SC O OP - Tobacco Business Online

Transcription

Kretek Expands Its Three Vapor Brands—Cig2o, Voodoo and EZ Cig
MAY/JUNE 2014
VOLUME 17 NUMBER 3
n
The Latest
SC O OP
on the
“Others”
Cigar Sense:
Meet a Mobile Cigar Shop
C-Store Corner:
Private-Label E-Cig Insights
Trench Marketing:
Fumé’s Focuses on Loyalty
PUBLISHER’S LETTER
BY ed o’connor
Risk Versus Reward:
the Many Dimensions
S
itting on an Aruban beach allows for sun, surf, an occasional martini, and the opportunity for reflection. My
recent March “shake and bake” outing to sunny Aruba
provided just such opportunity. Thinking back, my thoughts
tend to focus on pro and con, yes and no, risk and reward, and
the dynamics of arriving at conclusions and decisions. Conclusions take us to a final point. Decisions require the fortitude
to act. Decisions take us to where the so-called rubber meets
the road. Each day we face conclusions. Each day we make,
defer or change our decisions based upon new information or
altered conclusions.
I’m sure that you’re all thinking, He’s on a beach in beautiful Aruba with the warm sun beating down, the omnipresent
azure-gray sky, and the cool turquoise surf lapping at the soft
sand…and this guy is going on abstractly about risk versus
reward and the arcane nature of conclusion and decision?!
All right, so let’s move the discussion to productive considerations: challenges facing electronic products.
As knowledgeable representatives in the public health community, Brad Rodu, Mike Siegel, Carl Phillips, Bill Godshall and
Joel Nitzkin speak on behalf of the harm-reduction potential
offered by vapor products, not one among these medical doctors and health professionals advocates smoking or taking
nicotine. Their conclusions are based upon available evidence
suggesting that within the harm-reduction spectrum, use of
nicotine taken without smoke offers a infinitely safer means
of using tobacco; it’s not the nicotine that hazards health, it’s
the smoke.
From the other side of the debate, there are equally highprofile, respected public and private institutions and individuals decrying the safety of electronic cigarettes. Their position
calls for elimination of all tobacco within society at large—a
position that at this time is inconsistent with federal law.
The third group of opinion leaders are those individuals and companies who stand to lose economic power and
status from the electronic products’ assault on traditional
cigarettes—a $100 billion business—with already $2 billion of
electronic cigarette penetration in evidence in the U.S. forecasted to achieve traditional cigarette parity in approximately
10 years. We include nicotine-replacement therapy (NRT) providers in this group.
The fourth concerned group is represented by our elected
officials working to understand the interests of the populations
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TOBACCO BUSINESS INTERNATIONAL
MAY/JUNE 2014
they represent. Keep in mind that based upon a recent study,
an average of two percent of all state revenues is derived from
tobacco taxation.
And finally, the FDA is charged with the responsibility of
sorting it all out through reliance on objective science while
possessing the legal mandate to regulate, but not ban, any
category of tobacco. This is akin to unraveling a Gordian knot
wrapped in a conundrum and colored by special interests of
well-meaning and less-than-well-meaning agents and institutions.
In Greek mythology, Sisyphus was punished by the gods
and condemned to push a rock up a steep hill, only to have it
roll back down and make him start again. Isn’t the FDA in the
position of a modern-day Sisyphus? Like it or not, the “Great
Unraveling” must come via the gates of the FDA.
Here’s the question: do we want an industry protected by
federal law from extinction but replete with all of its codicils,
commercial requirements, and often unpopular determinations? Or do we wish to allow every municipality and state to
make its own rules in the absence of FDA guidelines (so-called
deeming regulations), which are subject to public comment
and FDA adoption over perhaps as long as a two-year period? Without these regulatory guidelines, benignly intended
lawlessness may be brought upon the fledging e-cigarette industry. Constituent pressure may force legislators to act in the
belief that they guard the health of their voters, and economic
pressure based on the loss of revenue provided by the cigarette golden-egg goose could play a role. The city of Chicago
leads the ban against e-cigs in public places. Is this preliminary
to an attempted outright ban of usage? If so, other municipalities will probably follow suit. As a court-adjudicated tobacco
product, electronic cigarettes are protected from extinction.
The intended or unintended consequences of regulation will
be to allow the electronic cigarette industry to develop and
prosper, but not likely to the benefit of every stakeholder. Conclusions and decisions remain to be made by each of us as
risks are assessed and rewards are considered.
In the words of Abraham Lincoln, it seems that “you can
please some of the people all of the time and all of the people
some of the time, but you can’t please all of the people all of
the time.”
Ahhhh, the beach.
Good selling!
NEWS & TRENDS
MAY/JUNE 2014
Possible Merger for Reynolds
American and Lorillard
Deal would be complicated, but could benefit both companies
According to news in the Financial Times,
Reynolds American has hired advisory investment bank Lazard to assess and define
a potential deal to acquire Lorillard for upward of $20 million.
A deal to combine Lorillard, the thirdlargest seller of cigarettes in the U.S., with
Reynolds, the runner-up to top-seller Altria
Group, would bring Camel and Pall Mall
under the same corporate umbrella as Maverick and Newport, the top-selling menthol
cigarettes in the U.S. (British American Tobacco owns 42 percent of Reynolds American). Together, the merged companies
would own more than two-thirds of the
country’s menthol cigarette market. Other
Lorillard brands include electronic cigarette
companies Blu Cigs and Skycigs, which
Lorillard says made up more than half of all
U.S. e-cigarette sales in the fourth quarter
of 2013. Reynolds has its own e-cigarette
brand, Vuse, currently in test markets with
an expected nationwide launch planned for
later this year.
