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June,
2005

NATO:
Fighting the Good Fight

By Joseph Finora

Armed with a team of experienced leaders, NATO aims to close the gap between legislation and reality.

NATO. No, it is not the acronym for the North Atlantic Treaty Organization. In the tobacconists' world NATO means "National Association of Tobacco Outlets" (www.natocentral.org), a one-time grass-roots organization that's blossomed into a fulltime lobbying and communications group aimed at rallying support for retailers while fighting the blizzard of anti-tobacco legislation coming from Washington and state capitols. And it's just starting to gear up the fight, according to executive director Thomas Briant.

NATO, founded in 2001 and headquartered in Minneapolis, Minn. boasts about 2,100 members, most of them tobacco outlets. However, the organization can count a cross-section of the U.S. tobacco industry - including Altria Group Inc., and Altadis USA, as well as roll-your-own manufacturer Robert Burton & Associates., and nearly 50 regional and national distribution companies such as Arango Cigar Co. - as members. Chains like Smoker Friendly and franchise-operated stores such as Tinder Box are also on board. A growing number of traditional tobacco shops are also members, with NATO increasingly reaching out to this audience. During the first four months of 2005, R.J. Reynolds Tobacco Company, Swedish Match North America, and U.S. Smokeless Tobacco Company sponsored a NATO retail membership drive. As a result of the effort, some 200 tobacco stores have joined the association.

Briant is supported in his legislative and communications efforts by vice president Velma Hartley in Columbus, Ga.; Jackie Cohen in Washington D.C.; Tim McKinney in Bedford, Ind.; and Shon Ross in Lubbock, Texas. Combined, they have over 60 years of various tobacco industry, legislative and communications experience. The group estimates that 90 percent of its efforts are spent monitoring tobacco-related bills and providing support to those who will be negatively impacted by them. As this issue went to press, NATO was focusing on, among other things, age-restriction bills in Alaska, Kentucky, and New York.

Dues are constructed around a sliding scale based on business size: a retailer with one location can expect to pay $100 per year; a two-store location retailer will annually pay $200. The benefits largely come from helping to support a group that regularly tries to stem the tide of anti-tobacco legislative action through intense information and communications lobbying, but there are other reasons to join.

In addition to assisting members on tobacco legislation, NATO works to "enhance the common business interests" of tobacco stores and to encourage the expansion of the tobacco store segment of the retail marketplace. Not to neglect the business side of retailing, the benefits of joining NATO include not only assistance on tobacco legislative issues, but also the opportunity to utilize competitively priced retail services so even independently owned tobacco stores can conduct business on a more level playing field. NATO members can also save money on credit card-processing services that are exclusively offered to their organization by a major card-processing company. Members can also take advantage of quarterly product discounts and promotions offered exclusively to NATO members by major manufacturers and distributors.

Last March the Federal Bureau of Alcohol, Tobacco and Firearms announced a joint effort with state attorneys general and the major credit card companies, informing cigarette website companies that they will no longer be allowed to accept Visa, MasterCard, American Express, and other credit cards for the sale of cigarettes over the Internet. In response, NATO recommended members consider contacting Huntington Merchant Systems (HMS), the preferred credit card processing service for NATO members. HMS will analyze the retailer's tobacco sales and work to offer credit card processing services to members who sell other tobacco products by mail order, catalog or website.

"We work directly with all members to help contact state and Federal elected officials on tobacco matters," says Briant, a lawyer for 25 years, who got his start working with the Central Minnesota Tobacco Store Association, a retailers' group. "Anti-tobacco groups want to usher in a new era of Prohibition through taxation and smoking bans."

This became the model for NATO, which in addition to fighting excessive taxation on tobacco products and smoking bans, has taken up the cause in cases of advertising and display issues as well.

NATO employs two main communications methods to spread its message. Instead of listing the downloadable form letters many organizations post for members seeking communications guidelines, NATO strives to draft personalized letters for each member interested in contacting various representatives. "A retailer is very busy yet each case is unique," notes Briant. "We prepare a letter so the retailer only has to sign and send it in." NATO also lists addresses, as well as phone and fax numbers for government representatives. When necessary, it will help prepare members to testify.

Another effective communiqué is "customized alert sheets." These are produced when a retailer is willing to distribute pertinent news to customers. They also contain appropriate legislative contact information but are aimed at getting customers involved. "It's generally very easy for a retailer to communicate how the customer's lifestyle is being threatened and how he may have to pay additional tax. A retailer tends to know which clients will be concerned enough to act. But again, the trick is to make it simple and direct." NATO has built its communications efforts around a specialized database that links retail locations with state and congressional district offices.

Its e-newsletter, NATO Monitor, reports on relevant tobacco issues across the country while keeping members updated on organization highlights and business tips, such as which credit card processes to use in the face of increasing scrutiny by electronic-payment companies of tobacco sales. Its Pinnacle Award annually recognizes industry standouts. And while these forms of communication make up the majority of NATO's communication activities, special efforts can be formulated should a case warrant it.

Fax-to-Fax and Face-to-Face
As states and municipalities learn that the power to tax tobacco virtually at will may frequently backfire and result in revenue that's lower than anticipated, messages from groups like NATO can help stop the bleeding. But for communications efforts to be effective, the game plan has to call for action on all fronts. While faxes, e-mails, and old-fashioned letter writing and petition campaigns clearly help the cause, in political circles very little can compare to the power of face-to-face communication.

The legislative update page on its website lists federal as well as state tobacco activity. It notes bill numbers, sponsor(s) and proposals as well as a status box. A similar state-by-state breakdown informs visitors of what's taking place across the country. Other updates cover proposed action on flavored cigarettes and tobacco, retail licenses, fire-safe cigarettes, and Internet/mail restrictions. There's also a "hotlink" to state legislature websites.

In 2004, NATO teamed with the Retail Tobacco Dealers' Association (RTDA) and the National Association of Convenience Stores (NACS) to defeat a Food & Drug Administration (FDA) bill that would have - among other things - banished tobacco products to behind-the-counter or under lock-and-key status. It also would have outlawed walk-in humidors, prohibited color ads in stores, and increased penalties for tobacco sales to minors. In addition to a nationwide customer-alert and letter campaign, NATO representative Cohen walked up and down Capitol Hill personally handing information to legislators. The unprecedented effort succeeded.

"Governments have to realize they've reached the point of diminishing returns when it comes to increasing tobacco taxes," notes Briant. "What they've got to consider is that they're also regulating people's livelihoods and inhibiting employment growth."

But so far, it seems like there's almost no end to the fights on NATO's card. In 2004, nine states considered state-wide smoking bans. In 2005, the number has more than doubled to 19. Tax on Other-Tobacco-Products (OTP) is another prime target.

"In the end, we're small business people paying tax and are impacted by the action of our governments," states Briant. "We've got to use every means we have."

The National Association of Tobacco Outlets, Inc. (NATO), 15560 Boulder Pointe Rd., Minneapolis, MN 55347, Toll-free: (866) 869-8888, Email: info@natocentral.org.


SMOKESHOP - June, 2005