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June
2003

TOBACCO INDUSTRY NEWS

Altadis USA Wins Counterfeit Convictions

Miami - Three men involved in counterfeiting premium cigar brands owned by Altadis U.S.A. have been convicted and sentenced for felony trademark counterfeiting in the federal district court in Miami. Each defendant was sentenced to 180 days of confinement, 100 hours of community service, and two years probation.

Louis Ordonez was found guilty of trafficking in counterfeit Montecristo and Romeo y Julieta cigars. Jorge Guerra and Cesar Tellez were convicted for supplying Ordonez with the counterfeit packaging materials that he used.

The defendants tried to avoid criminal liability by claiming that they were copying Cuban cigars. However, the Court of Appeals ruled that the defendant's sales of phony Cuban Montecristo and Romeo y Julieta cigars and packaging constituted criminal counterfeiting of the Montecristo and Romeo y Julieta trademarks that Altadis U.S.A. controls in the United States.

"Altadis U.S.A. is strongly committed to vigorous enforcement of its trademark rights and will seek criminal prosecution of anyone who would infringe those right. Altadis U.S.A. is continuing to work with local and federal law enforcement officials to use the federal criminal anti-counterfeiting laws to secure convictions of counterfeiters of our brands," the company said in a printed statement.

The company continues to work with U.S. Customs in seizing and destroying shipments of counterfeit cigars.

Altadis stresses it will seek criminal prosecution of any importer, distributor, retailer, or other member of the trade dealing in counterfeit cigars. In cases where criminal prosecution is not successful, the company will invoke the civil provision of federal trademark laws that allow courts to award trademark owners up to $1 million in statutory damages per counterfeited trademark, as well as recovery of attorney's fees.

Other Altadis U.S.A. brands include H. Upmann, Trinidad, Don Diego, Santa Damiana, Cabanas, Por Larranaga, and La Corona.


Major Restructuring at Imperial Tobacco

Montreal -Imperial Tobacco Canada has announced a major corporate restructuring affecting every facet of its business. The restructuring will "allow the company to maintain its leadership position in the tobacco industry despite the reduction in sales, the steady declines in total industry volume, the resulting overall industry over-capacity, as well as significant price competition," the company said in a statement. The principal changes will occur largely by the end of 2003, and include the closure of the company's Montreal production plant; transfer of its tailor-made cigarette, tube, and insta-kit production from the Montreal plant to the Guelph plant; closure of its threshing operations and phase-out of its reconstituted tobacco facility at the Aylmer, Ontario plant; transfer of its leaf export business and domestic leaf purchasing at tobacco auctions to a third party; and restructuring of its Montreal head office, which will be completed by the end of 2004.

As a result of the changes, almost 840 employees will be directly affected including some 430 unionized regular employees, 240 seasonal employees, and 170 non-unionized employees. There will be no job cuts at the Guelph plant.

Imperial Tobacco Canada will continue to maintain a strong business presence in both Ontario and Quebec. Its manufacturing operations will be focused on its Guelph and Aylmer facilities. The head office and research and development functions will remain in Montreal. The restructuring does not impact regional sales offices and regional sales representatives.


Expanded, Friendlier Toraņo Web Site

Miami -Toraņo Cigars has launched a totally new Web site at www.torano.com, utilizing the latest in interactivity technology to ease, simplify, and speed site navigation. Combined with interesting graphics, restful shades of tobacco-browns, crisp photography, and even a video of the entire rolling process, the surfer-friendly site is intriguing and encourages exploration.

"We created this dynamic site to facilitate communication between the cigar community and Toraņo Cigars," reports vice president Charlie Toraņo. "There's plenty of substance here for all cigar lovers, and the interactivity and viewer involvement will keep visitors coming back often."

Key areas include a bulletin board, ratings, company background, and a photo-and-description online cigar brochure that are valuable to smokers and retailers alike. Direct links and photos are available for contacts in all areas of the company's operation. An events area features write-ups and photos of Toraņo's national and international events, while a forum area and a frequently -updated news page assure visitors will return often.

The new "Cigar Insiders" page keeps visitor involvement high. insiders receive a free monthly online newsletter, as well as a free cigar for signing up, for reviewing pre-production cigars, and for referring friends as Insiders.


Florida to Enact Smoking Ban on July 1
Cigar Industry Wins Exemption for Trade-Related Smoking


Florida lawmakers have enacted the voter-mandated smoking ban with final legislation that goes into effect on July 1. In response to a lawsuit filed by Florida-based cigar manufacturers, legislators added amendments broadening the ban's few exemptions to shield the state's cigar 27 companies. With the new exemption, tobacco manufacturers will still be able to burn tobacco indoors, allowing them to test their product and conduct quality control. The exemptions originally applied only to tobacco retailers such as cigar stores.

"It's protecting an important Florida industry, particularly an industry important to a lot of different cultures," said Sen. Alex Diaz de la Portilla, R-Miami, who is sponsoring the Senate's smoking ban bill. "When voters went to vote last November, they did not go with the intention of banning smoking for cigar manufacturers."

In their suit, nine major tobacco manufacturers argued that the smoking amendment violated the U.S. Constitution by potentially interfering with interstate commerce and conflicting with the supremacy of federal law.

Smoking will be banned in most restaurants and bars. Exemptions include stand-alone bars that make less than 10 percent of their profits from food, and the outdoor sections of restaurants - a provision that has upset some business owners. "[The law] does provide an unfair advantage for establishments that have outside seating," said Bart Hofford, incoming president of the Key West Restaurant and Bar Association.

Any area that is less than 50 percent covered by a roof and walls is considered open-air under the law and smoking can be allowed. Also exempted are areas rented to VFW clubs and similar organizations.


BITS & PIECES

  • New York City's controversial smoking ban became effective March 30, banning smoking in all bars and restaurants. Only a handful of existing cigar bars - pending final certification - and retail shops are exempt from the ban. In July, New York state enacts a similarly restrictive ban statewide.

  • PT Gudang Garam maintained its leading position in Indonesia's domestic clove cigarette market last year, with market share increasing to 34% from 33.8% a year earlier, according to AFX Asia. Sampoerna came in second with 21.8% compared to 19.4% previously. Bentoel had 19.2%, up from 17.2% and Djarum was unchanged at 0.7%.

  • A.S.P. Enterprises, growers and dealers of tobacco, has relocated to a new address. The company can now be reached at 9700 NW 17th Street, Miami, FL 33172, Tel: (305) 593-6958, Fax: (305) 477-5754, Web: www.aspenterprises.com.

  • CAO International has been awarded the WorldStar 2002 Award for excellence in packaging for its innovative Box-Pressed Tubo design. Eligibility in the competition required all entrants to have been the recipient of a domestic or international packaging award during the past two years; CAO previously won the German Packaging Award 2002 in Dusseldorf, Germany last year. "Our goal has been to combine a fresh and innovative approach towards packaging and marketing with our traditional 'old school' aistheics of cigar craftsmanship," said Tim Ozgener, CAO vice president.


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