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December,
2004

TOBACCO INDUSTRY NEWS

Voters in Three States Approve Tobacco Tax Hikes
Colorado, Montana, and Oklahoma Target Tobacco for Revenues


New York - Voters in Colorado, Montana, and Oklahoma approved measures on election day that will increase taxes on cigarettes and other tobacco products. Incorporating the new tax increases, the national cigarette tax average will hit 84 cents per pack, an increase of 12 cents over the previous year. Rhode Island has the highest tax at $2.46 per pack and Kentucky continues to have the lowest at $0.03 per pack.

Colorado voters overwhelmingly approved a stiff tobacco tax that will hike the price of a pack of cigarettes 64 cents to about $3.90 a pack, while doubling the current tax on all OTP products. Advocates say it should result in a 14 percent decline in teen smoking, based on evidence from other states with higher taxes. It is expected to raise $175 million a year; most of it will pay for tobacco-prevention efforts, health coverage for children and preventive-health screenings for low-income adults.

In Oklahoma, voters passed State Question 713, authorizing an 80 per pack cigarette tax hike to $1.03, with revenues funding a variety of expenses from trauma to Medicaid. Taxes on other tobacco products will also increase.

In Montana, passage of Initiative 149 will increase tobacco taxes by $45 million a year, allocating most of the money for new or existing health-care programs. The tax on a pack of cigarettes will jump from 70 cents to $1.70. In addition, I-149 will more than double Montana's taxes on chewing tobacco, from 35 cents an ounce to 85 cents. The tax rate on other tobacco products will increase from 25 percent to 50 percent of the wholesale price.

Veterans' organizations, tobacco wholesalers, convenience store owners, and tobacco makers had been fighting I-149 in court, and had asked the Montana Supreme Court to throw out the ballot measure as unconstitutional. The groups appealed after a district judge denied their request in late August. The court in September denied the coalition's request for an expedited appeal, but was not expected to issue a final decision in the case until after the election.


Altadis Rolls Out Montecristo Platinum Virtual Photography Tour, 2005 Promotional Calendar

Ft. Lauderdale, FL - Beginning this fall, Altadis U.S.A. is taking its Montecristo Platinum Virtual Photography Tour to retailers in major U.S. markets to promote its premium Montecristo Platinum Series cigars.

Every customer who purchases three Montecristo Platinum cigars will receive a free cigar and the opportunity to have his picture taken with a photographic image of the Montecristo Platinum model - a nude painted from head to toe with platinum body paint - featured in Montecristo Platinum's national ad campaign. In the virtual photo, she appears to be lighting the consumer's cigar.

Altadis also has expanded the ad campaign into an attention-getting 2005 calendar titled "Unadulterated Pleasure." The ad shows a nude female model painted from head to toe in platinum body paint; the calendar features the same model photographed in a different pose for each month of the year. Each page highlights one of the brand's shapes or the box, featuring original artwork by Michel Delacroix. The calendar will retail for $14.95 from Altadis retailers.


Oklahoma Tobacco Retailers Form New Alliance

Tulsa, OK - Despite falling short in its efforts to prevent passage of a new state tobacco tax hike on election day, Northeastern Oklahoma tobacco retailers have found strength in their new organization, the Tobacco Retailers Alliance (TRA).

The group is at work on drafting bylaws and future activities for a national organization serving all tobacco retailers, said Steve Bruner, a Tulsa smoke shop owner, and investment firm president who serves as the organization's spokesman and chairman of public affairs.

He said there are over 350,000 tobacco retailers in the U.S., most with several employees who are tax-paying good citizens.

"Add these up for a do-good small merchant organization," he says, "and you have a formidable organization giving strength to a unified industry supporting good public causes and giving our industry a voice for those true facts that politicians and others are likely to distort for lesser causes to our detriment."

To have the American Indians in policy-making and leadership positions, where it all began in Oklahoma, would be another plus, he added.

Joe Lane, a rancher and independent smoke shop owner, is president of the public education group, which was formed in August.

Lane and Bruner said the first job of the nonprofit educational group has been to lead a state-wide campaign to stop the continuing regressive taxation of tobacco products.

The alliance has embarked on a "good citizenship program of activities to support worthy state programs on behalf of several hundred members who run smoke shops for tobacco products in Oklahoma and bordering states," says Lane.

Bruner adds that there are much better ways to raise public awareness of the need to discourage smoking and other potentially harmful tobacco uses. He feels that the majority of Oklahomans should say "No" to the use of tobacco and "No" to any new taxes freely without the State of Oklahoma passing a law that raises unneeded taxes.

TRA launched a "modest and truthful, unemotional campaign" to gain support in its effort to defeat State Question 713, but it was passed by voters on election day. It increases tobacco taxes as much as $8.00 on a carton of cigarettes and higher on other tobacco products.

The new group has retained veteran public relations executive and leader Dean Sims, founder and chairman of Tulsa-based Public Relations International, for counsel on association management and marketing communications.


CigarExpo "Hybrid Event" Debuts in W. Virginia

Chester, WV - The first ever CigarExpo 2004 was held on October 9 in Chester, West Virginia. The event was jointly produced by Laurie Silverman of New Castle, Pa.-based Klafter's, Inc. - a national cigar distributor - and Ron Cross of Mountaineer Racetrack and Gaming Resort, where it was held.

Silverman believes that all of the previously existing shows and exhibitions serve a good purpose but miss some elements desired by retailers, manufacturers, and consumers. The CigarExpo 2004 was meant to satisfy what the other events do not, according to Silverman: cigar enthusiasts everywhere appreciate a localized event.

Chester - a northwestern suburb of Pittsburgh - is associated with the "heavy cigar user belt" which runs south from Erie, Pa. past Pittsburgh in a 40-mile-wide swath.

The event drew 233 paying customers and 20 vendors. The idea was to allow consumers the opportunity to purchase cigars and other tobacco products at a reasonable price with a coupon system while the manufacturer had time to explain the different products offered. A portion of the attendees were retailers who had a chance to talk with manufacturers displaying a complete range of products. Retailers were also able to purchase new merchandise items for the holiday season.

Participating manufacturers included Altadis, General, CAO, Cusano, The Cigar Connection, Miami Cigars, Drew Estate, Puros Indios, and American Western Cigar.

CigarExpo will reoccur at Mountaineer Racetrack and Gaming Resort but also on a regional basis at other venues yet to be determined. It is unique in the one-on-one between consumer, retailer, and manufacturer. It is meant to complement the retailer-manufacturer trade shows and the much larger consumer events held in the large cities. Retailers could promote the CigarExpo when in their area to alert cigar enthusiasts to a fun and informative event and more manufacturers could take advantage to promote and sell product. The event is only expected to grow.

"CigarExpo has been the best opportunity for smoking enthusiasts to spend time with manufacturers, said Belinda Burnett of Drew Estate. "The manufacturer had time to devote to each customer and provide personal attention."



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