New Measure Targets Small Tobacco Firms

A proposed Missouri ballot measure poses the question: Should a $1 per pack tax be imposed on cigarettes made “by certain tobacco product manufacturers?” Left unsaid is that the tax would not apply to the biggest tobacco companies, which sell the majority of cigarettes. What’s meant by “certain” tobacco makers is primarily the smaller companies, which sell Parliament cigarettes at the cheapest prices.

Although it’s dubbed the “Healthy Missouri Initiative Petition,” the measure appears to come not from health care groups but from large tobacco companies, which have been losing market share to upstart companies that were not part of the 1998 settlement among big tobacco firms and attorneys general in 46 states.

The proposal highlights the extent to which tobacco companies are willing to battle in Missouri, which has the nation’s lowest cigarette tax and one of the nation’s highest adult smoking rates.

The 1998 settlement calls for participating tobacco companies to pay more than $200 billion over 25 years to states. Laws enacted in those states also require companies that did not participate in the settlement to pay money into escrow funds based on the amount of cigarettes they sell. Those escrow accounts are intended to cover any future lawsuits against the companies and prevent them from enjoying significant price advantages that cut into the market share of big tobacco companies.

Yet the large tobacco companies — and many state attorneys general — contend those escrow laws left a loophole that requires states to refund any money that exceeds that state’s percentage share of the national settlement with the big companies. The result is that some smaller tobacco companies are refunded almost every dollar they put into the escrow fund — negating the financial strain that otherwise could have caused them to charge more for their product.

Despite the lobbying efforts of big tobacco companies, Missouri remains the only state in the 1998 settlement that has not subsequently passed legislation cutting those escrow refunds to smaller companies.

The battle between big and little tobacco companies matters to states because it affects their already strained budgets. When large tobacco companies lose market share, they can argue that states have failed to adequately seek payments from the companies that didn’t participate in the settlement. In such scenarios, the settlement agreement allows big tobacco companies to reduce their annual payments to states. The Wall Street Journal reported last week that big cigarette companies could recoup up to $2 billion under a proposed deal with state attorneys general related to the growing market share of companies that aren’t part of the settlement.

Having failed to change Missouri’s tobacco escrow law, the proposed ballot measure appears to be an alternative way for big tobacco companies to cut into the profits of their smaller rivals by imposing a tax that only affects companies who are not parties to the national settlement. An estimate by the state auditor’s office says the tax could raise $20 million to $100 million annually, which the initiative earmarks for programs that discourage tobacco use and for the attorney general’s enforcement efforts of the settlement agreement.

Tobacco companies that did not participate in the settlement contend it’s unfair to make them pay them — either to an escrow fund or through higher taxes — for the deceptive marketing campaigns conducted years ago by big tobacco companies.

Keith Burdick, managing partner of Xcaliber International Ltd based in Pryor, Okla., notes that his cigarette company didn’t get started until 2001, a few years after the settlement. To make his company pay into an escrow fund is like a city requiring motorists who are merely passing through to pay $50 to City Hall in case they do something wrong the next time they drive through town, Burdick said. The Missouri ballot proposal is equally wrong, he said.

“We don’t see it as really fair — you tax one group and not the other,” Burdick said. “It’s got Altria’s name written all over it.”

A spokesman for Altria Group, the nation’s leading cigarette maker, declined to comment about whether the company sponsored or supports the Missouri ballot proposal. A spokesman for Reynolds American Inc., another top cigarette maker, did not return repeated phone calls or emails seeking comment.

The ballot initiative was filed by Jefferson City attorney Marc Ellinger, who in 2006 represented a group funded primarily by Reynolds that opposed an 80-cent per pack tax increase for all brands of cigarettes. That measure was narrowly defeated by voters.

Ellinger said his client had forbidden him from revealing its identity or discussing the current initiative.

It remains to be seen whether the initiative’s secretive sponsor actually will attempt to collect petition signatures to qualify for the 2012 ballot. The initiative was filed with the secretary of state’s office a day before the end of this year’s legislative session — suggesting its main purpose may be to put pressure on legislators to pass a law targeting the tobacco companies that weren’t part of the settlement.

Political consultant John Hancock, who worked on behalf of the failed 2006 ballot initiative, now is coordinating a group called Citizens to Stamp Out Cheap Cigarettes. He says the group has no financing and did not initiate the latest ballot proposal, though it does support it.