Details about the purchase price, the
leader and name of the combined company, and whether Reynolds would look to
acquire Lorillard in its entirety or only specific brands remain unclear as spokesmen
from both companies declined to comment
on the speculative news story. Regardless
of the details, the deal would face significant
regulatory and financial hurdles, but Bonnie Herzog, a Wells Fargo Securities analyst,
claims that a combined company could
capture “substantial cost savings and synergies, and the general tobacco environment
could become more rational.
“Based on our analysis, we believe [that
Reynolds] could pay up to $80 per share for
[Lorillard], incorporating synergies and cost
savings of around $400 million (eight percent of Lorillard’s revenue),” writes Herzog
in a report on the potential deal. She went
on to enumerate the possible benefits of the
deal, which she described as: “(1) manufacturing (potentially closing either Lorillard’s or
Reynolds’s plant, which makes sense given
we expect cig volume declines to accelerate
as e-cigs continue to displace volume); (2)
leveraging RAI’s U.S.-based e-cig manufacturing and co-development of future generations of e-vapor products; and (3) sales
force and other headcount reductions.”
New York Smoker’s
Rights Group Fights Back
Smokers’ rights group NYC Citizens Lobbying Against Smoker Harassment
filed a lawsuit March 25 challenging New York City’s recent ban on the use
of e-cigs in areas where smoking is already prohibited, reports the Associated Press. The suit reportedly argues that the smoke-free law’s regulation
of both environmental tobacco smoke and e-cig vapor violates the “One
Subject Rule” of the city’s charter.
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MAY/JUNE 2014
Republic and
Johnson Creek
Team up on
Vaping Endeavor
The two companies will join forces
as a “smoke juice” supplier.
Republic Tobacco and Johnson Creek
Enterprises of Hartland, Wisconsin have
joined forces to form a premier “smoke
juice” (e-liquid) supplier of vaping products
in the U.S. Republic Tobacco is the nation’s
largest distributor of roll-your-own and
make-your-own tobacco products and accessories, including such famous brands as
Job, Top, Gambler, Drum, Largo and Tube
Cut. Founded by Christian Berkey in 2008,
Johnson Creek Enterprises is a leading
smoke juice production facility. Through its
affiliates, Republic has taken an equity interest in Johnson Creek Enterprises.
Johnson Creek has been on the forefront of ISO9001 smoke juice production
by manufacturing e-liquid made from U.S.sourced ingredients and bottled in America, an unusual combination in the growing
e-liquid category. The company has been
widely recognized as the supplier of e-liquid for the popular Blu e-cigarettes.
“Republic Tobacco has been carefully
studying the ‘e-market’ for a number of
years now, and we finally found the perfect fit for our company, both in terms of
superior reputation and product quality,”
says Steve Sandman, president of Republic Tobacco. “Consumers in the ‘e-category’
have shown [that] they prefer to make their
own ‘e-product’ by selecting their favorite
delivery device and their preferred liquid.
We believe that this is a new make-yourown consumer, and now Republic will be
able to offer the highest quality products on
the market. Also, both retailers and wholesalers have been waiting for a reputable
company to supply this growing category,
and they will be very pleased that Republic
is stepping into the forefront of the category as it develops with such an outstanding
company as Johnson Creek.”
NEWS & TRENDS
MAY/JUNE 2014
Vermont and Utah Reject
Tobacco Purchase Age Hike
Highlights
Lawmakers say legal adults should have the freedom to smoke.
Vapor Digest
Makes Industry
Predictions
Both Utah and Vermont recently rejected proposals to raise the legal age
to buy tobacco products to 21. In Utah,
where you currently must be 19 to purchase tobacco, several senators said
that they are concerned about the negative effects of smoking, but couldn’t
support the measure because it would
infringe on the rights of adults to purchase a legal product. “When do you
become an adult?” asked Sen. Todd
Weiler (R-23rd District). “If you raise it
to 21, why not 23? Why not 25? Why
not 50?”
The bill’s sponsor, Sen. Stuart Reid (R18th District), claimed that his proposal
would have brought the smoking age in
line with the legal age to purchase and
drink alcohol, and he added that the bill
could prevent young people from becoming addicted to tobacco because it
delays their access to it. But opponents
argued that there’s no evidence to support these claims.
In Vermont, the House Human Services Committee voted against a similar proposal to raise the legal age to
purchase tobacco from 18 to 21. State
Health Commissioner Dr. Harry Chen
spoke out against the idea, noting that
18- to 20-year-olds are legally adults and
should therefore have the freedom to
smoke.
“We all share the goal of reducing our
smoking rate, especially our smoking
rate among young Vermonters,” said
Chen, who went on to assert that the
government must be cautious about
restricting the freedoms of adults by
“compelling or prohibiting behavior.”
The movement to up the minimum
age to legally purchase tobacco products had gained some momentum after New York City passed an ordinance
to raise the age from 18 to 21 last fall.
Since then, similar measures have
been introduced in Colorado, New Jersey, Massachusetts and Hawaii.
Upcoming Industry Events
Vapor World Expo
May 7-8
Rosemont Convention Center
Rosemont, IL
Tobacco Manufacturers Association
Annual Conference
May 19-22
Kingsmill Resort
Richmond, VA
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MAY/JUNE 2014
The Victory/FIN merger will create one of the largest independent
e-cigarette companies, according
to the March 2014 release of the
Vapor Digest Electronic Cigarette
Brand Influence Index (VDEBII). The
2014 VDEBII lists Blu (95.30) as the
“Most Influential E-Cig Brand” in the
disposable-rechargeable e-cig product category, followed by LOGIC
(93.00), Mistic (92.40), Victory/FIN
(92.10), NJOY (91.70), Vuse (86.60),
GreenSmoke (83.45), Krave (79.25), 21st Century (77.75), and V2 (77.60).
