirely clear to him, and he thinks word of mouth is equally if not more effective. “Customers will come in for the Super Bowl and March Madness because they want to, but planning special dinners, which we still do occasionally, is tough because half the people who say they’ll come don’t show up, and then you’re stuck, so I tend not to make it formal,” he says.

Lessons Learned: Listen to your Gut—and Your Customers Some Tips for New Cigar Shops Nicoletti prides himself on being able to know his clientele as well as he knows his inventory, but sometimes even this Have a walk-in humidor. Customers like to be up close hunch-master’s mojo runs afoul. “I’ve tried to sell some things and personal to the product instead of dealing with sliding that haven’t done as well as I’d thought,” he admits. “Glassware, cases—they love to be inside the room. knives—they both fell flat. Maybe there’d be a tiny bit of interest, The more, the merrier. The more cigars you can carry, but overwhelmingly it has to be cigar-related. The younger the better off you’ll be. These days, people are trying crowd does like glass and metal pipes, I do a nice chunk of new cigars; it’s half the fun. It’s not like cigarettes, where business on them, but that’s the only thing that’s ever worked people smoke the same product all the time. People have that’s not related to cigars. Old-fashioned signs, shaving kits, favorites, but they’ll try something new. When they see a gambling stuff…—none does well enough for me to want to highly rated cigar, they want to try it. It doesn’t hurt to have keep trying to sell it.” most of the brands people ask you for. What he knows works is treating the customer right. And Location, location. If you can open your store anywhere, for a small shop that doesn’t have the marketing or advertising find a place that’s warm in the winter months. January budget to compete toe-to-toe with large chains, Nicoletti through March are brutal in the cold-weather states, which relies on a personal touch to make his customers happy and means you’ll do only one-third to one-half your normal encourages them to spread his gospel. And if that doesn’t work, business during that time. there’s always the humidor. TOB

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Toasting the Toro

Tabacalera Perdomo’s new and highly anticipated Perdomo Reserve Champagne Noir cigars feature dark, oily, triple- fermented Cuban-seed maduro wrappers meticulously aged in bourbon barrels. Filled with hints of chocolate and dark- roasted coffee, this medium- to full- bodied blend offers a sweet aroma with a smooth, satisfying finish. The initial size is an impressive 6x60 Super Toro, packaged in 25-count boxes that are individually handcrafted in Tabacalera Perdomo’s state- of-the-art box factory. Each Spanish cedar box is stained in black with the brand’s logo, size and dimension prominently silk- screened in gold on the outside of the box. “After carefully fermenting these thick Cuban-seed maduro wrappers for more than 14 months in a natural pilón, we age them an additional six months in oak bourbon barrels. This process helps to ensure parallel colors, a clean even burn, and rich, complex flavors,” states

Nick Perdomo, president of Tabacalera Perdomo, whose cigar brands include Acing It Edición de Silvio, Perdomo Patriarch, Perdomo Reserve 10th Anniversary, Republic Tobacco has introduced 4 Aces Turkish & Blended Pipe Tobacco Perdomo Habano, Perdomo Grand in 0.75-ounce pouches. The new blend is a flavorful combination of rich Cru, Perdomo2 (Squared), Perdomo and aromatic Turkish and other premium tobaccos for a smooth, mellow Lot 23, Nick’s Sticks, Cuban Bullet, taste, packaged in a re-sealable, Seal-Tite wrap-style pouch that maintains and Perdomo Fresco. Tabacalera product freshness and flavor. 4 Aces Turkish & Blended Pipe Tobacco Perdomo, Miami Gardens, Florida, 0.75-ounce pouches come packed 12 pouches per sleeve, 12 sleeves per www.perdomocigars.com. case. Republic Tobacco, 800-288-8888.

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Mooch Goes Maduro

Introduced at the 2011 Tobacco Plus Expo, Berger & Argenti’s Mooch Maduro is winning raves from retailers. The cigar offers a medium-bodied, rich and complex smoking experience that ranks among the finest values in the premium-long-filler cigar market for discriminating cigar enthusiasts. The Nicaraguan- grown puro is produced with a deeply aged, Cuban- seed filler and binder crop and enveloped in a newly developed strain of Cuban-seed wrapper that bursts with a mosaic of diversely sweet flavors. Mooch Maduro is completely crafted by hand and affordably priced to appeal to the experienced everyday cigar enthusiast, with suggested retail price points ranging between $4.99 and $6.79 per cigar. Mooch Maduro is available in four unique sizes: Minnie (4¾x42 Corona); Schnorr (5x50 Robusto); Loll (6x52 Belicoso); and Windbag (7x49 Churchill). The cigars are packaged in attractive “short wheels” of 24 premium cigars, and an eye- catching, space-saving display tray is also available to retailers. Berger & Argenti Premium Cigars, Miami, Florida, 800-815-1155, www.bergerargenti.com.

