GOOD VALUE: ROLLING ALONG WITH GIZEH MARCH/APRIL 2011 VOLUME 14 n NUMBER 2 See inside for photos and highlights from Las Vegas. ALSO IN THIS ISSUE Special Report: Menthol Under a Microscope Setting Up a Tobacco Blending Bar Insights from Reel Smokers World Cigar Shop INSIDE THIS ISSUE INDUSTRY UPDATES News & Trends ........................................................... 12 E-Cigs prevailing, taxing on risk, FDA updates and more. CIgar Sense Leaf Lessons from Sin City ...................................22 In these economic times, even smokin’ Las Vegas has cigar sales woes; but savvy operators share some good-bet tips. TPE 2011 Highlights, page 32 Features TPE 2011 Highlights ...............................................32 More than 2,400 participants attended this year’s Tobacco Plus Expo International in Las Vegas. ProCigar Celebrates in Santiago ........................40 The Association of the Dominican Cigar Manufacturers held its fourth annual ProCigar Festival in the Dominican Republic. Menthol Under a Microscope .................................42 Manufacturers, retailers, regulatory agencies and public health experts weigh in on the controversy surrounding menthol cigarettes. Gurkha: Going Places ..............................................54 ProCigar Celebrates in Santiago, page 40 The company known for producing the most expensive cigars in the world is forging a path for growth. Torano Takes Off .......................................................60 Now once again making and distributing its own lines, this family-owned and -operated cigar company is forging a new future. Trench Marketing: Keeping It “Reel” ...............70 Carlos Sanchez started selling cigars while working as a fishing pro. Today his Deerfield Beach, Florida-based Reel Smokers Cigar shop is one of the most successful—and unique—stores in the country. Departments Publisher’s Letter ............................................. 4 Goodbye, Old Friend Trade Talk...................................................... 20 Tax Legislation Update Pipe in Hand ................................................. 28 Step Up to your New Tobacco Blending Bar Product Profile ............................................... 78 A guide to new and popular outlet products Torano Takes Off, page 60 NEWS & TRENDS MARCH/APRIL 2011 Hospitals Hit Up HigHligHts Tobacco Companies in Court Philip Morris Targets Counterfeiters A case against Big Tobacco is being watched In an ongoing battle against counterfeiters of its pop- closely by the industry. ular Marlboro brand cigarettes, Philip Morris USA re- cently seized 290 packs of counterfeit cigarettes from two New York retailers. The seizure, which took place Trial time has started for a case treatment of smoking-related ill- on the Poospatuck Reservation in Suffolk County, (City of St. Louis v. American To- nesses,” he writes in his blog came after a federal judge in New York approved PM bacco) involving a group of 37 (tobaccoanalysis.blogspot.com). USA’s request for the right to search smoke shops Missouri hospitals suing tobacco “The hospitals are not entitled for counterfeit Marlboros in New York. In its effort to companies for the treatment of to compensation from tobac- combat counterfeiting, the company has sued 48 re- smoking-related illnesses among co companies for treatment of tailers in the state for selling counterfeit Marlboros, patients who did not have medical smoking-related illnesses any including six other Poospatuck retailers. insurance. The hospitals are seek- more than they are entitled to: ing $477 million in compensation • compensation from alcohol Rotten Robbie Joins Smoker for claims dating back to 1993, ac- companies for treatment of alco- Friendly International cording to the St. Louis Post-Dis- hol-related diseases; patch. The industry is watching the • compensation from fast food Smoker Friendly International recently signed Santa case closely, believing that it could and soft drink companies for treat- Clara, Calif., convenience store chain Rotten Robbie well set a precedent for similar ment of obesity-related diseases; as an authorized dealer. Rotten Robbie will be the ex- lawsuits across the country. • compensation from motor ve- clusive retailer for Smoker Friendly’s SF Private Label Lawyers representing the hos- hicle companies for treatment of Tobacco products in its region of northern California. pitals charge that tobacco compa- motor vehicle crash injuries caused nies knew as far back as the 1950s by defective product designs; New York’s Odd Ban Plan that cigarettes were addictive and • compensation from toy com- harmful, yet continued to manu- panies for treatment of child in- Smokers in New York won’t have to worry about facture and market them “and they juries caused by toys with safety the city’s new law banning smoking at beaches and don’t think for one minute about flaws; parks because Mayor Michael Bloomberg has said who should pay for it.” • compensation from lettuce that the police won’t enforce it. “The police will not Philip Morris USA’s counsel manufacturers who