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February,
2001

TOBACCO INDUSTRY NEWS (cont.)

Villazon Closes Tampa Cigar Plant

Tampa, FL - Cigar manufacturer Villazon & Co. closed a machine-made cigar facility in Tampa in January. The plant, which dates to the 1920s, employed 108 people.

"We are consolidating our operations," said John Webber, general counsel for New York-based General Cigar Holdings Inc., which bought Villazon four years ago. "Much of the work is being moved to Honduras. It's more cost-effective for us to do the work elsewhere."

The closing of the facility means the once-dominant cigar industry in Tampa will be reduced to only a few players, among them J.C. Newman Cigar Co. and Havatampa, a unit of Altadis USA, Inc. which employs 350 people in Tampa.

Eighty years ago, as many as 20,000 people worked in Tampa's cigar factories, according the St. Petersburg Times. While the hand-rolling business went offshore years ago as cigar companies cut costs, now many of the industry's machine manufacturers are consolidating, with some starting to move jobs to other countries.


BAT Plans Theme Store Chain in Europe

British American Tobacco (BAT) is set to open a chain of stores in Europe featuring "Americana" stamped with the famous bull's eye logo of its Lucky Strike cigarettes. The company is seeking outside financing and an operator for Trans Urban Trading Co., a retail chain expected to open its first outlets this year. The stores, featuring futuristic fixtures and targeted to consumers in their twenties, are BAT's latest attempt to buck sluggish cigarette sales.

The stores, which will serve as an extension of the Lucky Strike catalog, will stock leather jackets, fifties-style radios and food mixers, food items such as Hershey's chocolate and maple syrup.


A New Leaf for UST's Smokeless Unit

Greenwich, CT - UST Inc. has changed the name of its principal subsidiary, United States Tobacco Co., to U.S. Smokeless Tobacco Co., in an effort to more accurately reflect the company's business.

"Since 1922, we've proudly been known as U.S. Tobacco Co. But that's led most people to think we make cigarettes," read a national consumer ad published in USA Today which explained the change to consumers. "We don't. We do, however, make the most recognized names in smokeless tobacco," it stated.

"The new name reflects our distinct position in the tobacco industry," said Murray S. Kessler, president, U.S. Smokeless Tobacco Co. A study conducted last summer revealed that a majority of consumers mistakenly believe that U.S. Tobacco Co. manufactured cigarettes. In November 2000, UST, which reported about $1.5 billion in annual sales last year, introduced a new strategic plan to grow earnings 10 percent compounded annually over the next five years. Included in that plan was the name change for its smokeless tobacco unit. U.S. Smokeless Tobacco Co. manufactures Copenhagen - its flagship brand introduced which was introduced in 1822 - as well as Copenhagen Long Cut, Skoal, Skoal Long Cut, Skoal Bandits, Rooster, and Red Seal. The company plans to introduce Copenhagen Black, a new bourbon-flavored chewing tobacco. It will be rolled out nationally in early 2001. In addition, Rooster and Red Seal line extensions will also launch regionally this year.


Colibri Prevails in Patent Infringement Claim Against Spec Enterprise

Providence, RI - A federal district court in Chicago entered a $20,000 final judgment and permanent injunction on November 28, 2000 against Spec Enterprise, Inc., an import and wholesaler of cigarette and cigar lighters from South El Mont, California.

The judgment was for utility and design patent infringement involving four patented Colibri lighters in connection with a lawsuit filed by Colibri Corp., a leading manufacturer and distributor of lighters and smoking accessories. Colibri also obtained a final judgment and injunction against two retailers in Chicago.

"We stand behind our products with regard to innovative design and superior quality," said Michael Reynolds, president, Colibri Corp., adding, "Imitators may produce inferior products and subject the retailers they sell to with product liability lawsuits from consumers."


Swedish Match to Purchase B.A.T.'s South African Pipe Tobacco Business

Stockholm - Swedish Match S.A. has agreed to purchase the pipe tobacco business offered for sale by B.A.T. following a condition placed by the South African Competition Board after the merger of B.A.T. and Rothmans South Africa in 1999.

The acquisition continues the company's focus on growth in core areas of cigars, pipe tobacco, and smokeless products. The company expects the purchase to be earnings enhancing from the first year of acquisition. The transaction is slated to be completed in early February.



SMOKESHOP - February 2001