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Rouseco Goes foR the Gold with Golden haRvest filteR tubes NOVEMBER/DECEMBER 2010 VOLUME 13 n NUMBER 6 Retailers are boosting profits by widening assortments ALSO IN THIS ISSUE Alaska: One Retailer’s Survival Story Profiting from Less Pricey Premiums Retail Profile: St. Augustine Tobacco PUBLISHER’S LETTER BY ED O’CONNOR Giving Thanks Thanksgiving is next week or the week after, depending faiths. To those closer to us, the Judy Browns, to the U.S. upon when this issue hits your desk—and the chickens are Coast Guard for saving Dave Tewksbury, to generous gay. More on happy chickens later. people such as Gates and Buffet, and for the good health Thanksgiving is that time of year when we celebrate our and happiness of our families, we give thanks and say: forebears’ landing at Plymouth Rock, giving thanks for be- Happy Thanksgiving. ing off the high seas, having made the crossing without Now, what about those happy chickens? Our kids want prescriptions of Dramamine and Promethazine—no more to know the rest of this Thanksgiving story: motion and no more nausea. It’s said that Captain Smith told one of the Puritans, “Don’t worry, Ethan, seasickness The story I tell is one quite sad, won’t kill you.” Responded Ethan,“It’s only the hope of dy- It tells of a turkey, a turkey so bad. ing that’s keeping me alive.” A braggart was he, to the chickens he’d say, So much for the first Thanksgiving. Three hundred and “I’m much better than you in most every way.” eighty-nine years later, we give thanks closer to home in our own industry: Imagine a retail/wholesale tobacco As he preened and he strutted throughout the day, company committing millions of dollars to build a beau- The chickens would sicken with sour dismay. tiful new school, giving community young’uns a head Fervently they hoped the end was in sight, start on their education. That’s exactly what Judy Brown That a kind person would notice their plight. and the Lil’ Brown Smoke Shack company have done. We give thanks for this special brand of generosity. See Thanksgiving is here and the chickens are gay, the school and read more on page 78. Or what about the ‘Cause ol’ Farmer Brown came and took him away. Coast Guard’s lifesaving rescue of tobacco retailer Dave The chest he puffed out in vanity great, Tewksbury from the arctic wilds while on a 50th birthday Is now roast turkey on somebody’s plate. fishing trip—a friend saved from near-certain death? For his rescue, we give thanks. Hear Dave’s story in his own words on page 52. And what about the gift of fortunes bestowed by Bill Gates and Warren Buffet? For this mag- nanimity we are all enriched and give thanks. And so it is that at this time of year, each year, we reflect and give thanks to the seasick Puritans for establishing the right to believe in and to practice the tenets of our personal 4 TOBACCO OUTLET BUSINESS NOVEMBER/DECEMBER 2010 INSIDE THIS ISSUE SPECIAL SECTION News & Trends ........................................................... 10 FDA regulatory developments, prospect of menthol ban protested, harm reduction product update, and more. CIGAR SENSE Welcome, Affordable Premiums—And More .....24 In a world where legislation and innovation coexist at all-time highs, open-minded manufacturers respond more quickly to changing demand and the latest category trends, such as less-pricey premium cigars. Adventure at Bug Lake, page 52 FEATURES Cover Story: The Great Tobacco Mix-Up ................................ 32 A few handfuls of cigars, a bowlful of RYO, a pinch of e-cigarettes and a splash of beverages—the new and improved recipe for tobacco retailers’ success is to keep mixing it up. Lighting Up with Calico ....................................42 Variety and quality are king for this California-based lighter manufacturer. Adventure at Bug Lake ..................................... 52 How two friends survived an Alaska fishing trip gone horribly wrong. Oliver Twist: A New Product with a Past ........62 At a time many view as a new era for smokeless tobacco, a brand with a long and venerable history is reinventing itself. Smoker Friendly Celebrates, page 30 Trench Marketing: Sitting Pretty .................... 70 In the midst of a scenic resort town, the St. Augustine Tobacco Co. steadily builds business by targeting tourists. Departments Publisher’s Letter ............................................. 4 Giving Thanks Trade Talk...................................................... 22 FDA Training Requirements Questioned Event Spotlight .............................................. 30 Smoker Friendly Celebrates Product Profile ............................................... 