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Sept/Oct
2002

TRENDS AND TRENDSETTERS IN SPECIALTY TOBACCO RETAILING
New York Hikes Cigar Tax; Retailers Struggle
Albany, NY - State lawmakers here initially considered raising New York's cigar tax to 54 percent of the wholesale price, but intense lobbying resulted in only a 37 percent cigar tax, which went into effect on July 2. New York State previously collected about $21 million a year from the old 20-percent tax and expects to get an additional $15 million under the new rate.

Cigar store owners question whether the state will get much additional revenue, though, speculating that the higher tax will give customers more incentive to avoid taxes altogether by buying from catalogs, the Internet, or Indian reservations.

Faced with an inventory stock adjustment tax, retailers statewide held sales to reduce inventory before the new rate went into effect, and wrangled with the difficult decision of raising retail prices afterwards.

"Everybody outside New York State has a 45 percent advantage," said Earl Schultz, who opened Smokin Flamingo four years ago with his wife Louis. "People won't smoke less. They'll buy their cigars some place else. New York State has made it very, very adifficult to do business."

"The guys who buy a couple of cigars for the golf course will still stop in," said Steve Dvorak, owner of the Tinder Box in Amherst, N.Y. "But the serious smokers, we may lose the box sales."


California On Alert Again...
Owners of small cigar and pipe shops visited the California state Capitol in August urging senators and assembly members to vote against any increased taxes on cigarettes because of the subsequent impact on cigars, pipe tobacco, and smokeless tobacco. California is the only state in the country that links cigar and OTP tax to cigarette tax rates, and a current proposal could increase the cigar tax by 50% next year if passed, crippling the cigar and pipe tobacco businesses. "Most alarming from our standpoint was the number of senators and assemblypersons who were simply unaware of the OTP tax," said Charles Janigian, president of the California Association of Retail Tobacconists. Linda Squires, owner of The Squire tobacco shop in Santa Rosa, said "If the tax on cigars and pipe tobacco goes up again, I'll simply have to close my doors." More than 100 tobacco stores in California went out of business following the passage of Proposition 10 in 1998.

Macanudo '56 T-Bird Winner Drawn at RTDA Show
Macanudo cigars offered retailers the chance to win a 1956 Ford Thunderbird at this year's RTDA in Las Vegas, NV. The promotion celebrated Macanudo's current advertising campaign, "Macanudo, An American Passion." The winner, Teresa Essa of Smoky's of Livonia, was selected on July 24 at the General Cigar Co. booth. Essa (at left) is shown with her new set of wheels.

Major Expansion for Austin's Heroes & Legacies Shop
Austin, TX - Heroes & Legacies has doubled the size of its retail space and private lounge area at its Austin,Texas tobacco store. Totalling 6,000 sq. feet of space in the Arboretum mall, the expanded shop, which relocated to larger space within the Arboretum, has introduced new lines of merchandise including fine Italian writing instruments, Venetian glass pen sets, ST Dupont pens, Star Bay furniture, unique home furnishings, authentic models including replica boats, motorcycles, airplanes, and autos.

The store carries one of the largest selections of pipes and tobaccos in the state, Montecristo coffees, ST Dupont lighters, Mary Frances cigar box purses, Regaud and Aspen Bay candles, Evergreen crystal, leather goods, a wide selection of bar accessories, and The Art of Shaving brushes and accessories. The shop's walk-in humidor has also been expanded, and the store offers customers a weekly "Humidor & Cigar of the Week" special. The shop has also introduced a weekly cigar night featuring a variety of selections from the store's top brands, as well as hosting larger events every four to six weeks.


JR Cigar's Wall St. Store Closes
New York, NY - Described by company president Lew Rothman as "the most beautiful cigar store ever built," JR Cigars at 1 Wall Street Court in Lower Manhattan closed its door in April. The store, located in the former Cocoa and Sugar Exchange building, cost $4.5 million to build, and was completed in 1997. "It leaves the downtown New York smokers with no place to buy cigars at a reasonable price. A big loss all around," concluded Rothman, who cited poor economic conditions in the World Trade Center neighborhood following the terrorist attacks of September, 2001.

Super Bowl Trip is Grand Prize in Zippo's Retailer of the Year Contest
Bradford, PA - The 2002 Zippo Manufacturing Company "Retailer of the Year" will win an all expense paid trip to Super Bowl XXXVII, January 2003 in San Diego, courtesy of Zippo and Sports Illustrated magazine.

"Few products or events have the same name recognition as our Zippo lighters, and certainly the Super Bowl is one that should generate great interest among our retailers to compete for the grand prize," said Pat Grandy, Zippo marketing communications manager. "We've found that the increased in-store display and promotion that the contest stimulates has helped many retailers to significantly increase their sales of Zippo lighters and other Zippo products."

To qualify for consideration as Zippo's Retailer of the Year, retailers must submit an official entry form, a photograph, and a letter describing various aspects of their in-store Zippo merchandising efforts and sales.

A panel of Zippo executives reviews all entries and chooses the winners based on a combination of creativity of in-store Zippo display, promotion of the collectible of the year, and overall sales.

In addition to the Super Bowl trip Grand Prize, six other prizes will be awarded. The First Place prize is an all-expense paid trip for two to the 2003 Zippo U.S. Vintage Grand Prix in Watkins Glen. Two second place winners will receive a DVD player, and three third place winners will receive a Zippo leather-like Duffel bag from Brandlocker.

The 2001 Zippo Retailer of the Year winners were Gatlinburlier, Gatlinburg, Tenn, (grand prize winner); Tobacco Palace, Lancaster, Pa. (first place winner); and Burning Desires, Scranton, Pa. (second place winner).

To obtain an official entry form for the 2002 Zippo Retailer of the Year Contest, retailers should call 800-254-4481.


SMOKESHOP - Aug/Sept 2002