TOBACCO INDUSTRY NEWS
Production, Distribution, Regulation, Trade...
Oettinger Davidoff Acquires Camacho Cigars
Basel, Switzerland - Camacho Cigars, based in Miami, Fla. and Danlí, Honduras, has been acquired by Switzerland’s Oettinger Davidoff Group, the parent company of Connecticut-based Davidoff of Geneva, for undisclosed terms. The acquisition brings Camacho’s sales and management teams, headed by Christian Eiroa, 36, and a strong portfolio of Honduran-made premium cigars, into the global luxury group whose cigar tradition was started by tobacconist Zino Davidoff.
The president and chief executive of Davidoff, Dr. Reto Cina, 62, said that he would not change any aspect of Camacho’s business operations. “You don’t change a winning horse,” Cina told the Miami Herald.
Eiroa will remain the president of Caribe Imported Cigars (which does business as Camacho, as well as handles sales, distribution, and marketing). “Given Davidoff’s rich tradition and long history, I am confident to say that I cannot think of a better family to belong to,” Eiroa said. “There’s a very emotional attachment to our brands and legacy and we feel that that the Oettinger Davidoff Group will maintain this integrity. I am committed to the continued development of our brands within the U.S. and all other foreign markets.”
Julio, Christian Eiroa’s father and founder of Tabaccos Jamastran, said that other suitors for the Camacho business didn’t care as much about family business values: “I am happy that my legacy will be protected by a group like Oettinger Davidoff and I know my son Christian will be in good hands with Dr. Cina and his management team.”
All of Camacho’s 561 employees will be kept, according to Davidoff, and the only major executive change will be that of Julio stepping down as President of AgroIndustrias, to focus on leaf growing during his retirement.
According to Eiroa, the acquisition “offers us a platform so we can grow a lot more aggressively.”
Caribe Imported Cigars, the distributors of Camacho in the United States, has 10 brands: Camacho, Baccarat “The Game,” La Fontana, Legend-Ario, National Brand, Repeater, Deluxe, Don Macho, Don Felo, and Nude Bundles. Camacho Cigars was founded in 1961 by Simon Camacho and became part of Caribe Imported Cigars and the Eiroa family in 1994.
General Tobacco Sues 52 U.S. Attorneys General and 19 Competitors $1 Billion for MSA Restraint of Trade
Mayodan, NC - Cigarette manufacturer and distributor General Tobacco (GT) is suing 52 attorneys general of the United States and its territories and 19 competing tobacco companies and for allegedly conspiring with the states to set up the 1998 Master Settlement Agreement (MSA) so that later market entrants pay the states substantially more than other competitors pay. The sixth-largest tobacco company in the U.S., GT believes the effect of the MSA is to drastically limit future competitors from fair market competition, and is asking for treble damages in excess of $1 billion from its competitors.
The complaint, filed in Louisville, Ky., charges the attorneys general with violating “the Sherman Anti-Trust Act, its constitutional rights under the Equal Protection and Due Process Clauses of the Fourteenth Amendment, the Compact Clause and the Commerce Clause of the U. S. Constitution as well as violation of the Civil Rights Act, Title 42 USC Section 1983,” according to a statement from GT.
“The structure for the MSA created an impossible business environment for future competitors, especially small players such as GT. All we are asking for is a level playing field for everyone,” says J. Ronald Denman, executive vice president of GT.
To date, GT has paid about $502 million into the MSA, which it joined in 2004, as well as $36 million in escrow. The agreement sets strict guidelines for tobacco marketing and advertising and finances anti-smoking campaigns.
Xikar Receives Trademark Opposition from Cuban Government over “Havana Collection”
Kansas City, MO - Corporacion Habanos, S.A. has contested Xikar, Inc.’s trademark application for its Havana Collection line of cigar cutters, lighters, and cigar cases, arguing that Cuba’s registration of the name “Habanos Unicos Desde 1492” for raw tobacco, cigars, cigarettes, cut tobacco, matches, etc., would be harmed by Xikar’s action.
