logo
















logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo
February,
2007

TOBACCO INDUSTRY NEWS
Production, Distribution, Regulation, Trade...

CAO International Purchased by Henri Wintermans USA

Nashville, TN - Henri Wintermans Cigars, USA Inc., a sister company of Dutch multinational ST Cigar Group Holdings (STCG), has acquired the Nashville-based cigar company CAO International. Terms of the deal were not disclosed.

Founded by Cano Ozgener in 1968, the company became known for its meerschaum pipe imports and premium humidors before launching its first cigar in 1994. CAO now produces eight major lines of premium cigars in addition to the “flavours by c.a.o.” subrand, all made in partnership with factories in Honduras, Nicaragua, and the Dominican Republic. The company has gained a high profile for innovative product development and marketing concepts, often securing participation in high-profile Hollywood events.

STCG is one of the world’s largest cigar companies known especially for Café Crème, the largest-selling small cigar worldwide. Other Wintermans brands include Henri Wintermans and Nobel Petit.

Cano’s son Tim Ozgener, will remain as president of CAO. “I am very excited by this new alliance which I feel will offer the company many tremendous opportunities, not only in the United States but internationally, with Henri Winterman’s expertise, CAO can evolve to become a truly global brand,” said Tim.

Aylin Ozgener, Cano’s daughter, will also continue with the company, focusing on special events and trade relations.

Gary Hyams has been appointed chairman of CAO, having previously been managing director of Henri Wintermans U.K. Company, Loretta Cigars. Gary brings a wealth of experience having previously dealt with many major international cigar brands.

“I have known Cano, Tim, and Aylin for some years now,” said Hyams, “and I feel what they have achieved with their brand is not only remarkable but will ultimately become one of the legends of the cigar business. We at Wintermans are proud to be associated with such a success story, and we are very much looking forward to firstly retaining the culture of the company, so fundamental to the success, but also in building the company further to meet the high expectations of the brands, consumers, and trading partners.”

CAO’s production facilities in Estelí, Nicaragua and Danlí, Honduras — CAO Fabrica de Tabacos — are a partnership between CAO and the Carlos Toraño cigars. La Aurora in the Dominican Republic produces CAO’s flavored cigars as well as the company’s only Dominican-made premium handrolled cigar, Vision.


New California License Required for Tobacco Manufacturers, Importers

Sacramento, CA - In order to sell tobacco products in California, manufacturers and importers of tobacco products must have a new license after May 1, 2007 called the “Manufacturer’s/Importer’s Tobacco Products License.”

There are also new recordkeeping and reporting requirements. License holders must file a monthly return and report their distributions of tobacco products to licensed distributors, and the total wholesale cost of the products. The license, which has a one-time application fee, must be renewed yearly.

The new licensing requirement is part of Assembly Bill 1749, which amends the Cigarette and Tobacco Products Licensing Act of 2003.

An application for a license will be mailed to all licensed distributors by the end of January 2007. Companies must file their application by the end of February 2007.

Manufacturers or importers of chewing tobacco or snuff must submit a one-time fee of $10,000, while manufacturers or importers of tobacco products, excluding chewing tobacco or snuff, must submit a one-time fee of $2,000.

Applicants must also submit a list of all tobacco products manufactured or imported, and continue to update this list whenever a new or additional product is manufactured or imported, or whenever a listed product is no longer manufactured or imported. The full list must be resubmitted to the BOE each time it is updated.

Companies must consent to jurisdiction of the California courts for the purpose of enforcement of the Act and appoint a registered agent for service of process in California and identify the registered agent to the BOE.

To renew a license, company must file a renewal application with the BOE each year. The new license is in addition to any other required licenses and/or permits.

Beginning May 1, 2007, manufacturers and importers must also mail monthly returns with a report to the BOE, which will supply a return form to prepare. The monthly report must include a list of all licensed distributors that received the manufacturer’s or importer’s tobacco products and total wholesale cost of the products. Failure to comply with the recordkeeping provision can result in the suspension or revocation of the license.

California State Board of Equalization, Excise Taxes Division, Toll-free: 800-400-7115, or, if calling from outside the continental United States, dial 916-445-6362, Web: www.boe.ca.gov.


Star Scientific Looses RJR Patent Infringement Suit in Judge’s Ruling

Chicago, IL - Star Scientific Inc. says will appeal an “incorrect” ruling issued in a January 19 summary judgment that found the company’s patents on a tobacco curing process that reduces the level of cancer-causing toxins was “fatally indefinite.”

U.S. District Judge Marvin Garbis also ruled that the effective date of the patents was Sept. 15, 1999, rather than Sept. 15, 1998. The decision dealt a blow to Star Scientific in the patent infringement lawsuit it filed in 2001 against R.J. Reynolds Tobacco Co., causing the company’s shares to plunge 40%.

“Judge Garbis ruled in a summary judgment motion that Star Scientific’s patent in question is essentially invalid as it lacks clear statement of its art and uniqueness,” Goldman Sachs analyst Judy Hong said in a research note.

While the appellate process moves forward, Star says it will continue to work aggressively to further expand sales of its dissolvable smokeless tobacco, Ariva and Stonewall Hard Snuff, through licensing agreements with other companies as well as through its own distribution.

The company is also examining the potential sale of some or all of its curing barns to reduce debt obligation on the barns, as well as other steps to conserve resources including a review of senior executive salaries, personnel costs, and other expenses. It already plans to end a lease on a Chester, Virginia, facility and relocate operations to a company-owned facility in Petersburg, Va. Star is also evaluating its Chase City, Virginia facility and its offices in Bethesda.