GIZEH Papers. Great Variety & Value. AVAILABLE NOW! CALL TODAY!

East Coast Orders Contact: GIZEH East Coast Master Distributor Daughters and Ryan Tobacco, Inc. 207 Johnston Parkway Kenly, NC 27542 Toll Free 866-942-7364

West Coast Orders Contact: Medium weight United States Importer Light weight Medium weight 110mm GIZEH of North America, Ltd. Slow burning 50 leaves/booklet Cut corners Light weight 340 North Palm Street • Suite A 50 leaves/booklet 50 leaves/booklet Slow burning Brea, California 92821 33 leaves/booklet Toll Free 888-989-4662 www.gizehna.com 72 TOBACCO OUTLET BUSINESS MAY/JUNE 2011 PRODUCT PROFILE MAY/JUNE 2011

Growth for GIZEH

Gizeh’s new Silver Tip Duo Tube Filling Machine has multiple functions. The company combined expertise and modern design to create a new tube-filling machine for use with both Standard and Extra filter tubes. The adjustable chamber, the convenient tamping aid and the antislip base ensure consistent optimum results. The Silver Tip Extra Tube has a longer filter compared with GIZEH standard tubes, meaning there is less room in the chamber and less tobacco is needed to make a perfect cigarette. Using the Silver Tip Extra Tube enables smokers to save 10 percent of tobacco. The Silver Tip Duo Tube Filling Machine can easily be used with all GIZEH/Mascotte tubes. GIZEH of North America, 888-989- 4662, [email protected]. East Coast Master Distributor: Daughters and Ryan Tobacco, 866-942-7364, gloria@ daughtersandryan.com.

Presenting AVO 85th

Cigar luminary Avo Uvezian is celebrating his 85th birthday with the release of his limited-edition anniversary cigar, the 85th. The 85th marks the 10th annual limited- edition release from AVO Cigars, a tradition the legendary cigar composer began on his 75th birthday. The 85th is a diademas-format cigar limited to a 100,000 run worldwide, with 60,000 cigars earmarked for the U.S. market. Packaged in a sophisticated black lacquered box bearing the AVO 85th Anniversary logo in gold, the AVO 85th features a combination of San Vicente and piloto tobaccos enfolded by a Peruvian binder and perfected with a special sun-grown Dominican wrapper. Davidoff of Geneva, 727-828-5400, www. davidoffusa.com.

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New Size in the House

J.C. Newman’s Brick House cigars are now available in a sixth size: a 5.5x52 pyramid, the Short Torp. “We are excited to introduce a new Brick House size to cigar lovers nationwide,” says Eric Newman, J.C. Newman’s president. “The new Short Torp is guaranteed to Trading Up live up to the reputation of flavor and construction Brick House has earned.” Inter-Continental Trading USA’s new Shargio 3 Auto- Originally launched in four sizes, Injector makes three cigarettes with the push of a J.C. Newman’s Brick House line was button. The introduction follows last year’s debut of the expanded last year with the addition of Shargio Dual Auto-Injector, which offered the ability to Mighty Mighty, a 6x60 cigar that packs quickly make two cigarettes at one time as well as easy- a mouthful of flavor. The new pyramid to-understand, step-by-step instructions and reliable shape allows for a concentration of performance. To create the Shargio 3 Auto-Injector, Inter- flavors in the head of the cigar, creating Continental improved the Shargio Dual Auto-Injector’s an exceptional and unique smoking electrical system, enabling the injector mechanism to run experience. more smoothly and almost doubling the injector’s life The Short Torp will be officially span. Inter-Continental Trading USA Inc., 800-595-0796. released at the International Premium Cigar & Pipe Retailers trade show in July, but attendees of the tasting events sponsored by J.C. Newman across the country, known as the Brick House Bash, can get a sneak peek of the cigar starting mid-May. Each Brick House cigar is handmade in Nicaragua using the finest Nicaraguan tobaccos and wrapped in a one-of- a-kind Havana subido leaf. Recently named one of Cigar Aficionado’s top 25 cigars of 2010, Brick House offers one of the best cigars in the world at a price any connoisseur can afford. J.C. Newman, www.jcnewman.com or www. brickhousecigars.com.

