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June/
July 2000

RETAILER & TOBACCO INDUSTRY NEWS

Smuggling Bill Would Increase Red Tape

WASHINGTON, DC - Intended to combat the smuggling of tobacco products into the U.S., the "Tobacco Smuggling Eradication Act of 2000" would institute record-keeping regulations at the retail level, require packaging changes, and expand the current scope from only cigarettes to all tobacco products.

The bill, introduced by Senator Frank Lautenberg (D-NJ), would amend the Internal Revenue Code of 1986 to require unique serial numbers on all tobacco product packages manufactured or imported into the United States. Packages bound for export would be required to be marked "for export."

Retailers would be required to maintain tobacco-related records, and wholesalers to keep records on the chain of custody of tobacco products, a requirement that already exists for manufacturers, exporters, and importers.

The bill would also amend the "Contraband Cigarette Trafficking Act," which assists States in enforcing and collecting tobacco excise taxes. The threshold of jurisdiction would be lowered to 30,000 cigarettes, from 60,000 currently, and expand its reach to cover other tobacco products.


Underage Cigar Sales Prominent on Internet Says Study

SAN FRANCISCO, CA - Internet retailers may be offering minors easy access to cigars, a report by California researchers charges.

Analyzing 141 Internet cigar retail sites, investigators from the University of California, San Francisco found that most made it easy for minors to buy cigars and only five carried health warnings about their wares. The study results were published in the May issue of the American Journal of Public Health, the Journal of the American Public Health Association.

Report authors say the Internet "potentially poses a major challenge to tobacco control efforts." Some Web sites surveyed used "kid-friendly sales tactics" such as cartoons, music, and cigar-promoting sportswear, the report warns.

Since "all marketing, including Internet marketing, creates demand," the authors say, "We need to be looking more closely at this medium."

According to the report, the cigar sites tempt minors not only with gimmicks, but also with low prices and easy access. About 69% allowed minimum purchases of less than $20, including single cigars or packs of chocolate- and vanilla-flavored cigars. One-quarter prohibited sales to minors, but there was no way to enforce the rule - 10 sites required buyers to check a box to show that they were old enough to purchase tobacco. About half of the sites allowed payment forms other than credit cards.

One way to quash the potential for cyberspace cigar peddling to minors is through programs like ones that monitor traditional merchants, the researchers said. Synar enforcement programs involve sting operations to ensure that merchants are not selling tobacco products to kids. Similar programs aimed at Internet merchants may push them to develop ways to screen out minors from their customer base.


Davidoff Inaugurates NYC Store

NEW YORK, NY - Davidoff of Geneva, the Swiss retailer, manufacturer, and seller of premium cigars, luxury goods, and other tobacco products and accessories, recently held a grand opening for its 38th flagship store located on Madison Avenue in New York City. The 3,800-square-foot store boasts a two-story glass and pear wood humidor with a 100,000 cigar capacity. Located at the intersection of Madison Avenue and 54th Street, the store appears as a glass curtain wall at street level, revealing the elegant interior of light woods, French limestone floor, and opulent showcases. The store, designed as "a meeting point…to enjoy a cigar with a cup of coffee in a comfortable and pleasant atmosphere," according to Bänninger, has private humidors, a large flat-screen TV, and a stock ticker tape machine. The store is a seven-days-a-week retail location, and continues Davidoff's plans to develop a unified look for its luxury stores around the world.

Strauss Expands to No. Kentucky

FLORENCE, KY - Strauss Tobacconist, a Cincinnati, Ohio tobacco tradition since 1880, has expanded into Northern Kentucky. Strauss, which will continue to operate at 410 Walnut Street in downtown Cincinnati, opened its new store in the town of Florence, located ten miles south of Cincinnati. Strauss President Jim Clark said the move was undertaken "simply to service our neighbors and their needs that much better. We saw a definite need for quality tobacco products in Northern Kentucky, and we're going to fill that need."

Cubancigars.com Makes Internet Splash

CHICAGO, IL - Cubancigars.com, an Internet startup corporation financed by two venture capitalists from Chicago's information technology community, has launched the "first cigar-related Internet portal web site based in the Midwest," say its founders. Led by Larry S. Cohen, a University of Chicago-trained researcher turned Internet marketer, cubancigars.com joins the increasingly crowded cyber-cigar arena.

The web site, which features directories for cigar, wine, fine watch, and golf retailers worldwide, takes advantage of the growing trend among common-name web sites to promote an attractive web address and capture a valuable demographic group. With research indicating a growth in the international cigar market, the company also purchased the domain name for Cuban cigars in four other languages, insuring an international draw.

"No, we don't sell Cuban cigars," admits Cohen. His hopes rest on the eventual lifting of the trade Embargo. "If Clinton lifts the American embargo against Cuba tomorrow, we will be online selling product by the end of his speech."



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