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Aug./Sept.
2000

TRENDS AND TRENDSETTERS IN SPECIALTY TOBACCO RETAILING

Cigarette Sales Slump Under Hefty Tax
NEW YORK - New York cigarette sales have fallen dramatically since an additional 55-cent-per-pack excise tax made New Yorkers the most heavily taxed smokers in the country.

According to state reports, April saw carton sales drop a whopping 48.4 percent to 5.8 million cartons compared with sales of 11.26 million cartons sold during April 1999. The 98 percent increase in the cigarette tax, which put the per-pack tax at $1.11, started March 1. Sales in that month dropped 29.6 percent compared with March of 1999.

Despite the decline in sales, the tax, which was devised by state legislators and Gov. George Pataki as way of financing New York’s Health Care Reform Act, managed to lift tax revenues from $63.1 million in April 1999 to $64.6 million in April 2000. However, the $1.5 million increase is way off the $33 million monthly average needed to reach the goal of an additional $400 million in annual revenues from the increased tax.

Industry officials and retailers are concerned that dwindling sales will devastate business and undermine the legislative intent as consumers have started purchasing cigarettes at alternative sites, such as Indian smoke shops, over the Internet, and from retailers in bordering states, to avoid the tax hike.

“It’s going to cost the taxpayers of New York hundreds of millions dollars to subsidize the health care programs that were supposed to be funded by this tax increase,” said James Calvin, president of the New York Association of Convenience Stores.


Havana Republic Targets Brazil for Retail Expansion
WESTON, FL - Havana Republic has announced the formation of a joint venture with Ricardo Amarou, an internationally known operator of upscale restaurants and clubs, and Sergio Goldberg, a leading developer of Brazilian commercial properties and shopping centers, to develop a group of Havana Republic cigar emporiums in Rio De Janeiro, Brazil. The first emporium is planned to open by year’s end.

Under the agreement, Havana Republic, together with Amarou and Goldberg, would be directly involved in the design, construction, and operation of the stores.

“We are very excited about this opportunity to expand our international retail operations into Rio De Janeiro, one of the wealthiest, most exciting cities in the world,” said Stephen Schatzman, president, Havana Republic.

For the third quarter, Havana Republic’s revenues were rose 7.6% to $169,555, compared to $156,661 for the same period a year ago. Operating expenses for the period, which ended March 31, 2000, were also up, totalling $262,043 compared with $235,044 a year ago. The rise was attributed primarily to the opening of the company’s third cigar emporium. There was a net loss of $105,765, versus a net loss of $20,089 for the fiscal 1999 third quarter.


Excalibur 1066 Vote
Villazon & Co. is asking consumers to vote for one of two new “test blends” for the upcoming Hoyo de Monterrery Excalibur 1066 cigar. Each blend utilizes full-bodied Honduran, Nicaraguan, and Dominican filler, combined with a West African Cameroon wrapper, but feature different binders. One uses a Connecticut broadleaf binder, while the other an Ecuadorian-grown, Sumatra seed binder. Voting began in late June and was set to end July 31. The winning blend will be announced at the Retail Tobacco Dealers of America (RTDA) trade show in August, according to Bill Roethel, Villazon’s vice president of marketing. To receive the sample two-pack, consumers had to purchase a combination of four cigars from Hoyo do Monterrey, Punch, Partagas, or Macanudo. Ballots could be registered by mail or online.


Fincato Opens Humidor Room
Fincato, long renowned for its wide array of pipes and considered Rome’s foremost dealer of Italian pipes, recently opened a smoking lounge and humidified cigar room. Built by Cainarca, a Milan-based company specializing in crafting fine humidors, the striking humidor room is the first of its kind in Rome and the largest in Italy.


Natural American Spirit Retailer of the Year Contest
SANTA FE, NM - Santa Fe Natural Tobacco Company is sponsoring a Retailer of the Year Contest 2000, with prizes worth more than $25,000 available for the winners, including a digital video entertainment system, digital camera, Palm Pilot, and a grand prize dream vacation to the destination of the winner’s choice. All entrants will receive a Sony Discman just for participating.

There are two categories for entry. Winners of the “Biggest, Greatest, Most Overwhelming Display” category will be chosen based on the size of the display and its visibility or prominence in the store, and the potential to boost Natural American Spirit sales.

Those in the “Most Unique and Creative Display or Promotion” category will be chosen based on the uniqueness, creativity, and imagination of the display, and the potential to boost Natural American Spirit sales. Contest entries will be displayed during the month of July. All entries must be postmarked no later than August 14, and received no later than August 31. Winners will be notified on or before October 1. For more information, call Santa Fe Natural Tobacco at (800) 982-7454.


Pre-Embargo Havanas Offered in JR Cigar’s “Cigar Vault”
NEW YORK - A limited supply of pre-embargo Flor de Farach Cuban cigars recently went on sale at JR Cigars’ Fifth Avenue store in New York.

The cigars are part of a selection of special vintage and rare offerings housed in a large “cigar vault,” the brainchild of Lew Rothman, president of 800-JR Cigar Inc. Actually a former walk-in bank vault located in the lower level of the store which opened earlier this year, the vault also houses rare and well-aged Dominican H. Upmann, Bolivar, and Por Larrañaga cigars. Rothman estimates he has about 40,000 of the Cuban Flor de Farach cigars, which were manufactured in 1958 and shipped to Tampa prior to the 1962 Cuban embargo.

The Flor de Farach cigars were likely machine-made, as the company was a second-tier brand, though quite popular. Rothman says he has six sizes of cigars in boxes of 25, 50, or 100 cigars. Prices start at $400, with some of the larger boxes going for $900.

“Remember when Geraldo Rivera opened up Al Capone’s safe on television?” asks Rotheman. “Well, that’s what it was like when I opened the cigar vault. The difference between me and Geraldo, though, was that I knew what was in my vault because I put everything in there.”



SMOKESHOP - August 2000