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August,
2007

TOBACCO INDUSTRY NEWS
Production, Distribution, Regulation, Trade...

CAO International Named U.S. Distributor of Café Crème and Nobel Petit Cigarollo Brands

Nashville, TN - CAO has become the exclusive U.S. distributor of the global cigar brand Café Crème and Nobel Petit which are produced by CAO's parent company Henri Wintermans / ST Cigar Group effective July 1. Davidoff of Geneva (CT), which has no corporate ties to ST Cigar Group, had been the brand's longtime U.S. distributor.

Café Crème was first launched in 1963 in the United Kingdom, making it the first cigarillo to enter the market. Today, Café Crème is the world's number one cigarillo brand and is available in more than 100 countries worldwide. Café Crème is the category leader in France, the United Kingdom, Australia, Spain, Portugal, Russia, Hong Kong and Singapore.

"We are very excited about adding both the Café Crème and Nobel Petit brands to our portfolio," stated CAO national sales manager Micky Pegg. "These are brands that possess a global status and heritage, and it is our goal to make the Café Crème range an integral part of every retail tobacconist's inventory."

Nobel Petit cigarillos are available in Sumatra, Lights, Brasil, and Dominican varieties; Café Crème cigarillos in regular, light, Oriental, and filter varieties.


New York State Bill Seeks to Ban U.S. Postal Service Deliveries of Tobacco Products in Name of Youth Access

Albany, NY - New York Congressman John M. McHugh (R) has introduced a measure that would outlaw the shipping of cigarettes and other tobacco products via the U.S. Postal Service (USPS), while a new study fingers convenience stores as a leading cause of smokes for youths.

The Internet-Postal Service connection is the primary source of cigarettes for many minors, McHugh noted. All major commercial shippers have stopped accepting tobacco, but the USPS has taken no action on its own to protect children from cigarette addiction.

"The Postal Service has allowed itself to become a tool of the Internet and mail-order tobacco trade," said James Calvin, President of the New York Association of Convenience Stores.

The legislation has received strong endorsements from health groups and small business organizations such as the Campaign for Tobacco-Free Kids, the American Cancer Society, and the New York Association of Convenience Stores.

According to an American Journal of Public Health study, almost 20 percent of the tobacco sales websites do not say anything about prohibiting sales to minors, more than half require only that the buyer indicate they are of legal age, another 15 percent require only that the buyer type in their date of birth, and only seven percent require any driver's license information.

State and local governments have lost more than a billion dollars per year in taxes evaded by online tobacco sellers.

All three major shipping companies-DHL, FedEx, and UPS-have stopped shipping cigarettes nationwide. As a result, all internet tobacco vendors are using the USPS to make their deliveries, McHugh noted.

Congress alone has jurisdiction over what is delivered via U.S. mail, and because of this inconsistent policy, states face a significant loophole in their tax enforcement policy.

But while convenience store operators are applauding McHugh's measure, a study suggests many stores aren't doing much on their own to keep cigarettes away from minors.

Clerks who work in convenience stores that sell gasoline are the most likely to sell tobacco to minors, according to a study appearing in the August issue of the American Journal of Preventive Medicine.


Proposed $35 Billion Federal Cigarette Excise Tax Increase is Approved by Senate Committee

WASHINGTON, D.C.-Leaders of the Senate Finance Committee have tentatively agreed to a $35 billion federal tobacco excise tax increase which would be used to broaden a federal program to provide health insurance for millions of low income children.

President Bush could block any deal, however. In his 2008 budget, Bush proposed adding $5 billion over five years to the program, which currently costs almost $5 billion per year. He has criticized some states' expansions of the program to adults and less needy children.

The children's health insurance program expires Sept. 30. The $35 billion tax hike would take place immediately and increase the federal cigarette tax by 61 cents a pack to $1 a pack. The current Federal tax on cigarettes is 39 cents per pack and on cigars is 20.719 percent of the wholesale price with a cap of $48.75 per thousand for large cigars, or 4.9 cents per cigar. These taxes generated about $7.2 billion to the U.S. Treasury in 2005. The federal tobacco tax, last raised in 2003, has never been increased by more than a dime per pack.

The industry says smokers already pay $89 million a day in federal and state taxes and tobacco settlement costs.

Dawn Carlson, president of the Petroleum Marketers and Convenience Stores of Iowa has taken a stand against the proposal, predicts with another hike in the price of a pack of cigarettes, there'll be even more attempts to steal cigarettes and that creates safety concerns for convenience store employees.

Carlson predicts stores will have to hire more staff, increase security measures, and install more security cameras if the cigarette tax goes even higher. Tobacco products typically account for one-third of the items sold in convenience stores.


BITS and PIECES

  • CAO was selected to provide cigars for the NBA Players Association Annual Summer Meeting held at the Atlantis Resort & Casino in The Bahamas, June 25-29, which drew over 200 of the NBA's elite players, their families, NBA executives, and associated VIPs. NBA VIP gift bags included a sampler of CAO cigars along with CAO M.E.R.C.H. headwear.

  • Swedish Match has agreed to purchase Bogaert Cigars, a privately held cigar company headquartered in Belgium that has been producing cigars since 1937. The company has production facilities in Belgium and Indonesia, producing some 270 million machine-made cigars and cigarillos under its Bogart and Hollandia brands as well as private label which are sold primarily in France, Germany, Netherlands, and Belgium. Purchase price was not disclosed.

  • In June, 41 members of congress, led by Rep. Louis Capps (D., Calif.), sent a letter to Vogue magazine Editor in Chief Anna Wintour and Vice President/ Publisher Thomas Florio urging the publisher to voluntarily reject cigarette advertising, expressing specific displeasure with recently published ads for R.J. Reynolds' new Camel No. 9 which the congressmen accused the manufacturer of marketing to Vogue's teen readers.

  • Philip Morris International has launched Marlboro Mix 9 in Indonesia, a cigarette flavored with cloves. Last year, the company bought a controlling stake in Indonesian cigarette manufacturer Sampoerna for $5.2 billion. Almost two-thirds of adult males in this country of 230 million people smoke and growing numbers of females are joining them, analysts say. Ninety percent of smokers choose cigarettes blended with cloves. The new blend is the strongest Marlboro currently on the market, comparable to other full-strength kretek on sale in Indonesia, but twice as strong as regular Marlboros on sale elsewhere in the world.


  • SMOKESHOP - August, 2007