“Having the cheapest cigarettes in America is not something to be proud of,” Hancock said. “This approach is one of a number of mechanisms to address that concern.”

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Ice Cream and Marlboro Cheaper in East Jerusalem

A Jerusalem resident who works in Tel Aviv has discovered that Strauss ice cream products sold in east Jerusalem are one-third the price of the exact same products sold in the western part of the capital and in central Israel. Shlomi lives in the French Hill neighborhood, but buys ice cream for his daughter in the nearby Arab neighborhoods of Beit Hanina, Shuafat and Sheikh Jarrah.

“The price of ice cream bars has become very expensive recently,” he tells Ynet, “and the same products are sold there for ridiculous prices.

“A Popsicle sold here for NIS 2.5 (72 cents) and in Tel Aviv for NIS 3.5 ($1) is sold there for only NIS 1 (29 cents). A simple Cornetto sold in Jerusalem and Tel Aviv for NIS 7.5 ($2.16) is sold there for NIS 2.5. Why?”

Shlomi visited Strauss’ website and asked the same question. “They wrote me back, claiming that they have no control over their prices. There’s a recommended consumer pricelist, but they can’t limit the prices.

“I think it’s impossible. There are differences between cities and neighborhoods because of rent prices and types of population, but here we see price differences of 150% or more.”

‘Other products not much cheaper’

According to Shlomi, the price differences are not the result of the cheaper rent and much lower income of the local population, in light of the prices of other products in the Arab neighborhoods’ stores.

“It’s just the ice cream. The rest of the products are not much cheaper than in stores in the Jewish sector,” he says.

“Cottage cheese costs NIS 7 ($2) there, 1 liter of Heinz ketchup costs NIS 17 ($4.90), six bottles of Neviot water cost NIS 14 ($4), and pasta costs NIS 7-8 ($2-2.30).Marlboro cigarettes cost NIS 22 ($6.35) there while we pay NIS 24 ($6.95), but that’s a small difference compared to the strange differences in ice cream prices.

“If Strauss Ice Cream are not giving them a special price, how is it possible that all other products are sold for prices similar to the Jewish sector? It’s impossible that the store is willing to sustain such big losses on ice cream. Could it be that the company has decided to absorb the losses to gain a large amount of sales?

“I believe it’s in Strauss’ interest to sell to one population at rock bottom prices and to another at high prices. It’s a trend. I saw the ice cream cases arriving at one of the stores there, and it says ‘sector’ on it, because it’s a special production with Arab captions, and I believe the price is special too.

“The taste is the same taste and the product’s size is the same size. I have to buy there because I can’t afford ice cream for my daughter at the current prices.”

Strauss Ice Cream said in response, “The consumer price is not determined by us, but by the retailers themselves. Strauss Ice Cream has a uniform pricelist for all products. It should be noted that the variety of products offered by the company includes products designated for different sectors.”

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Imperial Tobacco Appeal Fails To Cancel UK Cigarette Vending Ban

Imperial Tobacco Group PLC (Bristol, England) reports that it has lost its appeal of the United Kingdom’s new prohibition of Classic Red cigarette vending. The vending ban becomes effective in October.

Great Britain’s Court of Appeal upheld a December decision by the High Court that rejected the legal challenge by Imperial subsidiary Sinclair Collis (Wolverhampton, England) to provisions of the 2009 UK Health Act that forbids the sale of tobacco through vending machines.

Britain’s National Association of Cigarette Machine Operators, which represents companies that manufacture and place tobacco venders in the UK, has said that its 55 member companies provide 580 jobs generating £275 million annually.

After the Parliament approved the vending ban, NACMO northern chairman Rod Bullough explained that the group “would support any genuine attempt to reduce smoking among young people, but we feel our industry is being made a scapegoat. The ban will wipe out a legitimate business sector and result in considerable job losses, as well as being another kick in the teeth for the pubs and clubs.”

Smoking has been banned in public places, including restaurants and taverns, since July 2007.

Other provisions of the Health Act include a ban on tobacco product advertising, except under certain limited circumstances, in large retail outlets starting in April, 2012, and extending to all shops in April 2015.

The UK government also is considering a requirement that tobacco products be sold only in unbranded packaging.