“Vapor Digest believes that the
[Victory/FIN] merger…will set up
an upcoming round of acquisitions
of e-cig industry suppliers by the
larger e-cig brands,” says publisher
Patrick V. Butson. “With both Victory
and Fin now off the market, the influential e-cig brands will shift their
focus to cost reduction and supply
chain management as the best way
to improve their competitive positions…[t]herefore, we predict that a
major U.S. e-cig brand will purchase
a large U.S.-based e-liquid manufacturer within 90 days.”
NEWS & TRENDS
MAY/JUNE 2014
NACS Weighs in on E-Cig Age
Association urges c-stores to treat e-cigs as age-restricted position relating to e-cigarette sales.
While no one claims to know where
the FDA will land in regard to e-cigarettes, many are speculating that the
government agency will eventually
regulate the category. The National
Association of Convenience Stores
(NACS) is taking a proactive stance on
that position by encouraging its retail
members to treat e-tobacco products
as an age-restricted product, subjecting them to the same age-verification
procedures as those applicable to tobacco products.
Convenience stores are the largest
retail channel for e-cigarette sales with
overall sales of nearly $540 million in
2013, representing 75 percent of all
brick-and-mortar sales excluding kiosks and tobacco-only outlets.
“Given the uncertain status of e-cigarettes, it just makes sense that convenience stores check IDs as part of the
more than 4.5 million age-verification
checks that we already conduct every
day,” explains NACS President and
CEO Henry Armour.
NACS’ position, which was developed by the association’s retail board
of directors at a recent meeting, is as
follows:
• Retailers should, as a best practice, follow the same applicable federal, state and local laws for verifying
the age of purchasers of tobacco and
apply these standards to the sale of ecigarettes.
• NACS will promote effective procedures for retailers to verify sales of
age-restricted products and will encourage retailers to utilize these procedures and training tools.
• NACS will work with all appropriate federal organizations to ensure that
convenience stores continue to play a
leadership role in establishing guidelines that take into account current
research related to the age-restricted
products.
NACS is also encouraging retailers to use procedures and training
tools like those offered by We Card, a
program established in the 1990s to
provide age-verification tools and processes to retailers. NACS was a founding member of this program, which
has provided retailers with more than
1.1 million in-store educational kits
and has trained more than 350,000 retail employees nationwide.
We Card training resources include
state-law-specific eLearning courses
for frontline cashiers and managers
that follow FDA Guidance for Tobacco
Retailer Training Programs, in-store
tools to assist with proper age calculation, spotting both fake IDs and illegal adult purchases for minors, plus
a wide range of in-store signage and
information on how to display this signage. We Card has produced new materials specifically for e-cigarette age
verification.
“As responsible retailers, we want to
help ensure that minors do not have
access to e-cigarettes,” says Armour.
“Convenience stores will continue to
act responsibly in retailing e-cigarettes
and complying with existing laws.”
Eco-Cigs Expands Distribution
Company now has distribution in seven of the top 10 U.S. markets.
Eco-Cigs, a marketer of electronic cigarettes, announced that it has signed a
distribution agreement with Kimball Distributing (KDI) of Grand Prairie, Texas, a
rapidly growing distributor of premium
energy and protein drinks to retailers in
Dallas/Fort Worth and 25 surrounding
counties. The arrangement gives Eco-Cigs full
distribution in seven of the top 10 U.S.
markets. “We’re excited about working
with Kimball Distributing,” says Tony Vec-
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MAY/JUNE 2014
chie, senior vice president of sales and
distribution at Eco-Cigs. “We believe this
partnership will make an important difference for both Eco-Cigs and KDI, and we
appreciate their confidence in our company and our brands.”
“We are extremely pleased to be
working with Eco-Cigs—a class organization,” adds Kimball Smith, president
of KDI, which also distributes Sapphyre
and Sapphyre Hookah products to thousands of locations throughout its large
service area. “And our first sales results
with Sapphyre and Sapphyre Hookah are
very positive,” he says. “What’s more,
Eco-Cigs’ high-quality products are guaranteed not only by our company, but by
Eco-Cigs too.
“And as a company new to the e-cigarette business,” Smith continues, “we are
comfortable that Eco-Cigs products are
marketed solely to the 18-and-over market, and that they offer consumers a real
alternative to traditional cigarettes.”
NEWS & TRENDS
.
MAY/JUNE 2014
FDA Misses Regulatory Deadline
Legislators criticize FDA for failing to meet its 90-day review deadline.
In a letter to President Obama, U.S.
Sens. Barbara Boxer (D-Calif.), Richard Blumenthal (D-Conn.), Tom Harkin
(D-Iowa), Dick Durbin (D-Ill.), Sherrod Brown (D-Ohio), and Ed Markey
(D-Mass.) prodded the administration to review and finalize regulations
for tobacco products, noting that the
deadline for completing a review of
the deeming regulations submitted on
October 1, 2013 has passed.
The letter expressed particular concern about products seen as more
youth-oriented. “In light of the novel
products that threaten to addict more
youth to nicotine, we ask you to urge
the Office of Information and Regulatory Affairs (OIRA) to swiftly release the
deeming regulations that it received on
October 1, 2013,” stated the letter. “We
are particularly concerned about the
risk of addiction posed by new nicotinebased products such as e-cigarettes
and ‘e-hookahs.’[…]While we understand that OIRA is dealing with a number of deadlines, we urge you not to
compound the delays that have already
occurred over the years since the passage of the Family Smoking Prevention
and Tobacco Control Act of 2009.”