80 A guide to new and popular outlet products The Great Tobacco Mix-Up, page 32 NOVEMBER/DECEMBER 2010 INTERNATIONAL VOLUME 13 n NUMBER 6 PUBLISHER . Edward R. O’Connor GENERAL MANAGER, SALES AND ADMIN . Lea Edmondson EDITOR-IN-CHIEF . Jennifer Gelfand CONTRIBUTING EDITOR . Renee M. Covino CONTRIBUTING EDITOR (PRINT/WEB) . Matthew Mullen MANAGER OF PRODUCTION AND DESIGN . Karen Rogers Smith COPY EDITOR . Lisa Whittington WEB MASTER . Mitch Ostapchuck CIRCULATION MANAGER . Carol Calini TMG INTERNATIONAL Edward R. O’Connor, President Lea Edmondson, General Manager of Sales and Administration Susan Reuter, President of Reuter Exposition Services and Manager of Tobacco Plus Expo TOB ADVERTISING TOBACCO PLUS EXPO SHOW 8311 Six Forks Rd., Suite 211 Reuter Exposition Services Six Forks Office Park 33 Flax Mill Road Raleigh, NC 27615 Branford, CT 06405 Toll-Free: 877-702-4427 Susan Reuter, Show Manager Tobacco Outlet Business is published bimonthly at 8311 Six Forks Road, Suite 211, Six Forks Office Fax: 919-844-6866 Toll-Free: 888-737-3976; Fax: 203-483-5778 Park, Raleigh, NC 27615. Printed in USA. Copyright 2010 by TOB, LLC. Subscription rate is $45.00/year. Send paid subscriptions to Tobacco Outlet Business at same address as mentioned above. For re- EDITORIAL OFFICES print information, contact Ed O’Connor at 877-702-4427. Copying: Permission is granted with users of the 101 West 23rd Street, Box 115 Copyright Clearance Center Inc. To photocopy any article, with the exception of those for which separate New York, NY 10011 copyright ownership is indicated on the first page of the article, provide a base fee of $1.25/copy. Tobac - 212-727-0750 (voice) co Outlet Business is a registered trademark of TOB, LLC. POSTMASTER: Send address changes to Tobacco Outlet Business, 8311 Six Forks Road, Suite 211, Six Forks Office Park, Raleigh, NC 27615. TPE_11_Foundation_Ad_TOD_10-2010 10/25/10 12:00 PM Page 1 To Exhibit or to Attend Call (888) 737-3976 or (203) 483-5774 • www .tobaccoplusexpo.com Built on a Strong Foundation Las Vegas Convention Center • March 2-3, 2011 Highlights of the upcoming TPE 2011 include: • A Charity Golf Tournament and Auction • Opening Night Reception with Music, to Benefit Cigar Rights of America Open Bar and Great Food • FREE Educational Sessions with • Premium Cigar Bar & Lounge Serving Complimentary Breakfast Free Beverages • Cigar Blending Demonstrations • Giveaways at the Spin to Win Wheel in the Exhibit Hall • People’s Republic of China Pavilion Some of the many products • Hundreds of Show Specials exhibited include: Plus… More Brands and Tobacco Cigars • Premium Cigars • Bundled Products Than At Any Other Event! Cigars • Cigarettes • Premium Cigarettes • RYO/MYO • Smokeless Tobacco • Electronic Cigarettes Pipes • Loose Tobacco • Hookahs Accessories • Humidors • Air Purifiers Lighters • Cutters • Fixtures Software POS • Financial Services & much more. The Tobacco Show That Has Provided the Industry with a Forum for Over 15 Years! NEWS & TRENDS NOVEMBER/DECEMBER 2010 marketing in the United States. Prior to filing FDA Overstep? an NDA, a firm submits to FDA an Investiga- tional New Drug application (IND) in order to Regulatory body was hasty in citing unsubstantiated claims and lawfully gather data on investigational prod- poor manufacturing processes, say experts. ucts during animal studies and human clini- cal trials.” The U.S. Food and Drug Administration today involve violations of good manufactur- The FDA’s campaign against e-cigarettes issued warning letters to five e-cigarette ing practices, making unsubstantiated drug will be dealt a hard blow if Njoy’s lawsuit is distributors—E-CigaretteDirect LLC, Ruyan claims, and using the devices as delivery successful—which is exactly what Godshall America Inc., Gamucci America (Smokey mechanisms for active pharmaceutical in- predicts after reading the oral arguments Bayou Inc.), E-Cig Technology Inc., and gredients like rimonabant and tadalafil.” presented in the case in September. “It was Johnson Creek Enterprises LLC—for vari- In its statement, the FDA also said it has clear to me that the district attorney grossly ous violations of the Federal Food, Drug, determined that electronic cigarette products misrepresented the evidence,” he says. “I and Cosmetic Act (FDCA). The FDA says are subject to FDA regulation as drugs. Un- am more confident than ever that the FDA the warning letters were for unsubstantiated der the FDCA, a company cannot claim that will lose. And I believe this court decision will claims and poor manufacturing practices, its drug can treat or mitigate a disease, such decide for many years to come exactly what but industry observers charge that it’s the as nicotine addiction, unless the drug’s safe- is a claim and what is not.” FDA’s claims that are unsubstantiated. ty and effectiveness have been proved. The “These letters were meant to intimidate FDA says all five

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