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April,
2008

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

Joya de Nicaragua Names Drew Estate as U.S. Distributor

Estelí, Nicaragua - Joya de Nicaragua S.A. (JdN), the family-owned maker of Joya de Nicaragua premium, handmade cigars, has announced that Drew Estate will replace SAG Imports as their distributor for all of the cigars it manufactures for import and sale into the U.S.

“Drew Estate's commitment to adopt my vision of Joya de Nicaragua and its goals was the key factor in my decision,” said Dr. Martinez Cuenca, owner and c.e.o. of JdN, noting that he had considered the option of forming his own U.S.-based sales and distribution operation. “The fact that they have their own in-house sales force and marketing department were important ingredients also. Plus, the most obvious factor is the success they are having in increasing their own market share within the highly competitive U.S. market,” he said. “We feel an alliance between our two companies will be a win-win situation for all including cigar stores and consumers nationwide.”

Both JdN and SAG, which has been the brand’s distributor for seven years, mutually agreed to terminate their business relationship effective April 25th, 2008 to facilitate a smooth transition.

All production of all Joya de Nicaragua cigars, including blending, tobacco selection, fermenting, and rolling, will remain at Joya’s factory in Estelí, Nicaragua - Tabacos Puros de Nicaragua - which first opened in 1968 and is Nicaragua’s eldest factory in operation. JdN will retain and continue to service all their international and duty free accounts directly.

The Joya de Nicaragua brand was an early pioneer in crafting robust, all-Nicarag­uan puros from locally grown black tobaccos.

“In order to increase our market share and strengthen our position in the U.S. market, we felt it was imperative to introduce changes in our marketing and distribution strategies,” said Cuenca.


Kahlúa Cigars by Drew Estate to be Discontinued

Richmond, VA - Kahlúa Cigars Delicioso by Drew Estate, which were introduced in 2002 and become one of the more popular products in the flavored cigar category, will be discontinued. Pernod Ricard, which recently purchased the Kahlúa liquor brand,has exercised its right to not renew the licensing agreement with the cigar’s manufacturer, Drew Estate. On March 31, all production of the brand at the Drew Estate factory in Estelí, Nicar­agua, will cease. General Cigar will continue to sell the brand until all inventory has been depleted.

Dan Carr, senior vice president of sales and marketing for General Cigar commented, “While we regret the loss of the brand, General Cigar remains committed to the flavored premium cigar category.” General’s other flavored cigars include Helix Remix, which it makes at its facilities in Honduras.

“Although we were proud to be the manufacturer of this internationally renowned brand, we were also well prepared for this eventuality, said Steve Saka, president of Drew Estate. We…are very excited to now be able to dedicate production capacity to new coffee infused products that will not only fill, but overflow any void left by Kahlua’s departure.”

Two of Drew Estate’s new product announcements last year were in fact coffee-infused: Isla del Sol, a sugared-tip line infused with a Cuban-style mojo of Sumatran Mandheling bean coffee, and Café Libertad, a four-size line of Fair Trade coffee-infused cigars.


Alpha Tobacco International is Formed;
Company Debuts First Product, Mega Cigarettes


Springfield, MO - Alpha Tobacco International, Inc., of Springfield, Mo. has formally announced the establishment of their new U.S. tobacco company. Alpha Tobacco International has been formed to supply the U.S. tobacco consumer products that will be unique and competitively priced. Alpha Tobacco has a team of veteran tobacco blenders, manufacturing personnel, and sales team to ensure the future success of the company.

Ralph Brown, vice president, says that he believes that there has not been a new company enter the U.S. in the recent years that has offered the unique and consumer-satisfying products that Alpha Tobacco will be offering. “Alpha Tobacco recognized in their market studies that in order to be successful in the U.S. we must deliver outstanding products such as our first brand, Mega cigarettes,” Brown said of the cigarette that will debut at the 2008 Tobacco Plus Expo in Las Vegas. “Mega cigarettes are designed to deliver excellent value and quality that is required of the American smoker. Mega’s slogan ‘Mega Taste, Mega Value,’ is synonymous with this belief.”

