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October,
2007

TRENDS AND TRENDSETTERS IN TOBACCO RETAILING
Swedish Match Acquires Cigars International

Richmond, VA - Stockholm, Sweden-based Swedish Match AB, parent company of Swedish Match North America, has acquired Cigars International, Inc., a privately-held company that specializes in the direct marketing and sales of premium and machine-made cigars and related accessories.

Cigars International will be operated as a separate business independently of Swedish Match AB’s existing U.S. operations: Swedish Match North America and General Cigar Holdings. Keith Meier, founder and chief executive officer and John De Marco, vice president and chief operating officer of Cigars International will both continue in their respective roles.

Sven Hindrikes, president and chief executive officer of Swedish Match AB explained, “Swedish Match AB’s purchase of Cigars International is aligned with our long-term growth strategies in the premium cigar category and represents an opportunity to strengthen our position within the global cigar market.”

Headquartered in Bath, Pa., Cigars International utilizes a multi-channel direct marketing strategy encompassing catalog sales and email programming, as well as fulfillment and wholesale distribution via its websites: cigarsinternational.com and cigarbid.com. Cigars International also operates two retail outlets in Bethlehem, Pennsylvania. The company features a comprehensive product selection of leading national brands complemented by a collection of proprietary cigars sold exclusively through Cigars International.

“Considering Swedish Match AB’s leadership position within the global tobacco industry, we are enthusiastic about the opportunities for growth that this transaction represents,” said Meier.

Terms of the purchase were not disclosed. Harris Williams & Co., a middle market investment banking and advisory firm, acted as an advisor to Cigars International on this transaction. BB&T Capital Markets served as the exclusive financial advisor to Swedish Match AB.


Fumée World

Fumée World, a website devoted to the art of cigar smoking featuring podcasts, reviews, and articles for the cigar fan, has launched an e-commerce cigar shop at www.fumeeworld.com.

The shop features a wide variety of premium and hard-to-find cigars, in depth reviews, cigar related T-shirts, and select-your-own cigar sample packs, allowing customers to choose exactly how many of each cigar they want to try.

“We believe that fumeeworld.com provides an unsurpassed shopping experience through our easy-to-use website and the comprehensive information we provide about every cigar we carry,” says Heather Waibel Haddad, owner of Austin, Texas-base Fumée, Inc. and Fumeeworld.com.

The e-store allows customers to choose a flavor profile and see recommended cigars based on the customer’s preferences. It further assists selection by providing an online tobacconist who is available for questions and suggestions. Fumée plans to expand to include beverages and cigar accessories this year.


Connecticut Clamps Down on Online Cigarette Buyers

Hartford, CN - The Department of Revenue Services (DRS) has begun sending notices to Connecticut residents who owe the state taxes on the purchase of unstamped cigarettes over the Internet. The initiative is part of an effort by the agency to ensure taxpayer compliance with state cigarette laws.

A federal law, the Jenkins Act, requires out-of-state retailers to give state tax departments detailed information about purchases of cigarettes delivered to their state. Online and mail order retailers must provide the tax departments with the names, addresses, brands, and quantity of cigarettes shipped into each state. This information allows states to make certain the appropriate taxes are paid on the purchases.

The agency has worked to inform the public about the taxability of out-of-state cigarette purchases and supported legislation barring the shipment of untaxed cigarettes to unlicensed individuals.


State of the Industry Report

Retail consultancy and design firm Design Forum has released its second annual report on the State of the Industry in conjunction with Chain Store Age’s ranking of the Top 100 retailers in the August 2007 issue of the news magazine.

The report focuses on retailers’ need to perpetually transform in order to maintain a connection with consumers. “One-time brand definition is a thing of the past. The new rule is adaptivity,” said Lee Carpenter, c.e.o. of Design Forum. “Value is everywhere and almost everything has become a commodity. Goods and services are not about what they do, they’re about how they make you feel… retail success will depend on the strength of the emotional benefit the brand has to offer, a benefit that will change as the customer dictates.”

This year’s State of the Industry report looks at a number of themes, including: in-store innovation driving the resurgence of the middle; brand authenticity; rapid cycle of trends and how retailers are trying to keep up; role of behavioral research in reorienting the question from “what should we put in the store?” to “what will customers choose?”; today’s retail watchwords - individual, specific and relevant. The complete report: can be viewed at: www.designforum.com/PDF/CSAweb-sm.pdf


SMOKESHOP - October, 2007