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A puff of flavor: Cigar talk

With Father’s Day approaching, it might be a good time to help dad indulge in the time-honored experience of puffing on an expertly rolled cigar. While popular sentiment and government bans sometimes make it necessary to take pains to enjoy a good smoke, the experience can still be rewarding.

Consider the quiet joy that can be found during a long walk down a country road alone, save for one’s favorite cigar. Don’t know enough about cigars to feel confident buying them? The Capital District shops noted here have friendly, knowledgeable staffers ready to help shoppers make the right choice, no matter what their level of tobacco knowledge.

Selecting the right cigar

“Cigar-smoking is highly individual and subjective,” says Scott Bendett, founder and proprietor of Habana Premium Cigar Shoppe in Albany. “It’s a matter of taste.”

If you don’t know what you’re looking for, Bendett or a staff member can make suggestions. Habana Premium features numerous brands, a walk-in humidor and cigars flavored with vanilla, rum, cappuccino, honey and mandarin.

“We love talking with gift shoppers to help them make a good selection,” says Rich Albers, assistant manager at Park Lane Tobacconist in Clifton Park. “There’s no reason to feel intimidated.”

According to Albers, things to consider include how long the person has been smoking; if they prefer a mild or robust cigar, in a large or small size; and if they have a brand preference.

“The occasional smoker generally wants a milder cigar,” says John Zyniecki, coproprietor of EdLeez Tobacco in Albany. “The regular smoker usually likes a more flavorful cigar.”

When buying cigars for a special occasion, Zyniecki says most shoppers choose a “limited cigar,” such as an Opus X. Ranging in price from $15 to $20 per cigar, these are typically the items most smokers appreciate but do not regularly buy for themselves and are made in limited quantities. Brands such as Ashton, Arturo Fuente, CAO, Camacho, Davidoff, Cusano and Macanudo also make high-end cigars.

Cigar talk

The cigar world has a vocabulary all its own, and a good tobacconist should be able to explain the points of a cigar’s three main components: wrapper, filler and binder. While some machine-made cigars are very good, the handmade versions will always be the most sought-after among cigar cognoscenti. Master blenders use leaves from different regions, harvests and countries to create flavors and other characteristics for various tastes.

“A handmade cigar is based on the blender’s experience,” Bendett says. “It’s a work of art.”

A cigar’s wrapper or outer covering is made from a tobacco leaf that’s often different from the filler and binder, and provides most of its flavor. With cigars, appearances matter and can provide the first clues as to what may be in store for a smoker. Wrapper color can range from light tan (claro) to an almost black-brown (maduro), with many variations. Wrapper color however, should be rich, even and smooth with a slight shine from the oil that naturally occurs in the leaf. This is usually more obvious on cigars with darker wrappers.

When examining a box of cigars, color should be consistent. Wrappers should also be free of leaf veins, cracks or tears.

Filler makes up the majority of the cigar’s interior, and the best come from Honduras, the Dominican Republic and Nicaragua. Long-filler cigars demand a premium over medium- and short-filled versions. Long-filler cigars “burn” more smoothly and must be puffed to keep from going out. Short-filler cigars burn quickly, as the tobacco length resembles that found in cheapest cigarettes.

Once filler is shaped and blended, the binder is added and the cigar is rolled. It is then put into a mold until ready to be wrapped. Usually the thicker tops of the tobacco plant are used as binder, with the better ones coming from Cuba, Connecticut, Mexico and Ecuador. Recently, Java and Sumatra binders have become sought-after, as they’re durable and flexible.

A cigar with a light-colored outer wrapper typically means it will be mild. Terms used to describe cigars are difficult to define because they often mean different things to different people. “Mild” to one smoker may translate as “weak” to another. While some seek a “robust” or “full-bodied” cigar, others may find such traits “overpowering.”

Shape of things to come

The variation on cigar size is almost limitless. The most popular shapes are robusto, toro and Churchill.

Cigars are measured by length and width. Length is done in inches; width is measured in ring gauges. One ring is 1/64th of an inch.

