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August/Sept.
1999

PRODUCERS, SUPPLIERS, REGULATIONS & ASSOCIATIONS


FTC Calls for Health Warnings on Cigars
Would Ban Electronic Ads

WASHINGTON, DC - The Federal Trade Commission has released a report recommending that Congress pass legislation mandating health warnings on cigar labeling and advertising and prohibiting cigar ads on television and radio.

According to the report, which focused on the cigar industry's 1996 and 1997 advertising and promotion expenditures, there have been substantial increases in the industry's sales, revenues, and advertising. The investigation came in response to the dramatic increase in cigar consumption and increased concern among health authorities about risks associated with cigar consumption. The data for the report was collected from five leading domestic cigar manufacturers: Consolidated Cigar Corp., Swisher International, Inc., General Cigar Co., Havatampa, Inc., and John Middleton, Inc.

"We now know that there has been a dramatic increase in cigar use and in the extent of advertising for cigars in the last few years," FTC Chairman Robert Pitofsky said in releasing the report. He noted that, unlike cigarettes and smokeless tobacco, cigars are not regulated and said the FTC was "recommending that Congress pass legislation mandating health warnings on all cigar advertising and packaging, and a ban on electronic advertising."


Swedish Match Acquires El Credito
RICHMOND, VA - Swedish Match has reached an acquisition agreement with El Credito Cigars, a producer of handmade premium cigars based in Miami. With the purchase, Swedish Match has gained strong entry into the premium cigar market.

The purchase includes production units in the Dominican Republic and Miami that employ a total of 350 workers. Ernesto Perez-Carillo, the company's president, will continue in his current capacity while assisting Swedish Match in developing greater premium cigar operations in the domestic and global markets.

El Credito's 1998 sales reached approximately $11 million. El Credito' s largest and most popular brand is La Gloria Cubana, one of the most exclusive cigars sold in the U.S. The company's other brands include El Rico Habano, El Credito, and La Hoya Selecta.


Holt's, Antillian in Distribution Deal
PHILADELPHIA, PA - Holt's Cigar Holdings announced the signing of an exclusive distribution agreement with Miami-based Antillian Cigar Corp., whose brands include Sosa, Sosa Family Selection, and Imperio Cubana.

The agreement calls for Ashton Distributors, a subsidiary of Holt's, to provide exclusive sales of Antillian's brands, which will enjoy the benefit of Ashton's unified, national sales force.

Holt's president Robert Levin commented, "We are delighted and extremely enthusiastic about this agreementÉbecause it represents a great opportunity for both companies to grow. Our sales force is also excited about their ability to add Sosa cigars to the variety of quality products they currently represent."

Sosa cigars are manufactured by Tabacalera A. Fuente y Cia in the Dominican Republic under the supervision of respected blender Juan Sosa.


A Saint Luis Rey Celebration
Executives from Tabacalera Cigars International and Havatampa celebrated the reintroduction of Saint Luis Rey at the RTDA. Pictured above are, from left: Benji Menendez, director of Central American and Caribbean Operations; Ingrid Diaz de Soto, director general, Caribbean Operations; Peter Strauss, director of U.S. Operations, TCI, USA; Javier Plantada, director general, Central American Operations; Marty Faust, vice president of sales, premium cigars; Enrique Lloves, president and chief operating officer, TCI, USA; Barton Bridges, president and chief executive officer, Havatampa; Donald C. Young III, vice president of marketing and advertising, Havatampa.

New Factory for Indian Tabac
Facility to Boost Production, Quality

NAPLES, FL - Indian Tabac Cigar Co. has moved production into a new factory in San Matos, Honduras. The modern, 30,000 sq. ft. facility will allow for a 300% increase in rolling capacity, according to Rocky Patel, president of the company.

"Indian Tabac has emerged from the cigar slump with such strong demand for its cigars that we outgrew our factory in Danl'," says Patel. "This [new facility] meets the accelerating demand for our premium cigars, and accommodates future market growth."

The new location is about six miles from Indian's previous factory in Danl', the center of Honduran cigar rolling. An open, airy building design capitalizes on the mountain location's naturally cool climate, so the tobacco remains moist and supple, crucial to proper bunching and rolling. Two giant cold-storage areas maintain the bulk leaf at ideal conditions.

The factory employs 420 workers, including 160 bunchers and rollers, teamed in pairs. Twenty quality control workers monitor every aspect of the process. Two men alone combine 75 years of experience supervising bunching and rolling, and a third has been selecting and curing tobacco for 50 years.

The facility, owned by Nestor Plasencia, is unusually large in the current climate of failing factories. Except for a small, separate private-label operation, Indian Tabac has free run of the entire facility, which is also unique in Plasencia's organization.

Company founder Phil Zanghe, who resides full-time in Honduras, says, "this autonomy allows me to be present during every stage of the cigar operation, from pre-preparation of tobacco to shipping."

"Nestor pioneered and grows almost all the new Habana 2000 wrapper leaf," adds Patel, "and we get first choice of this revolutionary tobacco. The new factory and our close association with him furthers our goal of controlling the entire cigar-making process, turning the finest tobacco into the industry's number one boutique cigars."

Indian Tabac manufactures six lines of premium cigars including their top-selling Classic and new Box-Press "Super Fuerte."


CORPORATE BRIEFS
General's Quarterly Income Off 50%
new york - General Cigar Holdings, Inc. reported second quarter income of $2.4 million on sales of $35.1 million, a decline of 50 percent and 20 percent respectively, compared to $4.8 million in income on sales of $44.1 million in 1998. Edgar M. Cullman, Jr., president and c.e.o. said the company's lower results were due to "softness in the premium cigar business and the reduction of inventory levels by retailers who had continued to purchase high quantities of cigars through the 1998 second quarter in anticipation of increases in consumer demand."

CigarAmerica Quarterly Sales Jump 253%
beverly hills, calif. - OroAmerica, parent of CigarAmerica, Inc. said that sales at its cigar unit rose by 253 percent to $319,000 in the first quarter of fiscal 2000, compared to sales of $126,000 in the first quarter of fiscal 1999. The operating loss in the quarter fell by 11 percent to $221,000 compared to $248,000 in the same period of the prior fiscal year.

Record Sales at Holt's Cigar
philadelphia - Holt's Cigar Holdings, Inc. reported record results for the first quarter ended June 30, 1999. Net sales increased 13.7 percent to a record $8.3 million compared to $7.3 million in the first quarter of fiscal 1999. Net earnings for the first quarter were up 8 percent to a record $1.04 million compared with $965,821 for the same period in fiscal 1999.


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