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October
2003

TRENDS AND TRENDSETTERS IN SPECIALTY TOBACCO RETAILING
Shops Create "Smokeshop Bowl" Football Challenge
Buccaneers vs. Panthers Pits Edward's vs. McCrainies


If the thought of retail promotions has you stumped, take inspiration from the folks at McCranies Pipe & Tobacco in Charlotte, N.C. and Edwards Tobacco Shop in Tampa Fla. - friends who couldn't resist an NFL challenge with the return of football season.

"We thought it might be fun to get the two shops and their customers involved in a little rivalry between the two stores," explains Gordon Smith of Edward's Tobacco and parent company FGT Enterprises, Inc.

With the Tampa Bay Buccaneers defending their Super Bowl Championship this year, Smith challenged his good friends Todd and Trent McCranie to a football bet for the Sept. 14 matchup of the Bucs vs. the North Carolina Panthers. The store with the winning home team would be treated to an eight-person feast supplied by the other store and would be presented with a photo of the other store's staff wearing their rival shops' baseball caps or T-shirts for an entire day. Posters were even made up for each of the stores to publicize the bet, and customers were invited to watch the game at each shop.

"Retail shops can work together to build promotions that get their customers involved and cement relationships with their staff and customers," said Smith, who wanted to create some fun and camaraderie between the two stores.

The game turned out to be a late thriller: a come-from-behind Bucs touchdown, a blocked field goal, and an overtime Panther victory.


Tribal Smoke Shop Raid Tests Sovereignty, Taxation

An attempt by Rhode Island state troopers on July 14 to serve a newly opened Narragansett Indian Tribe tobacco shop a warrant for search and seizure of untaxed cigarettes resulted in a physical confrontation, the arrest of seven tribe officials, and a disputed account of injuries. The tribe sued the state the following day, claiming their rights were violated during the raid. The state appointed a commission to investigate the handling of the raid.

The Narragansett Indians, who have been federally recognized since 1983, began selling cigarettes at the Narragansett Smoke Shop on tribal land in Charlestown, Rhode Island - without sales or cigarette taxes - only two days earlier. The tribe has acknowledged it imported cigarettes from outside state borders and sold them tax-free and without state-approved stamps, according to a document filed in U.S. District Court. By law, Indian sales to Indians aren't subject to government sales taxes, but tribal businesses are supposed to collect taxes on sales to non-Indians.

The tribe maintains it's entitled to sell the cigarettes without state interference, because it is federally recognized and should be treated as sovereign. The state argues the tribe, and its products, are subject to state laws, such as those on taxation. Both sides are bracing for a lengthy court battle that will like reach the Supreme Court.


Tobacco Exec Launches Internet RYO Storefront

Canton, Ohio - Gary Corbett, a veteran tobacco executive who's developed products and direct mail programs for Havana Group, Inc. and Fred Stokker & Sons, has launched a new retail tobacco Internet storefront specializing in roll-your-own and make-your-own products and supplies.

The Tobacco Station (USA), at www.tobaccostation.com, launched in August and specializes in RYO and MYO products: cigarette tobaccos, making and refill kits, machines, tubes, and related accessories. Corbett has been a tobacco manufacturer for over 20 years and has developed many popular cigarette tobacco blends sold on the Internet, through mail order catalogs, and in specialty tobacco stores. He has also developed many popular pipe tobacco and chewing tobacco blends and handles new product development for the new business.

Corbett's partner, Ralph Miller, has also been in the tobacco business for over 20 years and specializes in Internet and mail order catalog marketing. He is responsible for the design and administration of the Website.

Tobacco Station has partnered with a seventh generation tobacco grower and an experienced tobacco manufacturer in North Carolina, responsible for tobacco processing, packaging, and order fulfillment from the company's distribution facility.

To prevent underage tobacco sales, the web site uses a third-party, secure age verification service to confirm that customer-provided birth date information is accurate by searching a variety of government databases.


Alberta Cuts Cigar Tax Hike in Half

Edmonton - The Canadian province of Alberta reversed a massive 183 per cent tax hike on cigars in July, delivering relief to struggling cigar store owners. The move, which will trim $7 to $8 million from Alberta's treasury, was also welcomed by cigar smokers who were spending double the amount for lower-end cigars that smokers paid in other jurisdictions.

"It was having an adverse effect on retailers, mostly in the border communities,'' said Cathy Housdorff, a Revenue Department spokeswoman. The reduced tax is now 95 per cent - prior to the March, 2002 tax hike, the levy was 80 per cent.

Housdorff said she doesn't believe the tax cut will boost cigar smoking. She said last year's huge tax increase resulted in a significant decrease in cigarette smoking (25%), but had little impact on the use of other tobacco products - cigar consumption fell by only 3.6 per cent.

"This cut will really help people on the lower end," said Ken Knowles, owner of Hub Cigar. "With the big tax increase, our upper end wasn't hit that much because people with money were buying cigars anyway, but the middle and lower end really took a kicking.''

The tax cut resulted largely from a small but vocal lobby group, "The Small Guys Tobacco Group," which met with Revenue Minister Greg Melchin last March. "The government has made a hard decision and probably a fair one," said Colm O'Shea, an Ontario-based cigar wholesaler who led the lobby. "The last year and a half was probably excruciating for retailers in Alberta."


General Hosts Punch Poker Nights at Retail Shops

A series of 40 Punch Poker events are being sponsored by General Cigar Co. at select U.S. tobacconists. The promotional program launched in June and will be complete in November.

Participating retailers are being outfitted for poker tournaments with Punch Poker signage, poker tables, free Punch cigars, branded playing cards and chips in a custom wood carrying case emblazoned with the Punch logo, and a special offer of 25% off on Punch cigars.

At the beginning of each round, players receive Punch Poker chips, worth $800. After one round, or three hands, is complete, the player with the most "money" wins a free 10-count box of Punch cigars and a pack of playing cards.

At the end of each completed round, players return their chips to the house and new players rotate in for the next round.

A championship round will put all previous round winners together in a final match consisting of five hands of poker. The winner of this championship will win the Punch customized wooden carrying case containing the Punch branded poker chips, playing cards, and a 25-count box of Punch cigars.


BITS & PIECES

  • The Demuth Foundation has sold the the Demuth Tobacco Shop in Lancaster, Penn., the nation's oldest tobacconist dating to 1770, to Domestic Tobacco Co., a Lancaster-based tobacco wholesaler. The transaction includes the shop's inventory, brands, and name, with the foundation retaining ownership of the shop's building, artifacts, and archives. Domestic Tobacco already owns producer of smokeless tobacco Demuth Tobacco Co., which it bought from the Demuth family about 30 years ago.

  • Ned Roscoe, president of the California-based Cigarettes Cheaper retail tobacco chain, ran in California's recall election as a Libertarian candidate for governor. Deeming himself the "Smoker's Candidate for Governor," Roscoe said beforehand that the election "gives us an unprecedented chance to advocate smokers' rights and less regulations." His platform included no new taxes and no 'stupid new laws.'

  • Dallas's new citywide smoking ban has prompted the owners of Nick & Sam's Steakhouse to open a new upscale $1.2 million nightspot to cater to the after-dinner crowd and other baby boomers. "Everyone used to stay in our lounge and smoke cigars and drink and enjoy the atmosphere," said Joe Palladino, a co-owner. "They can't do that anymore, so we wanted to give them another option."

  • SMOKESHOP - October, 2003