Ironically, the tobacco industry has
been anxiously awaiting regulatory
guidance as well, with many retailers
and manufacturers expressing frustration that a lack of clarity around
regulation of products not specifically
referenced in the Family Smoking
Prevention and Tobacco Control Act
hampers their planning. It is widely
believed that the forthcoming deeming regulations will cover e-cigarettes.
The legislators’ letter also raised
concerns about what they called the
“growing prevalence” of e-cigarette
use among youth. “Many of us have
spoken with Food and Drug Adminis-
tration Commissioner Margaret Hamburg and Center for Tobacco Products
Director Mitch Zeller about the urgent
need for deeming regulations. We
were pleased to see the proposed regulations move from their jurisdiction
to OIRA. We hope that you will prioritize the review of these regulations
so that we work together to advance
appropriate regulatory oversight of ecigarettes,” concludes the letter.
Meanwhile, legislation has been
proposed that would prevent the marketing of e-cigarettes to children. U.S.
Sens. Boxer, Durbin, Harkin, Blumenthal and Markey have introduced the
“Protecting Children From Electronic
Cigarette Advertising Act,” which will
enable the Federal Trade Commission
(FTC) to determine what constitutes
e-cigarette marketing to children and
to work with state attorneys general to
enforce the ban.
Kretek Names New Sales Team Members
Russ Mancuso is the company’s new VP of field sales.
Moorpark, California-based Kretek International has appointed Russell G. Mancuso as
vice president of field sales, with responsibility for direction and focus of the Kretek
national sales force for all Kretek brands.
Mancuso’s initial focus will be to ensure
that Kretek’s national sales force continues
to partner with distributor customers as
changing assignments occur in response
to new product introductions.
“With Kretek’s entry into more product
categories, it was the right time for changes in reporting and responsibilities,” says
Mark Cassar, CEO of
Kretek, a privately
held importing and
marketing company
with business concentrated in the cigar,
e-cigarette, and OTP
18
Russell G. Mancuso
categories.
“Russ’s
MAY/JUNE 2014
new focus will allow us to improve our
sales planning and policies moving forward in new areas.”
Mancuso joined the Kretek organization in September 2013 as vice president
of business development for Kretek’s Tobacco Media Group, the parent company
of Tobacco Business International. Prior to
joining Kretek, Mancuso served as senior
vice president of national accounts at Commonwealth Brands. He was previously
general manager of RBA and director of
sales for Liggett Group.
Kretek also announced two additional
sales appointments. Steve Lucas has
joined the company as central region sales
director and Eric Heiberg has joined as
northeastern region sales director. Both
will report to Russ Mancuso, Kretek Field
Sales VP.
Heiberg will be responsible for business
development and retail growth of Kretek’s
brands through its distributor and broker
networks in the Northeast, defined by the
company as extending across New England, New York, New Jersey and Delaware,
plus Pennsylvania, West Virginia and Ohio.
Heiberg is a veteran of management positions at Commonwealth Brands, Fleming
Companies and American Tobacco.
Lucas will have similar responsibility in
his region, which extends from Minnesota
and Michigan south to Texas and Oklahoma. His prior experience includes regional
sales positions at Robert Burton Associates, Commonwealth Brands and Imperial
Tobacco Group.
Kretek is the exclusive importer and
marketer of Djarum and Cuban Rounds
Cigar brands, Cig2o, EZ Cig and Voodoo evapor products, DjEEP lighters and VirMax
performance products.
NEWS & TRENDS
MAY/JUNE 2014
Miami Cigar to
Distribute Viva República
The company will be the exclusive U.S. distributor for all lines.
Viva República and Miami Cigar have announced an exclusive distribution agreement effective April 1, 2014. Miami Cigar
will sell and distribute all Viva República
lines in the United States. In addition to
the brand joining Miami Cigar’s premium
product offerings, its creator, Jason Holly,
is joining the Miami Cigar team. Holly
will concentrate on developing existing
brands and creating new projects, while
visiting accounts nationally for events and
sales support.
“We plan to increase our emphasis on
traditional channels,” says Jason Wood,
VP of Miami Cigar, explaining the arrangement. “In adding Jason Holly, we bring
on another valuable team member who
has seen the industry from the traditional
retailers’ eye[s]. He is highly creative and
can add to our strategy immensely.” Founded by Nestor and Mariana Miranda in 1989, Miami Cigar is celebrating
its 25th year in business. “We are proud
to be adding a growing new brand in the
same year [that] we are celebrating our
25th anniversary,” pronounces Nestor Miranda. “Even after two-plus decades and
millions upon millions of cigars, we’re not
ready to slow down.”
“I was thoroughly impressed with the
Mirandas and Jason Wood,” says Holly,
who attended Harvard University. “We
share similar values, key relationships,
ing
rket
ch ma
tren
HAEL
BY MIC
and both see enhanced growth potential
resulting from our complementary skills
and resources.”
When asked about future Viva República releases, Holly said that he will continue to rely solely on León’s factory. “It’s
home. The factory is modern and wellrun, boasts a fantastic tobacco inventory,
and is owned by a great friend,” relays
Holly.
With the pending release of the Nestor
Miranda Collection, the addition of Viva
República, and a plan to enhance its sales
mechanisms, Miami Cigar could be in for
one of its most exciting years since its
founding. “We have spent some serious
time evaluating our practices and look forward to implementing positive changes
that will enhance our brand identity,” says
Wood.
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Would you like to see your store profiled in TBI? Or
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78
ESS
CCO BUSIN ARY 2014
TOBA
EBRU
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MAY/JUNE 2014
L.A. Bans Vaping
California city becomes the third
to ban the use of e-cigarettes in
public.