produced be enforcing this,” he told a concerned caller who countered that 95 percent of all pa- E. coli-contaminated produce for phoned into the mayor’s WOR-AM radio show. tients paid their hospital bills and treatment of infections among “That’s not going to be their job.” that only one of every five smoked. patients who consumed this pro- Why pass a ban that he doesn’t plan to enforce? Prof. Michael Siegel of Bos- duce; or The mayor says that the threat alone of the $50 fine ton University’s School of Public • compensation from pharma- for smoking in public parks—which was passed by Health does not believe the hos- ceutical companies for treatment the City Council in February and now awaits Bloom- pitals should prevail in their suit. of illnesses related to side effects berg’s signature—will discourage smokers and re- “Although I agree that cigarette of medications. duce the amount of secondhand smoke in the city. companies produce a deadly and “Allowing hospitals to be com- addictive product, that they have pensated for treatment of smok- Utah Ban May Kill Pipe Market historically lied about the health ing-related illnesses would open effects of the product, that they the flood gates for similar lawsuits Unintended consequences of legislation under con- knew the product was addictive to be brought against all sorts of sideration in Utah (HB0170) will prevent the sale of and harmful yet covered that in- manufacturers of products which virtually all pipe tobaccos, according to the Interna- formation up, and that they con- cause human illness,” continues tional Premium Cigar & Pipe Retailers Association. tinue to manufacture and market Siegel. “Although I am obviously The original version of the legislation prohibited the this deadly product, I do not be- sympathetic to the desire to hold sale of any kind of flavored tobacco product but was lieve that the Missouri hospitals tobacco companies accountable amended with an exemption for cigars. However, it are entitled to compensation for their actions, I do not believe would still make aromatic pipe tobaccos illegal to sell from the tobacco companies for that this case has any legal merit.” or purchase in Utah—jeopardizing the future of the state’s pipe tobacco business. 12 TOBACCO OUTLET BUSINESS MARCH/APRIL 2011 NEWS & TRENDS MARCH/APRIL 2011 TMA Annual Meeting Slated for May E-Cigs Still The Tobacco Merchants Association Prevailing Against FDA plans its 96th Annual Meeting and Conference. Court opts against a full review of judge’s decision on regulation. Scheduled for May 22-24, 2011, at the Kingsmill Resort and Spa in Williamsburg, Virginia, the In January, the U.S. Circuit Court trol Act passed in 2009. The FDA TMA’s Annual Meeting and Conference will focus of Appeals for the District of Co- argued that e-cigarettes are akin to on “Evidence-Based Science and Regulation of the lumbia opted against having the nicotine gum and patch products Tobacco Industry.” The event will include a series full court review its three-judge regulated under the FDCA, which of pre-conference FDA industry workshops and panel’s decision that e-cigarettes must be must approved by the FDA educational sessions, including a keynote speech cannot be regulated by the FDA before they can be marketed. But by Lawrence Deyton, director of the FDA’s Center as a drug or medical device—pro- the three-judge panel disagreed. for Tobacco Products, on May 25. vided that the manufacturers in The panel ruled that devices can Topics on the program include a discussion question refrain from marketing be regulated by the FDA as tobacco about the current competitive position of the e-cigarettes as having therapeutic products rather than as drug de- industry by a panel of top securities analysts, a purposes. livery devices requiring elaborate SCHIP postmortem and discussion of the regula- At issue in last year’s e-cigarette clinical testing prior to being made tory environment, and a look at the current supply lawsuit was whether the FDA could available to consumers. and demand situation for leaf tobacco, along with regulate electronic cigarettes under The FDA appealed the panel’s the potential impact on supply of FDA regulation the drug and device provisions of decision, but the Court of Appeals on the use of pesticides and herbicides. Illicit trade, the Federal Food, Drug and Cos- recently declined to rehear the especially Article 15 of the FCTC and Title III of the metic Act (FDCA) or as tobacco case. The agency is now consider- FDA will also be addressed. products under the Family Smok- ing whether to take the case to the As is traditional at TMA’s annual event, ques- ing Prevention and Tobacco Con- U.S. Supreme Court. tions and answers will figure prominently in all sessions. Theo Foltz, retiring head of Altadis, USA, will be honored as a TMA Giant of the Industry. An FDA Site Now Bilingual evening dinner event will feature keynote speaker, Gareth Davis, retired head of the Imperial Tobacco The regulatory body has launched a new site for Group. The meeting will conclude with roundtable Spanish-speaking retailers.