“We find it remarkable that the Cuban government, under the guise of Corporacion Habanos, would attempt to extend its totalitarian influence to control an American company using our own courts,” said Van Keppel, co-founder and president of Xikar. “Even if it were legal for them to do business in the U.S., they have no basis for their opposition to our application.” The application through the U.S. Office of Patents and Trademarks was made public in May, 2008.
“They have the name ‘Habanos Unicos Desde 1492,’ which translates to ‘Unique Cuban Cigars Since 1492’ and is registered for cigars,” said Van Keppel. “We aren’t referring to cigars in our application - just our accessory products - and we’re using English ‘Havana Collection’ to denote the style and culture of Havana. It’s ludicrous that they would attempt to stretch their registration into a different language and meaning, representing different products and in a country where it’s not even legal for them to conduct business. They are trying to usurp our liberty to conduct business through strong-arm tactics reminiscent of their behavior toward private Cuban business back in 1959,” said Van Keppel.
The opponent claims buyers will likely be confused by Xikar’s usage of “Havana” in the name of its product line, but according to Xikar’s patent and trademark attorney, David Wharton of Stinson, Morrison, Hecker, LLP, “the name is meant to evoke a state of mind…in our case, it is about the culture of Havana; not ‘Made in Havana.’”
Corporacion Habanos also claims in its Notice of Opposition that its registration of the “La Casa Del Habano” tagline enables it to claim service mark rights in this slogan for retail store services for tobacco products and smoker’s accessories. “They are stretching to suggest that their registration of this line gives them a basis to preclude our registration of a mark comprising different words, in a different language, with a different meaning and for a product line rather than retail store services,” says Van Keppel. “Because their products are not even legally sold in the United States, they are simply advertising for the black market,” concluded Van Keppel.
Altadis U.S.A. Closes Alabama Factory
Selma, AL - Altadis U.S.A. has closed its cigar factory in Selma, Alabama, also known as Phillies Cigar Co. The facility, which had been in operation since 1941, produced machine-made blunt cigars including Phillies, Erik, Omega, Havatampa, and Dutch Treats. Its last day of operation was Nov. 14.
Richard C. McKenzie, senior vice president of human resources for Altadis U.S.A., told the Selma Times-Journal that a decrease in consumer demand for blunt cigars contributed to the factory’s closure, but that it also fell victim to a shaky national economy and a general downturn in the tobacco business over the last year. The closure affected 213 employees.
While the closure was not attributed to cost-saving measures, other factories under the Imperial Tobacco umbrella have been closed as part of a global restructuring since Imperial Tobacco Group’s acquisition of Altadis S.A. earlier this year.
Altadis U.S.A. continues to operate tobacco manufacturing facilities in Virginia, Pennsylvania, Florida, Puerto Rico, and the Dominican Republic. Imperial Tobacco operates a total of 58 facilities worldwide.
Miami Cigar & Company is Named Distributor of United’s 601, Cubao Brands
Miami, FL - Effective November 1, Miami Cigar & Company has become the distributor of Espinosa y Ortega’s 601 and Cubao brands in the U.S.
The Sunrise, Fla.-based company, a partnership of Erik Espinosa and Eddie Ortega which operates at United Tobacco, Inc., introduced the 601 brand in 2006 and the Cubao line in 2008. Both are full-bodied Nicaraguan cigar blends made for Espinosa y Ortega by Jose “Pepin” Garcia.
It’s the third manufacturer that Miami Cigar has added this year, joining Brun del Ré and Felipe Gregorio. “We have been broadening our portfolio, concomitant with developing our own, dedicated, Miami Cigar & Company sales representatives,” says Nestor Miranda, president of Miami Cigar & Company. “The in-house sales operation is one of the major elements that drew Erik and Eddie to our company.” Miranda says all of company’s principals have known each other for “many, many years.”
As part of the arrangement, Espinosa and Ortega will hold 601 and Cubao events at stores all over the country. “They still own the brands, and are the faces of the brands, so their presence and participation is essential,” says Miranda. “They will continue to be responsible for the advertising and marketing decisions, in concert with Rene [Castaneda] and myself.”
“As far as the tobacconists that now carry the brands, nothing will change. They will be served by Miami Cigar & Company’s sales staff, but can just as easily place their orders with Erik and Eddie,” Miranda noted.