After a 14-0 vote in March, Los Angeles
became the third major city to ban the
use of e-cigarettes and vaping products in
public spaces. The measure will not take effect until Mayor Eric Garcetti’s signature is
added, but industry observers expect the
mayor to support the action.
Chicago and New York City already have
similar bans in effect, and three states—
Utah, North Dakota and New Jersey—have
banned e-cigarette use wherever smoking
is prohibited. Clearly, even as vapor devices and e-cigarettes gain momentum, cities
and states are increasingly taking action
against the emerging category.
Many see the anti-e-cig sentiment as
guilt by association, suggesting that public perception may be tainted by the fact
that more and more traditional cigarette
manufacturers—companies viewed with
suspicion by the public—are moving into
the category. Others say that legislators
simply don’t understand the true nature of
vaping, despite strong scientific evidence
showing that e-cigarettes are far less destructive than combustibles and may actually be the most effective opportunity
for today’s smokers to quit. Many view
vaping as, at best, facilitating a nicotine
addiction and, at worst, luring new users
into the nicotine fold. Some suggest that
the true risks of vaping devices are not yet
known. Finally, critics claim that the cigalike devices—those that look, feel and act
like a cigarette—are viewed as making it
more difficult for businesses to enforce the
Smoke-Free Air Act.
With the future of the category at stake, it
will be up to e-cig makers to make the case
against such bans, and to do so quickly.
These and other issues central to the category will be addressed at Vapor World
Expo on May 7 and 8 at the Rosemont
Convention Center in Rosemont, Illinois.
NEWS & TRENDS
MAY/JUNE 2014
Highlights From Wells Fargo’s Report on Tobacco Trends
E-cigs are losing share to tank-style products, and more.
Wells Fargo analysts recently reported that based on their analysis
of the Henley Vaporium in Manhattan’s SoHo neighborhood, e-cigs are
losing share to vapors/tanks/mods
(VTMs) in the e-vapor market. This
development raises questions as to
“how the Big Three will or could get
involved, especially given part of the
vaping culture is a disdain for Big Tobacco and not wanting to be associated with smoking or be considered
a smoker,” says a report released
by the analysts, who added that the
“cig-alike e-cigs as they are today are
already becoming ‘your father’s ecig,’ [making it] critical that ‘cig-alike’
technology continues to evolve to
bridge the performance gap relative
to VTMs.”
Other findings by analysts based on
a recent Wells Fargo survey of retailers
and wholesalers suggest that:
1. U.S. cigarette industry volumes
are expected to be down 4.5 percent in
the first quarter of 2014 (1Q14).
2. Of the survey respondents, 63
percent saw a slightly more competitive environment in 1Q14 compared to
51 percent in 4Q13, while 44 percent
reported an increase in down-trading
pressure on premium cigarettes in
1Q14 compared to 41 percent in 4Q13.
3. Wells Fargo sees the most upside
potential for Lorillard in 1Q14 from the
continued strength of Newport Menthol
and “incrementality” of Newport Gold.
4. Lorillard’s 13-week extension to
June 27 of its Newport Gold promotion
is expected to help drive awareness
and trial.
5. The next cigarette list price increase is expected to be about six cents
per pack and occur in the week of June
2, led by Philip Morris USA, and net
price realization for 2014 is expected to
be a “flattish” four percent.
6. The e-cig category is slowing
down, but its growth outlook remains
robust with its shelf space increasing
18 percent year over year.
7. More than 40 percent of retailers
are holding off on carrying additional ecig brands in anticipation of Vuse (RAI)
and MarkTen (Altria).
8. MarkTen, currently sold in Arizona
and Indiana, is expected to be shipped
to 25 additional Western and Midwestern states starting June 2nd.
9. 2014 could be a pivotal year for
the e-vapor category as the vapors/
tanks/mods sub-segment is growing at
twice the rate of the overall category,
and 65 percent of the respondents said
vape shops are either currently or soon
could be impacting c-store traffic.
Royal Agio Cigars and Drew Estate Partner
Royal Agio Cigars and Drew Estate Tobacco Company enter exclusive distribution agreement.
Under a new agreement, Drew Estate will market, sell and distribute
all Royal Agio Cigar brands in the
United States. The arrangement
expands Royal Agio Cigars’ reach
across the broad channels of tobacco distribution throughout the
U.S. and provides the opportunity
to market Panter, Mehari’s and Balmoral brands.
“Although our companies are
22
MAY/JUNE 2014
quite different, there was an immediate chemistry between our
two family businesses,” explains
Boris Wintermans, CEO of Royal
Agio Cigars. “Both companies aim
for creating purposeful brands for
the long run and are committed
to making a difference. We both
have the ambition to expand in
the U.S. market and the Royal
Agio portfolio complements the
Drew Estate brand portfolio perfectly.”
“Drew Estate Tobacco Company,
including both the Drew Estate
premium division and the popular
market side called ‘Half a Sandwich,’ has tremendous respect for
the Royal Agio team and the special
family tradition behind all of their
fine cigars,” adds Jonathan Drew,
co-founder of Drew Estate.
NEWS & TRENDS
MAY/JUNE 2014
New York Targets Illicit Trade
Governor Andrew Cuomo has announced a new “cigarette strike force.”
New York plans to crack down on illegal tobacco trafficking and sales
with the help of a newly formed strike
force made up of local, state and federal agencies who will work together to
stop the sale of counterfeit and untaxed
cigarettes. State Governor Andrew
Cuomo says that the goal is to “crack
down on these illegal sales and capture
those smugglers who seek to evade the
law and rob the state of the revenue it is
rightly owed.”
By combining resources, the members of the strike force will be able to
both improve their database of crimerelated intelligence and share critical information as the team works to disrupt
and dismantle major trafficking organizations.