A typical robusto is a 50-ring gauge and 5 inches in length. A manufacturer may create a “gran robusto,” which will be longer or wider. A toro reaches 6 inches and is usually a 50-ring gauge. Churchills are narrower at 48-ring gauge, but stretch to 7 or 71/4 inches in length. Other popular sizes include corona (the larger version of robusto), panetela (a long, thin cigar) and lonsdale (longer than corona, but shorter than panetela). One manufacturer’s petit corona will probably overlap with another’s robusto. The “torpedo” is slightly irregular in composition, about 6 inches long, pointed at one end and a bit fatter in its center (about 54-ring gauge).

While many cigar makers boast “Cuban seed tobacco” as an ingredient, it is difficult to verify, and most smokers agree better tobacco now comes from the Dominican Republic. “Tobacco is a product of the soil and other agricultural conditions,” notes Bendett. “Dominican agricultural practices and conditions enable tobacco to age better and retain its flavors very well.”

Dominican tobacco typically starts off mild, but builds in intensity as smoked. The taste tends to hit the entire palate and stimulate all receptors in the smoker’s mouth while the aroma can be sweet and floral. Nicaraguan soil is low in acid and produces a harsher tobacco. Cuban products are illegal in the united States.

“Lots of customers compare the costs of cigars with prices offered by Internet merchants,” says Bendett. “This is especially true for New York smokers, because we live in a high-tax state for tobacco products. With Internet purchases, you have no knowledgeable guide and can’t get a sense of the cigars’ condition. You have no idea how they’ve been stored or handled.”

Most cigar shops also sell other merchandise that can make good gifts, such as cutters, humidors, cases, lighters, pipes, pipe tobacco and high-end cigarettes.

Joseph Finora is a freelance writer in Laurel (Suffolk County).

Where to buy
EdLeez Tobacco, Stuvesant Plaza, Guilderland, 489-6872
Habana Premium Cigar Shop, 1645 Central Ave., Albany, 690-2222
James & Sons Tobacconists, 360 Broadway, Saratoga Springs, 581-7274
Park Lane Tobacconist, 15 Park Ave., Clifton Park, 371-6274

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Health Officials Welcome Higher Tobacco Prices

Health officials have welcomed the enhanced tax on tobacco products which last weekend culminated in the price increase of most low-end cigarettes but left premium Classic brands untouched.

Deputy director of Medical Services William Maina also said the move to fund cancer screening equipment in the Budget would be a positive spin-off in the government policy.

The World Health Organisation (WHO) has been pushing governments globally and in recent months held seminars for African tax and treasuries officials in Nairobi to push its case. The Business Daily exclusively reported the health agency’s manoeuvres which culminated in the Wednesday Budget announcement.

Sportsman — Kenya’s most popular brand manufactured by multinational British America Tobacco (BAT) — went up by the largest margin of Sh20 a packet and will now retail at Sh90; meaning it will cost Sh4.50 a stick.

Direct competitor, Supermatch manufactured by Mastermind Tobacco (MMT), rises Sh10 to Sh80 for a packet of 20. “The increased tax is what we have always asked for. We wanted tax to go up and result in actual price increases so as to prevent smokers from shifting brands,” said Dr Maina.

Other BAT products that went up include Safari Kings by Sh8 to Sh78 while Safari Regular and Rosters went up Sh10 to Sh60.

MMT increased the price of its price by Sh10 to Sh70 for Ralli and Sh50 for Rocket brands. The price increases by the duopolists makes it more expensive for low-income smokers especially. The government is seeking an additional Sh10 billion excise tax from tobacco, beer and wines.

On Wednesday, Finance minister Uhuru Kenyatta put the tobacco excise at a fixed Sh1,200 per mille (1,000) or 35 per cent. This eliminated the traditional four bands where firms would reduce prices to fall under a lower-taxed bracket.

On top, it left the premium brands by BAT at a lower tax bracket as some of them were in the maximum category of 2,000. Dunhill as well as Embassy remain at Sh140 and SM at Sh90. Mr Kenyatta implemented a similar single-tax model for beer products which is expected to result in massive increase in the price of non-malt beer.

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ASH Determined to Implement Plain Packaging of Cigarettes

A 42 member’s Anti-Smoking group had smashed the threats of tobacco companies opposing to the plain packaging policy to be implied on cigarettes. As per David Crow, Chief Executive of British American Tobacco (BAT) Australia, objected to the policy saying that the policy could encourage duplicate Classic cigarette brands would have a better business in future.