Additional information about Alpha Tobacco can be obtained by contacting the company at (417) 886-2758 or via email at info@alphatobaccointernational.com.


International Association of Cigar Clubs Founded to Establish Network of Cigar Club “Safe Havens”

Fairfield, NJ - The founders of one of the country’s largest and most successful private cigars clubs, The Metropolitan Society in Fairfield, N.J., have formed the International Association of Cigar Clubs (IACC) hoping to create a nationwide network of clubs offering reciprocal visitation privileges to members when they travel. They’re also marketing their experience to others who are interested in establishing their own private cigar clubs.

Dan McCarthy founded the original Metropolitan Cigar Club in 1994 and wrote the business plan that ultimately established The Metropolitan Club. Following the passage of New Jersey’s statewide smoking ban, McCarthy together with Bob Lesnick designed and built the club from scratch, furnished it, and set up all of its financial and operational aspects as a means of establishing a cigar-friendly replacement for the lost venues its members used to patronize.

Now McCarthy and Lesnick want other private cigar clubs throughout the country to join together through IACC. “This will offer cigar smokers, even when away from home, a sanctuary to go to and relax while enjoying their favorite cigar without fear of reprisals,” Lesnick explains. Under the plan, the IACC would assist individuals who are looking to join an existing cigar club and help other individuals or groups in establishing new private cigar clubs. Clubs would belong to a parent organization; any member of one private cigar club would be welcomed and admitted to any other private cigar club within the organization. Cigarclubs.org has been established as a centralized internet location to provide the public with specific information on each member cigar club as well as upcoming events and club news.

The IACC is also offering individuals or groups an in-depth full day seminar on how to establish and operate a successful private cigar club, conducted by McCarthy and Lesnick. “Major players within the cigar industry have told us that the design we developed for The Metropolitan Society should be the model for all other cigar clubs in the country,” says Lesnick, “so we’ve taken this to heart.”


Synergy Brands to Sell Gran Reserve Corp.

Syosset, NY - Synergy Brands, Inc. announced its intent to sell Gran Reserve Corp. (GRC), the company’s wholly-owned cigar operation, for $400,000 to an undisclosed buyer. Synergy says the operation has become a non-strategic asset for the company and it plans to focus its efforts on other wholly-owned subsidiaries.

In it’s year-end financial statement filed March 28, 2008, the company states “Although no formal commitments have yet been finalized, a contract in principal has been reached with a group of management and supervisory personnel associated with the GRC cigar operations but who otherwise have no official capacity with Synergy Brands Inc. or its subsidiaries.”

Gran Reserve represented less than 2% of sales and less then 5% of gross profit for Synergy Brands in fiscal 2007. Revenues in the cigar operation decreased by 16% for the year ended December 31, 2007 at $1.61 million as compared to $1.92 million for the year ended December 31, 2006.

Gran Reserve operates all of Synergy’s direct-to-consumers activities, including CigarGold.com and Cigars Around the World (CAW) which sells premium cigars to restaurants, hotels, casinos, country clubs, and other destinations. Founded by Bill Rancic, the season one winner of the NBC show “The Apprentice,” CAW was acquired in June 2003 and opened a premium cigar retail outlet and cigar club in Miami Lakes, Fla., in 2006. The 6,000 square-foot facility is also a humidified warehouse that handles order flow for the operation’s websites.

Sales for this segment for the year ended December 31, 2007 decreased by 16% while operating loss increased by 262% to $1,097,463. The company was once a vertically integrated cigar producer operating tobacco farms, curing, and cigarmaking operations in the Dominican Republic.


Liggett Group to Transition all Cigarettes to LIP

Mebane, NC - Vector Group Ltd.’s subsidiary, Liggett Group LLC, will convert all of its domestic cigarette production standards to meet all state fire safety standards for low-ignition propensity (LIP) cigarettes by January 2009, the company has announced.

The Mebane, North Carolina-based cigarette maker, which produces Liggett Select, Eve, and Grand Prix among other brands, said in an announcement that the move is “consistent with cigarette fire safety standards enacted by a growing number of states.” The company will continue to meet all deadlines for fire safety standards in individual states that become effective before January, the company added.