The initiative will be coordinated and
managed under the leadership of the
tax department’s Criminal Investigations Division, which has named its
own Michael Spinosa as chief investigator to supervise the Strike Force.
Spinosa has a background in law enforcement, specifically focused on
money laundering, fraudulent documents, and advanced surveillance.
Prior to joining the tax department he
was a detective sergeant with the New
York City Police Department, where
he supervised long-term narcotics investigations. Under Investigator Spinosa’s leadership, the tax department
has seized contraband cigarettes in 18
separate cases already this year.
The current tax on a pack of 20 cigarettes in New York state is $4.35; in New
York City there is an additional $1.50 in
tax added to the $4.35. The penalty for
possession of unstamped cigarettes is
$600 per carton and possible criminal
charges.
“This seasoned team will take a
multi-pronged approach to cigarette
tax enforcement,” says Risa Sugarman, deputy commissioner of criminal
enforcement for the tax department.
“In addition to targeting the trafficking
itself, we will use our intelligence centers and audit powers to trace financing activities and stop the criminal organizations at the roots of the crimes.”
Assets seized during strike force investigations will be shared among participating agencies. The members of
the strike force include:
• New York State Department of
Taxation and Finance
• United States Bureau of Alcohol,
Tobacco, Firearms and Explosives
• United States Custom and Border
Protection
• United States Department of
Homeland Security
• United States Food and Drug
Administration
• New York County District
Attorney’s Office
• Richmond County District
Attorney’s Office
• Rockland County District
Attorney’s Office
• Cattaraugus County Sheriff’s
Department
• Erie County Sheriff’s Department
• New York City Sheriff’s Office
• Niagara County Sheriff’s Office
• Suffolk County Police Department
Siegel Challenges TPSAC Member Assertion
Professor Michael Siegel of Boston
University’s School of Public Health
recently commented on a statement
by Dr. Jonathan Samet, chair of the
FDA’s Tobacco Products Scientific
Advisory Committee and director of
the USC Institute for Global Health,
that e-cigs should be treated like
24
MAY/JUNE 2014
combustible products because nicotine vapor could “contaminate the air
[people] breathe” and “contaminate a
chair, and [people] could touch it and
nicotine can go through the skin.”
Prof. Siegel of Boston called the statement “the sort of hysterical nonsense
that now passes for science in the to-
bacco control movement,” pointing
out that the most conservative existing estimates of nicotine levels produced by vaping say the amount of
nicotine that a bystander inhales after
eight straight hours of exposure to
a full room of vapors in a bar is only
0.08 cigarette equivalents.
NEWS & TRENDS
MAY/JUNE 2014
TMA Hosts 99th Annual Meeting
TMA will host its 99th annual meeting and conference on “Evidence-Based Science, Electronic
Cigarettes and Tobacco Harm Reduction” on May 19-22, 2014 at the Kingsmill Resort in Williamsburg, Virginia. Highlights will include a presentation by Center for Tobacco
Products Director Mitch Zeller. The following speakers will
also be featured: Drs. David Abrams, K. Michael Cummings,
Scott Leischow, Riccardo Polossa, Konstantinos Karsalinos, Chris Bullen, Joel Nitzkin, Gil Ross, Jonathan Foulds,
Corinne Husten and Michael Siegel. The event will also
include seminars by top security analysts, e-cigarette executives, and tobacco industry representatives.
Attendees will also participate in celebrations of the
lifetime achievements of Bill Griewe of Cheyenne Tobacco,
Marvin Coghill of Alliance One, and Joel Sherman of Nat
Sherman. The schedule will be as follows:
• May 19: Deeming Regulations and Substantial
Equivalence Case Studies
• May 20: Evidence-Based Science and FDA
Tobacco Regulation
• May 21: The Nicotine Industry Today
• May 22: Nicotine Delivery and the Mission of
Tobacco Control
For detailed information, registration forms, and agenda
updates, go to tma.org or call TMA at 609-275-4900.
Call For Drug Chains to Eliminate
Tobacco Products May Benefit Other Channels
Following CVS Caremark’s February
announcement to cease such sales of
tobacco products, attorneys general
from 28 U.S. states and territories sent
a letter to the five largest retailers in
the U.S.—Kroger, Rite Aid, Safeway,
Walgreens and Walmart—requesting
26
MAY/JUNE 2014
each of them to voluntarily halt tobacco
product sales in their retail outlets that
contain pharmacies. Commenting on
the letter, Bonnie Herzog, an analyst at
Wells Fargo Securities, suggested the
effort, if successful, will be a boon to
other retail channels. “[Smokers] will
simply go to other retailers, such as
convenience stores, dollar stores and
tobacco shops,” adding that “this is a
positive for convenience stores, especially if more drug retailers follow suit
and discontinue sales of tobacco products,” wrote Herzog.
TMA REPORT
By FARRELL DELMAN
Breaking News From the TMA
The following are excerpts from harm reduction,
tobacco regulation and other tobacco-related news.
On harm reduction…
…The current tobacco-use landscape
presents an opportunity in the “diverse
alternative nicotine-delivery vehicles
available to smokers,” including nicotinereplacement
therapies,
smokeless
tobacco, and e-cigarettes, says a
“Perspective” article in the New England
Journal of Medicine by Michael C. Fiore,
Steven A. Schroeder and Timothy B.
