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June,
2004

TRENDS AND TRENDSETTERS IN SPECIALTY TOBACCO RETAILING
Online Group Withdraws Challenge to Internet Cigarette Ban

Buffalo, NY - An online tobacco retailers' group has withdrawn its federal court challenge of New York's ban on Internet and mail-order tobacco sales while awaiting the outcome of a lawsuit pending in state court, the group announced.

The Online Tobacco Retailers Association, or Oltra, is now the second group to drop legal action against the state over the ban. The Seneca Indian Nation, which sells large quantities of untaxed cigarettes at reduced prices over the Internet, withdrew its federal lawsuit in April.

Joe Crangle, attorney for Oltra, said the group is awaiting the outcome of a state Supreme Court action which claims the law was improperly passed by the Legislature in 2000.

The federal lawsuits by Oltra and the Senecas argued more broadly that the law was unconstitutional. The Senecas also claimed the statute violated their sovereignty rights under Indian treaties.

The law, passed in 2000 but not enforced until last year, prohibits Internet and mail-order sales of cigarettes to private individuals in New York state who are not licensed by the state to receive them. Industry groups say the law is intended to increase the state's tax revenues by forcing smokers to buy cigarettes at brick-and-mortar stores within New York state, rather than off the Internet.

In dropping the Senecas' legal challenge in April, Seneca president Rickey Armstrong said only that the tribe had changed its strategy on the issue and would address it in a different way.

The decision came after the Pataki administration announced it would hold off on efforts to collect state taxes on tobacco and gasoline sales from Indians to non-Indians at reservation businesses.


Partagas Roulette Nights Make Retail Debut

New York - General Cigar, maker of Partagas cigars, is launching a series of 50 in-store events scheduled to take place at select tobacconists nationwide throughout the year.

The Partagas Roulette Nights promotion is a tremendous visibility-building event at retail, the company notes, even though consumers won't be able to bet with or win real money. A six-foot high announcement sign, 200 postcard invitations, specially-priced 10 count boxes, Partagas playing cards, and Partagas gaming chips will be sent to participating tobacconists prior to their event. For the in-store event itself, General Cigar will supply tobacconists with a roulette wheel and a roulette dealer, as well as Partagas cigars to be used as free samples and prizes.

Consumers who attend the events receive a free deck of Partagas playing cards with the purchase of specially-priced, 25%-off 10-count boxes. Consumers who participate in the Roulette Night will also be eligible to win instant prizes.

Consumers can log on to www.cigarworld.com to find out where and when they can participate in one of the Partagas Roulette Nights closest to them.


Natural American Spirit 2004 Display Contest to Award $25,000

Santa Fe - Innovation and creativity continue to be the driving forces behind the Natural American Spirit Retailer of the Year 2004 Display Contest sponsored by Santa Fe Natural Tobacco Company, maker of Natural American Spirit cigarettes.

Winners will share in more than $25,000 in cash and prizes that will be awarded for creating an original Natural American Spirit display or promotion. Entrants are required to create a Natural American Spirit display or execute a Natural American Spirit promotion for the duration of the contest period, June 1, 2004 through June 30, 2004.

The contest produces dramatic results, not just for cash prizewinners, but for all contestants. "Participants tell us that the displays and promotions create higher foot traffic, increased sales, and newfound customers," said Dan Miller, vice president of marketing.

"This (promotional display) has not only sparked interest in all blends of Natural American Spirit Tobacco," said Sabrena Thompson of Tobacco House, Inc., "it has also increased sales."

Cash awards include a grand prize of $5,000, a first-place prize of $3,000, a second-place prize of $2,000, and a third-place prize of $1,000. In addition, 100 honorable mentions will receive $150 each. In addition, retailers will receive a ballot with our top choices for "Retailer of the Year" in September. Retailers are encouraged to cast their vote for the Retailer of the Year Grand Prize Winner. All participants will receive a retro-styled jacket with the Santa Fe Natural Tobacco Company logo, a $50 value, just for entering a display or promotion in this year's competition.

For more information on the Retailer of the Year Contest or Natural American Spirit products, contact Santa Fe Natural Tobacco at (1-800) 982-7454.


NEW & NOTABLE

  • Steve's Discount Cigarette Outlet opened in March in Valparaiso, Ind. Owner Steve Bellavia stocks cigarettes, cigars, pipe tobacco, lighters, and other tobacco-related products in the 1,100 square-foot shop, which also features a smoking lounge fitted with couches, end tables, and a cable television to give smokers a chance to relax. A smaller humidor holds the discount cigars, while a larger unit holds high-end cigars.

  • Old Town Cellar, a 1,200 sq.-foot wine and cigar store, opened in March on Main Street in San Bernardino, Calif., one of the first merchants to locate in the first phase of the Old Town La Quinta project, a six-acre retail, restaurant, and office development project there. Owner Dustin Nichols says that shop has been averaging about 50 patrons per day and generating about $50,000 per month in revenue since its opening, but expects business to quadruple within a year once surrounding retail and restaurant space is filled.

  • The Mohegan Sun, a gaming, entertainment, shopping, and meeting complex in Uncasville, Conn. owned by the Mohegan Tribe, celebrated the grand opening of the Clay Pipe Smoke Shop in its retail promenade in April. The tobacco shop features 243 varieties of premium cigars - billed as the largest selection in the state. The shop also carries a full selection of accessories, humidors, pipes, and Colibri lighters, as well as logo merchandise, leather jackets, accessories, knives, and sunglasses, from the Swiss Army Collection.

  • Sioux Falls, S.D. is home to the new Stogeez Cigar Lounge located downtown. Owner Tim Kant invested "thousands" of dollars in a ventilation system that keeps the lounge clear of smoke. The lounge works with Eastwold smoke shop, located just up the street, to provide most of the selections on the lounge's cigar menu.

  • Lind Boss Price has opened The Cigar Lounge on Washington Street in Grand Forks, N.D. The strip mall location features a 20-by-5-foot humidor, over 150 cigar facings, and "plenty of space" for customers to comfortably enjoy their cigars at the shop.

  • SMOKESHOP - June, 2004