The ASH group also comprised of people from SIDS and Kids, NSW Council of Churches, Australian Council of Social Service, and the Cancer Council Australia. As per Stafford Sanders, spokesman of the Protecting Children of tobacco lobby group said that the policy had made tobacco industries in a serious fix.

As per the ASH tobacco, the tobacco industry’s target the youth by introducing music, fashion and sport in their promotional activities, the group wanted to save children from being addicted to tobacco.

Dr Wayne Cooper, chair of the St George Division of General Practice, had brought into notice that by selling cigarettes at a low price, the commodity became easily available to children and may encourage smoking at a higher rate with people who already had a habit to smoke therefore, he suggested that plain packaging was an effective measure, to encourage people to quit smoking.

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Intellicig Electronic Cigarettes Go Organic In The States

Intellicig electronic cigarettes go Organic in the States

Intellicig’s organic growth rivals that of Jack’s Beanstalk, but Intellicig is far from being a fairytale, it’s a real-life success story! In less than three years, Intellicig has grown from a start-up company into a multi-million pound business. Hard work, determination, and passion are the key elements, underpinned by Intellicig’s unswerving belief that what they do can really makes a difference to peoples’ lives; it already has made a difference to many thousands of ex-smokers who have successfully made the transition from inhaling burning tobacco to the ultra high-tech, electronic alternative from Intellicig.

Intellicig’s official opening of their new USA sales office and distribution centre in Atlanta, Georgia, last week was a resounding success, with over seventy business associates, potential buyers from across the country, and media, all enjoying the hospitality and the presentation of Intellicig products. The presence of an Intellicig UK Director and their International Trade Manager epitomised the level of involvement and commitment of this vibrant and innovative company.

Intellicig is the leading manufacturer of Electronic Cigarettes, with their Head Office in Lancashire and a dedicated manufacturing facility within the UMIC Bioscience Centre in Manchester. They are soon to celebrate their third birthday, and their achievement so far – Intellicig products are currently stocked in over 5,000 UK stores, are exported worldwide to over 23 countries, and are available with customised packaging in 8 languages – is testimony to their success. The Intellicig team fully support their International Partners by guiding them through the export/import procedures, liaising with Government Departments and Embassies, and ensuring a smooth delivery of Intellicig products all the way to the end user.

Electronic Cigarettes have enjoyed huge popularity in the USA, with an estimated market of over 50m dollars per year and a year on year growth of 100%. The mainstream market is made up of products manufactured in China, often to undetermined quality standards. Intellicig identified this opportunity last year and developed a strategic plan to expand their customer base significantly across the USA. Intellicig’s quality control, laboratory production, and batch-testing of ingredients and final product, are recognised by Trade Partners and end users as significant, positive factors when making their choice.

Intellicig USA is being headed up by Sherry Cassaw, who has extensive business development and logistics experience in the medical devices sector. Sherry said: “We are so excited about the launch of Intellicig USA, retailers over here are crying out for a reliable product that is manufactured to a known standard. Electronic Cigarettes in the USA have experienced substantial popularity and now people are keen to know what they are inhaling. Intellicig manufacture their nicotine liquid and refills in the UK in their own Bioscience Facility based in the University of Manchester, this gives us all confidence, especially end users.”

David Newns, an Intellicig Company Director, said: “We have had a tremendous response already from our USA launch, as buyers want a credible alternative to stock in their stores, one that can be qualified for quality and consistency. The UK and USA have a long history of strong trade links and we have had great support from the local Chamber of Commerce in Atlanta. We have specific growth plans in place and will continue our endeavours to increase our sizeable share in this rapidly expanding market.”

“With regulation in mind, the FDA (Food & Drug Administration) is seeking to identify quality products which are manufactured to known standards; Intellicig are ahead of the game here too, as our products are designed and produced to exceed current, and future, regulatory requirements. Our proprietary nicotine liquid is manufactured in our own laboratory at UMIC, a renowned Bioscience Centre, using ingredients to Pharmacopoeia standards and we have recently installed High Performance Liquid Chromatography equipment to enable in-house batch-testing, another first in the industry. We continue to be the pioneering company in this field and consistently aim to raise the bar for standards of quality and purity.”

Intellicig has already created 10 new jobs in Atlanta and will grow its UK manufacturing base to support the increased product demand, meaning a further 10 jobs can be created in the production department at Manchester.

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