Baker, noting that up to 98 percent of
tobacco-related deaths are attributable
to combustible products. The article
proposes
targeting
the
“known,
overwhelming risks” of combustibles with
a “progressive public health approach”
that includes a focus by clinicians on
reducing their patients’ combustible
tobacco use if total tobacco-use cessation
cannot be achieved; population-wide
policies including excise tax increases,
clean indoor air rules, and public service
campaigns aimed at lowering combustible
tobacco use; a reduction by the FDA in
allowed nicotine content of combustible
tobacco products to near zero; a ban on
sales of all products containing tobacco
or nicotine, both combustible and noncombustible, to anyone under 21;
restrictions on the sale of combustible
tobacco products, such as requiring
licenses to sell—or even buy—them, or
28
MAY/JUNE 2014
banning point-of-sale advertising and
visible displays of combustible products;
and communication about harm reduction
since “not all nicotine-containing products
are equal, and the public health focus
should be on eliminating combustible
tobacco products,” according to the
authors.
…Dr. Gilbert Ross, executive and
medical director of the American Council
on Science and Health, said that the
“Perspective” article represents “a
landmark in the discussion of e-cigarettes
and tobacco harm reduction,” adding his
belief that the entire “tobacco control
industry” will eventually acknowledge
that “the current approach to helping
smokers quit is not, and has not, been
working, and the new approach of
encouraging non-combustible sources
of nicotine will likely be much more
effective.”
…In a January 18 Louisville CourierJournal
op-ed,
Professor
Brad
Rodu, endowed chair of Tobacco
Harm Reduction Research at the
University of Louisville, calls on state
officials to “endorse tobacco harm
reduction, offering adult smokers
truthful information about—and even
encouraging them to switch to—vastly
safer smoke-free tobacco products,”
and says that the medical groups and
government agencies “obsessed with
Farrell Delman,
President, TMA
[the] pursuit of a tobacco-free society
[and] deny[ing] smokers the facts about
harm reduction…should recognize that
tobacco prohibition is as unachievable as
was the prohibition of alcohol.”
…Gerry Stimson and Paddy Costall,
coordinators of the Nicotine Science
and Policy website (nicotinepolicy.net),
write that they “struggle to understand
why so many public health colleagues
are antipathetic to electronic cigarettes”
when the product’s uptake has been “a
consumer-led public health revolution”
and is a “classic harm-reduction
approach,” and note that the “reticence
to embrace” e-cigs is likely driven by
1) a suspicion behind working with any
for-profit industry; 2) the longstanding
anti-tobacco mentality and the difficulty
in switching to a positive mode from
being “anti” something; 3) a reluctance
or inability to engage with smokers
and vapers; 4) some suspicion and/or
jealousy that the e-cig movement did not
emanate from medicine or public health;
and 5) the tendency to adopt “narratives”
from public health “thought leaders.”
…During a joint legislative panel
hearing in Oklahoma on January 22 on
the pros and cons of promoting e-cigs as
a means to reduce smoking with a specific
focus on taxation and regulation, e-cig
supporters including Oklahoma Vapor
Advocacy League Chairman Sean Gore
TMA REPORT
argued that taxing e-cigs at the same rate
as cigarettes would reduce an incentive
for smokers to switch to the devices,
which some studies have said are much
less harmful. Critics like state Health and
Human Services Secretary Terry Cline and
the American Cancer Society’s deputy
medical officer Dr. Leonard Lichtenfeld
counter that existing evidence on e-cigs
is not enough to recommend the devices
as a safer alternative to cigarettes or as a
cessation aid.
ON THE FDA…
…Appearing on “The Diane Rehm
Show” on National Public Radio to
discuss the latest Surgeon General’s
report that expands the list of adverse
health effects caused by smoking, FDA
Center for Tobacco Products Director
Mitch Zeller commented that the report
“is a clarion call that the real harms are
associated with the use of the combusted
products and, principally, cigarettes.” He
noted that the FDA has an opportunity
under the Family Smoking Prevention and
Tobacco Control Act to reduce smokingrelated morbidity and mortality by both
informing the public and using regulatory
tools to try to shift people away from the
most harmful forms of nicotine delivery.
Zeller also acknowledged that “[i]f a
current smoker, otherwise unable or
unwilling to quit, completely substituted
all of the combusting cigarettes that they
smoked with an electronic cigarette at
the individual level, that person would
probably be significantly reducing their
risk,” but added that the challenge for the
FDA, as it shapes e-cig regulation, is to
figure out what the net population-level
health impacts would be.
…The FDA launched an “advisory
committee membership nomination
30
MAY/JUNE 2014
portal,” an online interactive system that
allows individuals to submit membership
applications to any of the agency’s 33
advisory committees, including those for
non-voting industry representatives on
the Tobacco Products Scientific Advisory
Committee.
…In a letter to the FDA, the National
Association of Tobacco Outlets (NATO)
called on the agency to immediately
remove two TV commercials from its
new $115 million multimedia youth
anti-smoking campaign dubbed “The
Real Cost.” NATO asserted that the ads,
which show a c-store clerk selling a
cigarette pack to a girl and a boy without
checking their photo identification and
accepting a piece of the girl’s facial skin
and an extracted molar from the boy
as partial payment for the cigarettes,
are a “false portrayal” of a real world
transaction involving cigarette sales and
are “offensive” to the retail industry.
ON OTHER tobacco news…
…National Public Radio’s food news
program “The Salt” reports that even as
smoking bans spread across the U.S.,
mixologists are bringing tobacco back to
bars by using it as an ingredient in their
mixed drinks. Such practices include
the mezcal-based “Oaxacan Fizz” at
Father’s Office restaurant in Los Angeles,
which is sweetened with pipe tobaccoinfused sugar syrup, the bourbon-based
“Smoker’s Delight” at PX restaurant in
Alexandria, Virginia, which contains a
sweet tea made with pipe tobacco or
clove cigarettes, and the cognac-based
“Step-dad” at Bar Charley in Washington,
D.C., which incorporates a dash of
“homemade tobacco bitters” and cynar,
an Italian liqueur.
