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Oct./Nov.
2000

RETAILER & TOBACCO INDUSTRY NEWS (cont.)

California’s Proposition 10 Trial Gets Underway

CALIFORNIA - The trial challenging California’s Proposition 10 got under way recently, with retail tobacconists taking on the state in an attempt to rescind legislation they feel is harmful to their business interests. The case of the California Association of Retail Tobacconists, Inc., et al. v. State of California, et al. began on September 15 under the supervision of Superior Court Judge Ronald S. Prager. The case seeks to invalidate Proposition 10, passed by California voters in November 1998 to impose a 50-cent per pack excise tax on cigarettes and an equivalent tax on other tobacco products. The proposition established the California Children and Families Commission, with its tax revenue funding pre-natal to age five programs in California. Rob Reiner, chairman of the Commission and proponent of the proposition, is a named defendant in the case. Charles Janigian, president of the California Association of Retail Tobacconists, was extremely optimistic regarding the tobacco industry’s likelihood of prevailing, given what he described as the State of California’s legal shortcomings in passing the tax.

Mike Ditka Keynote Speaker at 2001 International Tobacco Expo in Vegas

LAS VEGAS, NV - National Football League legend Mike Ditka will be the keynote speaker at the annual International Tobacco Expo, April 17-19, 2001, in Las Vegas. Ditka is scheduled to speak April 19th following the 8 a.m. breakfast held at the Rio Hotel Convention Center.

Ditka is among an elite group of great NFL players who has gone on to achieve success as a head coach; he became the 4th winningest coach in the league after recording his 100th coaching victory in his 10th season.

“He is a highly sought after motivational speaker,” says Sharon Wayne, ITE show manager. “Ditka is an exciting sport figure and has a love for cigars.”

The International Tobacco Expo is a one-stop venue for merchandise buyers at tobacco outlets, tobacconists, distributors and wholesalers, drug stores, liquor stores, mass merchandises, catalogs/internet, hotels/casinos. Products displayed include cigarettes, cigars, related accessories, and such ancillary items as POS systems, ATM machines, and phone cards.

Tobacco retailers will have the opportunity to brainstorm with their peers at a series of round-table sessions scheduled for Tuesday, April 17th from 2 p.m. to 5 p.m. These are open-forum sessions and will include discussions on mutual challenges and opportunities within the industry. Bonnie Herzong, a tobacco analyst with Credit Suisse First Boston, is returning by popular demand and scheduled to speak on Wednesday, April 18th at 8 p.m.

The exhibit hall will be open to all retailers with a tobacco license, at no charge. Hours are 11 a.m. to 5 p.m. on Wednesday, April 18th and 11 a.m. to 4 p.m. on Thursday, April 19th.

For information on attending or exhibiting at the ITE, contact Sharon Wayne, Show Manager, at (702) 893-9090, Toll-free at (800) 859-9247, or visit www.internationaltobacco.com.


Tobacco Manufacturers to Fight Canadian Labeling Laws

QUEBEC - Following the July passage of new laws on cigarette packaging in Canada, three tobacco companies, led by Imperial Tobacco, have launched a lawsuit that aims to strike down the legislation as unconstitutional.

The new laws require that warnings large enough to cover 50% of the total packaging of cigarettes must be in place by January 2001. Furthermore, there will be a total of 16 different textual warnings like “Cigarettes Cause Mouth Disease” alongside graphic photos depicting smoking-related illnesses, including cancerous lungs, diseased gums, or a brain after a stroke.

Imperial, which is joined in the suit by JTI-Macdonald Corp. and Rothman, Benson, and Hedges, Inc., contends the labeling law is unconstitutional because it infringes on the corporation’s freedom of expression.

“These packages belong to us,” said Imperial spokesman Michel Descoteaux. “We believe that for the government to come and seize 50% of the package for their own purposes is an expropriation of our trademarks and our packages.” He said that Imperial, while not against warning labels on cigarettes, feels the new larger labels are excessive.

The suit claims the Canadian government has also failed to produce any evidence that the new labels would lead to a reduction in the number of smokers.

Garfield Mahood, of the Non-Smokers Rights’ Association, argued the lawsuit suggests hypocrisy on the part of the tobacco industry regarding health warnings. “We’re obviously very critical of the industry for attempting to deny to customers the real risk of its products,” he said.

Imperial said the label requirements make a mockery of a 1995 Supreme Court decision that struck down sections of the Tobacco Products Control Act as illegal. That decision came after five years of court proceedings.

In September, manufacturers were denied an injunction to delay implementation of the new warnings while their legality is being decided by the courts, and are preparing to meet the deadline.


BITS AND PIECES

  • Danish tobacco maker Peter Stokkebye has opened its North American sales, marketing, and distribution headquarters, Peter Stokkebye International, Ltd., in Charlotte, N.C. The management team of the North American headquarters is headed by Erik Stokkebye, a fourth-generation member with 22 years of experience in the tobacco industry. Peter Stokkebye International, P.O. Box 481938, 6605 West W.T. Harris Blvd., Charlotte, Suite Q, N.C., Tel.: (704) 597-0416, Toll-free: (877) 605-1577, Fax: (704) 597-9568.

  • The number of cigarettes sold per person in the U.S. fell a record eight percent last year, according to government data and a report from the environmental research group Worldwatch. The Agriculture Department cites higher taxes, price increases to offset the $246 billion tobacco settlement, and the cumulative impact of 35 years of health warnings as reasons for the sales decrease. Smoking in the U.S. dropped from 2,810 cigarettes per person annually a decade ago to 1,633 last year, a 42 percent decline, according to Worldwatch.

  • Environmental Tobacco Smoke Listed As Carcinogen
    The Ninth National Toxicology Report on Carcinogens released on May 16th added environmental tobacco smoke (ETS), directly inhaled tobacco smoke, and smokeless tobacco (such as snuff) to its list of known human carcinogens. The report listed a total of 218 substances believed to be cancer-causing.

  • Cigar sales have tripled in Argentina during the past four years, from 5.3 million units in 1996 to over 15 million units in 1999. Cigar imports from countries including the U.S., Cuba, and the Netherlands account for 98 percent of the local market, estimated to be worth between US$15-20 million. Low-end cigars hold a 32 percent share of the market.

  • The Agriculture Secretary of the Dominican Republic, Eligio Jacquez, announced that only those tobacco growers with existing supply contracts will be allowed to plant tobacco this season. The decision is reportedly an attempt to prevent overproduction, which is believed to have affected leaf quality and prices. Jacques reported that the tobacco-growing area in the country is currently over 300,000 hectares.


  • SMOKESHOP - October 2000