Carolina Tobacco Reaches MSA Settlement

Portland, OR - Carolina Tobacco Company (CTC), a privately-held, manufacturer of price-value cigarettes sold under the brands Roger and Kingsboro, reached a comprehensive settlement with 46 states and the District of Columbia on December 27 that resolves a dispute over the company’s status as the manufacturer of its Roger brand from November 1999 to April 2003.

During this period, Roger brand cigarettes were produced, under CTC’s direction and control, by House of Prince Riga, a Latvian company. In 2003, states questioned CTC’s legal standing to submit the state certifications and make the escrow payments as required as a manufacturer under the Tobacco Master Settlement Agreement. The dispute led to multiple lawsuits, which have been resolved with the new settlement. As part of the agreement, CTC will release more than $31 million from its escrow accounts to the states and the District of Columbia. In return, they have agreed to recognize CTC as the manufacturer of Roger brand cigarettes during the disputed period. Additionally, the states have agreed not to seek any negative action against the company that would prohibit it from doing business within their boundaries due to lack of sufficient funds in CTC’s escrow accounts to compensate for sales from 1999 to 2003.

“Our fully owned, state-of-the-art facility in Johannesburg, South Africa, will continue to supply our customers across the nation,” said David Redmond, president of CTC. “Renovated last year to double its production capacity, the operation provides us with the flexibility to continue expanding our market share and reach.”


BITS & PIECES

  • Lorillard Tobacco Co., the third-largest cigarette maker in the country, has signed an agreement with Swedish Match North America Inc., the U.S. subsidiary of Swedish Match AB, to develop and market smokeless tobacco products “in the not too distant future.” Swedish Match’s is the third-biggest manufacturer of moist snuff in the country.

  • UST Inc., has entered into a definitive agreement to sell its corporate headquarters located in Greenwich, Conn. for $130 million to Antares Investment Partners, LLC. As part of the agreement, UST will remain in the building until it moves to its new headquarters in nearby Stamford, Conn. in Sept. 2007. The transaction is expected to close in March 2007.

  • Synergy Brands received a Nasdaq Staff Deficiency Letter on January 31, 2007 indicating that the company fails to comply with the minimum bid price requirement. For 30 consecutive business days the bid price of the Company’s common stock has closed below the minimum $1.00 per share requirement for continued inclusion of such securities for listing to trade on the Nasdaq Stock Market. The company has been provided until July 30, 2007 to regain compliance; otherwise it will subject itself to a potential delisting.

  • Democrats in the U.S. Congress plan to renew efforts to give the Food and Drug Administration regulatory authority over cigarettes. Massachusetts Democrat Edward Kennedy, who now chairs the committee that would consider the bill, is expected to take the lead in the Senate by introducing a bill to give the FDA broad sway over tobacco products, aides said.

  • Altadis U.S.A. was the official cigar sponsor of Playboy’s first-ever Poker Camp January 17th through January 21st at Morongo Casino Resort & Spa, near Palm Springs, Calif. Players were provided Playboy by Don Diego cigars and received world-class instruction and valuable playing tips from some of the most renowned poker players, culminating in a lavish party at the legendary Playboy Mansion.

  • PEOPLE MOVES

  • Bill White has joined Paul Garmirian, Inc. as the national sales representative, effective January 1st. White has over 20 years of experience in the tobacco retail field. He was vice-president of retail operations at Greybeard’s of London from 1983 to 1996, and for the last 10 years has been the general manager of Potomac Retail Enterprises, where he oversaw the operations of 14 retail tobacco stores. In addition to being the liaison between Paul Garmirian, Inc. and PG retailers, White will aid in public relations.

  • Daniel (Daan) M. Delen, 41, formerly president of British American Tobacco Ltd. Japan, has replaced Lynn J. Beasley, 49, as president of R.J. Reynolds effective Jan. 1, 2007. Beasley, a 25-year R.J. Reynolds veteran, announced her plans to retire following a transition period through mid-February 2007.

    Delen, a native of the Netherlands, joined British American Tobacco’s (BAT) family of companies in 1989 as a brand manager in Guatemala. He subsequently held a number of marketing and sales management positions for BAT in England, Singapore, Chile, and Argentina. In 2001, Delen was named senior vice president of marketing and sales for Brown & Williamson Tobacco Corp. Since August 2004, he has served as president of BAT’s Japan business unit.


  • At the upcoming Annual General Meeting of Swedish Match AB, held on April 23, 2007, the nominating committee will propose the election of Conny Karlsson as chairman to the Swedish Match Board of Directors. Bernt Magnusson has earlier announced that he is not available for re-election.

    OBITUARY: Arlene Petrosky, 59

    Arlene Jean Blakely Richey Petrosky, owner and operator of El Cabana Cigar Co. in Butler, Pa. since 2002, died on February 2, 2007.

    Petrosky served as the president of the New Downtown Butler Association of Business and Merchants; was a member of the Butler County Tourism and Convention Bureau, and the Butler County Chamber of Commerce.

    She is survived by her Husband M. Allan Petrosky; sons Robert D. Richey and Mark B. Richey, Captain, USAF; grandchildren, sisters, stepchildren, nieces, nephews, grandnieces, grandnephews, and cousins.

    Donations may be sent, in Memory of Arlene B. R. Petrosky, to the City of Butler Downtown Revitalization or the Cranberry Township Center for Abused Women.



  • SMOKESHOP - February, 2007