Cigar Retailer to Serve One Year for Selling Counterfeit Cigars
Miami, FL - A Florida Judge found Ft. Lauderdale retailer James Joiner of Smoke Cafe guilty of vending products with counterfeit trademarks and sentenced him to 364 days in Broward County Jail and five years of probation. Joiner was also ordered to pay Altadis U.S.A. restitution as well as the costs of probationary supervision and those of prosecution.
Joiner was arrested in 2006 in a sting operation, and found guilty of selling cigars with counterfeit Montecristo, Romeo y Julieta, H. Upmann, and Trinidad trademarks - the cigars illegally bore Altadis trademarks and were not made by Altadis.
An Altadis representative said that Joiner’s conduct was particularly outrageous because he had been a direct buyer from Altadis for many years. “Consumers had come to trust Joiner and when he engaged in the counterfeiting conduct…he not only broke the law, he violated that trust,” and that “Joiner knew better. He knew what he was doing was wrong, but he did it anyway.”
A key executive at Altadis said “The judge has handed down a sentence that not only punishes Joiner for his conduct, but also sends a clear message to other retailers that might be tempted to become involved in the sale of counterfeit products. In short, if they engage in counterfeiting, they do so at their own peril.”
Santa Fe Company Turns to Wind Mills for 100% of Electricity Needs
Santa Fe, NM - While it is costing more than using conventional sources of power, Santa Fe Natural Tobacco Company has turned to wind-generated electric power at two of its domestic facilities. Since October, the company’s Oxford, N.C. manufacturing operations and at its distribution center in Sparks, Nev. have been powered exclusively via this renewable energy source. The Santa Fe-based manufacturer of Natural American Spirit tobacco products has been buying wind generated electricity at its headquarters since 2005. “But the benefit of promoting clean and renewable energy was an important factor in our decision,” says Rick Sanders, president and c.e.o.
“This is an important reflection of our company values and our vision,” he says. “We have pioneered sustainable tobacco growing practices with reduced pesticide use and our nearly 20-year-old organic tobacco program. We have long promoted conservation and recycling. Now, even as we use renewable energy to power our entire company, we continue to look for ways to promote sustainability in all that we do.”
By drawing electricity generated by wind power versus fossil fuels, the company expects to reduce emissions into the atmosphere that would have amounted to 2,264 tons of carbon dioxide, 2.39 tons of sulfur dioxide, and 3.33 tons of nitrogen oxide.
King Maker Marketing Receives Smoker Friendly Visionary Award 2008;|
Retailers of the Year Named
Boulder, CO - Smoker Friendly Int. recognized King Maker Marketing Inc. as their manufacturer of the year with the 2008 Visionary Award at the 12th Annual, 2008 Smoker Friendly Tobacco Festival & Conference in Boulder, Colo.
The award is presented to the manufacturer who has “seen and acted upon the potential in partnering with SFI.” King Maker, established in 1994, is a leading supplier of premium quality, value-priced cigarettes and roll-your-own (RYO) tobacco and manufactures the SF Cigarettes and SF Roll Your Own Tobacco for Smoker Friendly. The company’s product lines are made using 100 percent American Blend tobaccos to ensure a smooth taste and consistent quality. Based in Paramus, N.J. with distribution centers in New Jersey and Illinois, KMM is owned by ITC Limited.
Bhavani Parameswar, c.e.o. of King Maker Marketing Inc., was present to accept the award.
In addition, Smoker Friendly recognized the Norman family of NBS, Inc. Smoker Friendly of West Virginia, Ohio, and Maryland as its 2008 Retailer of the Year. The award is presented to the company that SFI feels has “embraced the SF concept and the SF brand and acted upon the potential in partnering with SFI.”
NBS Inc., a family-run company operated by Steve Norman and his children Ryan Norman and Regan Bartley, opened its first tobacco store in 1997 in West Virginia and has been a Smoker Friendly Licensee since its inception. Steve Norman, along with his daughter Regan Bartley accepted the award at the conference.
SMOKESHOP - December, 2008