Making Martins The legendary name of Martin Bringing on Beretta will return to the world of premium cigars this year, The Beretta Elite series is the latest edition to Beretta’s bringing blends based on the signature line of premium cigarette tubes. The Elite lifelong work of cigar master series was developed to offer a milder taste than the Pedro Martin. The Martin full-flavored Original series. Like the Originals, the Elites Family of Cigars will feature several lines, including the feature unique black tipping papers and are available in Pedro Martin Ruby, featuring a glossy, red corojo wrapper king-size 200-count cartons. Beretta Tube Co., Pink Hill, with an aromatic all-Nicaraguan blend; Pedro Martin Gold, North Carolina; 800-979-0661; fax: 800-979-0673; e-mail: showcasing an exclusive combination of Connecticut [email protected]; www.berettatube.com. wrapper with select tobaccos; and Pedro Martin Corojo, one of the family’s classic all-corojo blends from pre-Castro Cuba. Martin Family of Cigars, www.martinfamilyofcigars. com.

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Luxuriate in Lagunas

Kretek International recently launched Djarum’s Lagunas brand of premium imported cigarettes in the United States market. Celebrating Churchill Developed by an international team of experts from Djarum and Kretek over a two-year period of blending and testing, Lagunas’ Davidoff has introduced the Lancaster cigar, the taste is characterized by a unique combination of tobaccos from newest edition to its popular Winston Churchill the U.S., Brazil, Indonesia, Turkey and Greece; the tobaccos are cigar series. This somewhat grander version of the blended for smoothness, enriched taste, and unique accents and Winston Churchill Spitfire cigar boasts a 4.5-inch- characteristics. Lagunas is available in two styles, Smooth Select by-46-ring gauge, but its most striking feature is its and Menthol Select. Unlike previous Djarum brands, Lagunas Belicoso format. It packs a smooth, powerful flavor is not a clove cigarette, and is therefore an important venture and is perfect for aficionados who do not wish to for Djarum into regular and menthol products. The new brand, relinquish their Winston Churchill cigar for those supported by its premium imported blend, is priced at a slight briefer interludes of smoking pleasure. premium to the prices of major-brand cigarettes such as Marlboro Lancaster’s truly unique blend is a compilation of and Camel, but slightly below prices for specialty brands such as many different tobaccos. All tobaccos used in this Dunhill, Natural American Spirit, and Nat Sherman. blend are from seeds of Cuban origin. An Ecuador The brand comes in a wide European-style 20-stick flip-top Special Sun Grown leaf is used for the wrapper. The box with double-bundled sections of 10 sticks each, with 10 binder leaf is Pelo de Oro from Peru. The Lancaster boxes per carton. At 7.3mm in diameter, the product is slightly uses the same filler tobaccos as the other Winston slimmer than major-brand cigarettes, in keeping with current Churchill cigars. Lancaster cigars are presented in global trends. Lagunas cigarettes are currently available in limited a brilliantly attractive red tin of four cigars for $23, areas, with plans to roll out to all 50 states by the end of summer or sold individually for $5.75 (not including state 2011. Phillips & King, 1-800-53-CIGAR. taxes). Davidoff USA, www.davidoffusa.com.

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Rising Sun

Goodrich Tobacco Co., a subsidiary of 22nd Century Group, will introduce Red Sun cigarettes to the tobacco trade at the IPCPR show in Las Vegas. Red Sun is a super-premium specialty cigarette that challenges the antismoking establishment. Responding to consumer sentiment about the endless assault on tobacco use, Good Tobacco Co.’s motto is, “We put the fun back into smoking!” Red Sun contains a rich proprietary blend of tobacco with relatively high natural nicotine content and uses the finest cigarette paper and filter. Red Sun is available in two king-size styles: Immense Taste Satisfaction and Bold Cold Menthol, both packaged in a hinged-lid flip-top box. Red Sun is distributed exclusively to tobacconists, smoke shops and independent retail outlets. “Red Sun was created for smokers by smokers,” explains Henry Sicignano III, president of Goodrich Tobacco Co. “Our product was developed for adults who are expressly unapologetic about smoking. “We do not encourage nonsmokers to start smoking, nor do we recommend that current smokers smoke more,” he adds. “However, we firmly believe that every adult smoker should be free to enjoy a cigarette without harassment and without feeling vilified and guilty, as long as nonsmokers are not forced to inhale secondhand smoke.” Goodrich Tobacco Co., www.RedSunCigarettes.com; 22nd Century Group, www.xxiicentury.com.

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Going for the Gold

Rouseco Inc. recently introduced Golden Harvest Filter Tubes. Available in red, blue and green, the tubes come in both King Size and 100mm. Rouseco Inc., www. rousecoinc.com, 888-372-8622.

Packing ’Em In

Swisher International has introduced new 84mm hard-pack packaging for the company’s Swisher Sweets Little Cigars. While the traditional soft pack will remain available, the popular 84mm- length hard pack is designed to resist bending and crushing to preserve the product in its original condition. Hard-pack Little Cigars are available in Swisher’s most popular styles, Sweet, Menthol and Silver. Swisher International, 800-874-9720.

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