Company c.e.o. Ronald Bernstein said the manufacturer will make changes to both its cigarette paper and to its production methods to meet all the guidelines required in different states, while continuing to produce what he called “best-in-class” cigarettes.

Last October, R.J. Reynolds announced that all of its cigarette brands would be manufactured using “fire-safe” technology by the end of 2009.


Sikar’08 Celebrates Fine Cigars in Honduras

Tegucigalpa, Honduras - The producer of Joya de Honduras Cigars and the distributor for Habanos S.A. in Honduras are hosting Sikar ‘08, May 1–8, 2008 in Tegucigalpa, Honduras, a cigar celebration featuring “the worlds finest cigars... while dining, dancing, and living the cigar connoisseur culture.”

The festivities will include factory tours in Danlí, Honduras, seminars, tastings, and presentations by cigar makers. In addition, event promoters have obtained permission to exhibit cigars found in the ruins of Copan believed to be the oldest and first cigars ever known that have never been displayed in public before.

Participating sponsors include Habanos S.A., Compania Tabacos Dos Rios S.A., Cuban Cigar Company Honduras S.A., La Casa del Habanos Roatan S.A., Placencia Cigars/ Tabaco Oriente, and Tobacco Corner, San Salvador, El Salvador.

Event details can be found at www.sikarevent.com.


IPCPR to Enforce “Show-Only” Specials

Columbus, GA - After receiving numerous complaints from exhibitors and retailers regarding the availability of “show-only” specials outside of the annual trade show, the International Premium Cigar and Pipe Retailers Association (IPCPR) has announced new policies that it will hold trade show exhibitors accountable for keeping “show special” exclusive for retailers who actually attend the trade show.

The trade association formerly known as the RTDA disclosed a number of penalties it will impose on those who exhibit at the annual trade show if they violate the policy. As of the 2008 show in Las Vegas, “show-only” specials must be promoted in specific ways. Companies who announce they will be bringing “show-only” specials will be announced in the Show Directory; receive a “Show Special” icon next to their company name in the Trade Show Directory; and will be highlighted in the List of Exhibitors, which is mailed to all association members.

Any companies who have taken pre-orders for “show-only” specials will lose 20 percent of their total points for the booth selection process in 2010, resulting in later booth selection and as a result a less desirable location on the show floor.


Eden’s Gate Relocates Offices, Warehouse

Cocoa Beach, FL - Eden’s Gate Cigars, the exclusive U.S. distributor for Adan y Eva and the Emilio Reyes Collection premium cigars from Flor de los Reyes, has relocated its headquarters from Simpsonville, Maryland, to Cocoa Beach, Florida.

“Our relocation places our office and warehouse closer to the Reyes factory, easing and reducing costs of transportation of company personnel and products,” explains, John Thornton, head of sales, marketing, and product development. “The move was completed without interruptions in business and communications, and the telephone and fax numbers have remained unchanged.”

Additionally, the company’s web site, www.edensgatecigars.com, has been redesigned for easier navigation and ordering, and expanded to include new materials like articles, press releases, and customer feedback. The company’s latest products appear on the site, including the new Adan y Eva Cognac and Champagne flavored cigars.

Although being a sales site, Thornton explains that the company’s pricing policy “is designed to not undercut our retailers…Smokers will pay an additional 15% over the retailers’ suggested retail prices, when ordering from the site. We are only interested in orders from consumers who have no local tobacco retailers.” The company has also added a retailers’ section, accessible only with a password, from which retailers can easily place orders at wholesale.

Recently, Eden’s Gate signed a contract with Multicarte, a twelve-person manufacturer’s representative firm, headquartered in Dallas, Texas. Multicarte covers Texas and nine other south central states and is strong in the wine and spirits marketplace.

The company can be reached at P.O. Box 321369, Cocoa Beach, FL 21150, Tel: (410) 988-2790, Fax: (866) 838-5516, Web: www.edensgatecigars.com.



SMOKESHOP - April, 2008