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February,
2010

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

Swedish Match AB, Scandinavian Tobacco Group to form New Worldwide Company with Focus on Cigars

Stockholm - Swedish Match AB has signed a letter of intent with Denmark’s Scandinavian Tobacco Group (STG) to form a company combining STG’s tobacco businesses with the premium and machine-made cigar businesses of Swedish Match. The new company would also include the pipe tobacco and accessories businesses of Swedish Match, as well as distribution of lighter and match products in relevant markets, but does not include the U.S. mass market cigar business of Swedish Match.

Swedish Match says the move is consistent with its goals of becoming the global smokefree leader while developing the cigar business to be “best in class.”

Based on the Swedish Match and STG 2008 full year results, the new combined entity would have had an annual combined cigar volume of more than 2.5 billion cigars; hold the leading positions for U.S. premium cigars and European cigars; and have strong positions in a number of other markets.

Leading cigar brands from Swedish Match include La Paz, and from its U.S.-based General Cigar Company subsidiary Macanudo, Partagas and Punch (in the U.S.) among others. STG’s holdings include Henri Wintermans Cigars Belgium and its Café Crème, Henri Wintermans, Colts, and Mercator brands; Denmark’s Nobel Cigars; and CAO International of Nashville, Tenn. Leading pipe tobacco brands for the new company would include Borkum Riff and Half & Half from Swedish Match and Erinmore, Clan, and W.Ø. Larsen from STG.

Stockholm-based Swedish Match would hold 49 percent of the shares in the combined entity, with the remaining 51 percent of the shares held by STG. Anders Colding Friis, the c.e.o. of STG, would assume the role of c.e.o. of the combined entity.

STG produces cigars, pipe tobacco, and fine cut tobacco, having divested its cigarette and snus businesses in 2008. STG is headquartered in Denmark with production facilities in Belgium, the Netherlands, Denmark, Indonesia, the Dominican Republic, Nicaragua, and Honduras.

Completion of the transaction is subject to due diligence by both parties and final transaction agreements, as well as bondholder and regulatory approvals. Signing is expected to take place during the first half of 2010 with completion as soon as possible thereafter.


Conwood Company Now American Snuff Company

Memphis, TN - Conwood Company, LLC has changed its name to American Snuff Company, LLC, effective Jan. 1, 2010. An operating company of Reynolds American Inc., the company is the nation’s second largest manufacturer of smokeless tobacco products. The name change will not affect any of the company’s operations, products, or staffing levels, says the manufacturer.

“Reassuming our historical company name emphasizes our commitment to the core values on which our company was founded,” said Bryan K. Stockdale, Conwood’s president and chief executive officer.

American Snuff Company was founded before 1900, and in 1912 moved its headquarters from New York to Memphis, manufacturing dry snuff the next 40 years. In the 1950s and 1960s, the company began diversifying, acquiring manufacturers of chewing tobaccos, as well as companies that manufactured shoe polish, popcorn, theater supplies and yogurt.

In 1966, to reflect its diversified operations, the company changed its name to Conwood Company. Since the 1980s, Conwood has divested all its non-tobacco lines of business and focused solely on smokeless tobacco products. Its Grizzly brand is the best-selling brand of moist snuff in the U.S.


Kretek International Drops Cigar Legal Action Against FDA

Moorpark, CA - Kretek International Inc., importer and marketer of Djarum clove cigars, has withdrawn its lawsuit against the U.S. Food and Drug Administration (FDA) regarding the distribution and sale of clove cigar products.

In September 2009, Kretek filed a complaint in the United States District Court for the District of Columbia seeking a declaration that the recently enacted ban on flavored tobacco products applied to cigarettes rather than to cigars. On December 23, 2009, the FDA placed a Q&A on its website discussing how it would regulate flavored tobacco products. It made clear that the FDA will only be taking enforcement actions against tobacco products that meet the legal definition of a cigarette.

Because the U.S. Department of Treasury has already determined that Djarum clove cigars meet the legal definition of a cigar, the FDA’s Q&A has provided Kretek with the assurances it was seeking through its lawsuit. As a result, Kretek has decided to drop its legal action while reserving its option to re-file at some future date.

“FDA’s Q&A will benefit the entire industry,” stated Kretek c.e.o., Mark Cassar. “We did not want to see three years of cigar product development negated by a hasty interpretation of the ban on flavored tobacco products and I am pleased that the Agency has not only taken the time to get this issue right, but has also decided to share its views with the entire industry.”


Zippo Acquires Ronson Corporation

Bradford, PA - Zippo Manufacturing Company has completed the purchase of substantially all of the assets of Ronson Consumer Products Corporation, Woodbridge, N.J., Ronson Corporation of Canada Ltd., and certain related assets of Ronson Corporation.

Zippo, founded in 1932 and best known for its refillable windproof lighter, also produces lighter accessories, butane candle lighters, lifestyle products for men, and an outdoor line of products and accessories.

Ronson, founded as The Art Metal Works in 1886, markets a range of lighter fuels and accessories, as well as an assortment of refillable butane pocket lighters, utility lighters, and torches. It has been marketing lighters since 1913.

The Ronson product line will continue to be marketed and sold under the Ronson name through its currently established sales and distribution channels.

According to Zippo President and c.e.o. Greg Booth, “Adding the venerable Ronson trademark to our family of brands provides an opportunity to expand our business, particularly leveraging Ronson’s competitive position in the lighter and fuels markets. We are very excited about the growth opportunities for both brands.” Terms of the agreement were not disclosed by Zippo.


Reynolds American Acquires Niconovum

Winston-Salem, NC - Reynolds American Inc. has completed the acquisition of Niconovum AB, a Swedish-based nicotine replacement therapy company, purchasing all outstanding shares of the company for approximately $44 million.

Niconovum markets innovative nicotine replacement therapy (NRT) products under the Zonnic brand name in Sweden and Denmark. Its nicotine gum, mouth spray and pouches use proprietary technology for nicotine delivery. Niconovum will be a separate operating company of Reynolds American.

Founded in 2001, Niconovum is based in Helsingborg, Sweden. Reynolds American’s intention is to retain Niconovum’s current management team, and its headquarters will remain in Helsingborg.



SMOKESHOP - February, 2010