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April/May,
2001

TOBACCO INDUSTRY NEWS (cont.)

Revenue soars at Netcigar.com

SYOSSET, NY - Internet retailer Netcigar.com reported $239,000 in revenue for its fourth quarter ending December 31, 2000, a 185% increase over $84,000 for the same period in 1999. A subsidiary of Synergy Brands, Inc., Netcigar.com offers a comprehensive variety of premium hand-made cigars, cigar accessories, and upscale gift items and also markets humidors, golf-themed gifts, and accessories. Synergy Brands, which reported net sales of $20.6 million in 2000, was granted an extension by Nasdaq in March to meet the minimum bid price requirements. In February, Synergy Brands received majority shareholder consent to implement a reverse stock split, a move company officials believe will not be necessary.

Sales Dip at North Atlantic Trading

For the year ended December 31, 2000, net sales at North Atlantic Trading Co. were $93.1 million, a decrease of $1.3 million or 1.4% from the prior year. Sales of the smokeless tobacco segment (National Tobacco Co. L.P.) decreased $6.1 million, or 13.3%. Sales of the MYO segment (North Atlantic Trading Co., Inc.) increased $4.8 million, or 9.8%, attributed to an expanded product line and increased Canadian sales. Gross profit decreased 4.6% to $59.5 million from $62.3 million from the prior year.

Changes on Tap following AWMA 2000 Expo

WASHINGTON, DC - AWMA Expo 2001 was held February 15-17 in New Orleans to mixed reviews. The business sessions were exceptionally powerful and well received, as was the association's new Leadership Excellence in Organization awards program presented at the Salute to Leadership Dinner.

But, as a reflection of continued consolidation within the industry, overall attendance at the Expo was less than previous years. Many exhibitors were pleased with the quality of the attendees, however, even if they were disappointed with the overall EXPO traffic.

"We had the best AWMA Expo we've ever had. The lookers stayed home, and the buyers came out. We were thrilled with the results," says Sam Popowcer, president, S. P. Enterprises, Las Vegas, NV.

"Those exhibiting companies that worked the show realized positive results, as did the Goetze's Candy Company," adds the well-known candy manufacturer's vice president of sales, Mitchell Goetze, Baltimore, MD.

Although 50 of the top 100 distributors in the United States were present at AWMA Expo 2001, traffic was not consistently heavy enough for the three-day event. Also, participants came for a variety of business purposes. While some attendees were planning programs for the latter part of 2001 or to have business conversations with their suppliers, others came expressly for show deals and to place orders.

"Obviously, the Expo needs to accommodate everyone's business objectives. We're listening closely to our exhibitors - and to other long-time supporters, and we know we need to make changes," says AWMA Board Chairman Bob W. Douglas, the Douglas Companies, Texarkana, AR.

"AWMA is at a crossroads as an association," says Douglas. "The needs of the membership are changing, as are their relationships with suppliers and customers. The AWMA Expo needs to reflect these changing roles within the channel, and we need to involve channel partners in the associations' decision making processes."

American Wholesale Marketers Association, Inc., 1128 16th Street, NW, Washington, DC 20036 Tel: (202) 463-2124, Fax: (202) 467-0559, E-mail: info@awmanet.org, Web: www.awmanet.org


No Movement Seen in Cuban Policy Under Bush Administration; Havanas Will Wait

WASHINGTON, DC - Growing anticipation that Cuban cigars might soon be able to enter the U.S. has once again proven premature.

Congressional efforts to dismantle the 40-year-old U.S. trade embargo against Cuba will hit an immovable impasse this year: President George W. Bush's unyielding support of the measure, according to Washington state representative George Nethercutt, a Republican and embargo opponent. Nethercutt told Bloomberg News that the Bush administration has "an unyielding position on Cuba," and says he will instead concentrate his efforts on changing the rigidity of the Castro regime, which has so far shunned the limited easing of sanctions on grain and medicine.

U.S. economic sanctions on Cuba have had little impact on the economy of either nation, the International Trade Commission said in a report requested by the House of Representatives Ways and Means Committee. Among the ITC's conclusions was that U.S. imports of Cuban cigars could total $15 million to $30 million a year if there were no sanctions, or about 5-10% of all U.S. cigar imports.

Over the longer term, tobacco industry officials believe U.S. imports of premium hand-rolled Cuban cigars could rival imports from the Dominican Republic, now the world leader. Cuba exported an estimated 150 million cigars in 1999. Cigars are the second-leading agricultural product, after sugar.


Re-Formed Indianhead Builds Management Team of Industry Veterans

MIAMI, FL - Indianhead has announced the appointment of key sales and marketing personnel. The company focuses on providing premium quality cigars and accessories at affordable prices. "We cater to tobacconists who want to satisfy today's price-sensitive but quality-conscious smokers," reports president Bill Bock.

"Indianhead's appointment of Bob Dennis as vice president of sales has proven significant to our monthly growth rate of 20% over the past year," adds Bock. "With 41 years in the business, Bob is known and respected throughout the industry." Dennis spent many years as central sales manager for American Cigar Company and has served as sales manager for Nat Sherman, Inc., the former Indianhead Sales, and Inter-Continental Cigar. Dennis handles all sales activity east of the Mississippi.

"We were likewise fortunate to have Terry Vincent join us this February as Western regional sales manager." says Bock. Vincent, a 15-year specialty tobacco sales veteran, was president of TSV Limited, which represented several major lines in the western states.

Bock's career in tobacco spans 35 years. He was worldwide military and duty-free sales manager at American Cigar before launching the original Indianhead in 1986. In 1996, he sold Indianhead to the Burger-sohn Group of Switzerland, producers of Dannemann cigarillos. Indianhead became Inter-Continental Cigar Company; Bock remained president. The company's several lines of long-filler handmade premium cigars were manufactured at Nestor Plasencia's factories in Danlí, Honduras and Estelí, Nicaragua. When Burger-sohn abandoned long-filler activities in February 2000 to focus on cigarillos, Bock reestablished Indianhead with a fresh line-up of premium cigars, including Cibao, Cuban Twist, and Joya del Rey.

The company also distributes Al Capone and Dannemann cigarillos and the remainder of Inter-Continental's inventory, including Al Capone, Beverly Hills, and Casa de Nicaragua cigars.

Indianhead, 16112 NW 13th Ave., Miami, FL 33160, Tel: (800) 292-4858, Fax: (305) 623-5494, Web: www.indianhead.com



SMOKESHOP - April/May 2001