…Despite Governor Made Mangku
Pastika of Bali, Indonesia cancelling the
international cigarette and other tobacco
products trade exhibition known as InterTabac Asia 2014 that was scheduled to
be held in Nusa Dua on February 27 to
28, the management of the Bali Tourism
Development Center has reportedly
begun preparations for hosting the event,
saying it obtained a permit from the
police.
…An unnamed source at Ukraine’s
diplomatic mission in Geneva said that
under current political circumstances in
Ukraine, “it may be very difficult to find
money to continue” its case against
Australia’s plain-packaging legislation,
which was launched by now-ousted
President Viktor Yanukovich in March
2012 at the World Trade Organization, as
Ukraine’s future trade policy is likely to be
focused more on concrete steps to help
its ailing economy than on “theoretical”
questions about tobacco products,
though the source added that the
legal challenge might continue if other
countries help fund it.
…After British American Tobacco
reported its 2013 results, Legal Director
Neil Withington said in an interview that
if the UK government requires plain
packaging for cigarettes, the company
would consider filing a legal challenge to
protect “consumers’ rights to choose and
our ability to compete.”
…A federal trial judge in Ohio recently
denied the plaintiff’s motion for class
certification in the Phillips Lights case,
which Morgan Stanley analysts said
continues “the industry’s universal
success in defeating the class certification
of federal ‘Lights’ cases” on the basis that
common issues do not “predominate”
and that the class structure is not a
“superior” litigation form, with all existing
class-certified ‘Lights’ cases residing in
state courts. TBI
Stogies on the Move
What do you get when you mix a sexy plexiglass trailer with about
50 SKUs of cigars? A smokin’ mobile business!
J
ust the name of this cigar
lounge would be enough to
attract attention and paying
customers: “4 Smokin’ Blondes.”
Couple that with the ingenuity
and execution behind this unique
mobile cigar business and you have
a true retail “wow” factor—one that
has been literally on a roll for over a
year now.
Blonde in Charge
There is actually only one “smokin’
blonde” affiliated with the business;
Sue Carlon, an entrepreneur and
cigar smoker, is the creator and owner
of the mobile cigar lounge (actually
an 8.5-foot-by-18-foot see-through
trailer made of plexiglass) named 4
Smokin’ Blondes. Where does the
32
MAY/JUNE 2014
By Renée M. Covino
“4” come in? Carlon was inspired by
her three women friends, all blonde,
who she frequently went out with
and was in the presence of when she
dreamed up the idea several years ago
while living in Arizona.
“It is a tribute to being there with
my girls; they were the inspiration.
If I hadn’t met them and they hadn’t
been there with me, the idea would
have never come to fruition,” she tells
Tobacco Business, adding that the name
also works as an attention-grabber.
The idea first came to Carlon
at the historic Arizona Biltmore
hotel in Phoenix. She was there for
a builders’ event, thanks to one of
the three friends who worked for an
architectural firm, when a veteran
34
MAY/JUNE 2014
architect/builder remarked to her
how much fun the hotel used to be
decades earlier when men could
smoke cigars inside.
“I’m a vintage girl at heart, and
when we were waiting outside for
our cars, it struck me from a business
perspective that the hotel should
provide cigars for sale and set up a tent
or outdoor seating area so people like
this gentleman could sit outside and
smoke,” Carlon relays. She thought
about it that night and continued to
think about it for months afterwards
with her girlfriends, realizing that
there was “a real market out there for
there to ride,” says Carlon, reflecting
on the experience. “We had a lot of
large cigars left over from our first
and second events.”
4 Smokin’ Blondes currently carries
a variety of cigars from about 30
different (mostly popular) cigar
brands—approximately 50 SKUs in
total—with a lot fewer large cigars.
But overall, and right from the
start, 4 Smokin’ Blondes was on to
a cigar concept that works. “We
hit the mobility part right on the
head,” believes Carlon. “We can go
to a lot of different events and cigar
smokers everywhere will flock to
The Party Globe
The transparent trailer instantly
got a reputation for being a “party in
a globe” and was then subsequently
nicknamed “The Party Globe,”
according to Carlon, “because people
can literally see inside that we’re fun,”
she says. “They see this clear trailer
that has a little bit of an upgrade[d]retro-party look to it, and they’re
drawn to us. We light it up at night,
we provide seating inside and out,
and we make it fun.” In Carlon’s
mind, she is extending a fun shopping
a portable cigar environment” that
traveled to events “so people could
relax, talk with friends, and enjoy
cigars.”
The business was born in 2013, and
by the first week in April, it had set up
shop at its first outdoor event—Arizona
Bike Week. It offered a variety of
premium cigars sold out of the trailer’s
two humidors, but one crucial mistake
in assortment was made.
us.” She says the idea that they can
purchase premium cigars, rather
than “something they’d find in a
7-Eleven,” is a real eye-opener for
event attendees who are not used to
finding such an indulgence. “They
see the trailer, they see the premium
cigars, and their eyes go wide,” she
adds. “They get it immediately and
walk in to make a purchase.”
Inside the trailer there is bar-type
seating—stainless steel high tables
with bar stools around them. “If we
have the space outside for a tent, we
will also do a wicker furniture lounge
area with nice cushions and end tables,”
Carlon explains. She is sensitive to
the fact that at biker events, “people
are riding all day; they want to come
in and cool off under the shade,
experience to the many male cigar
aficionados who are typically left out
of having a “wow” retail moment.
But that’s not to say that the 4
Smokin’ Blondes mobile cigar lounge
doesn’t attract women. Not only
does it have a female cigar consumer
following everywhere it goes, it also
attracts non-smoking shoppers from
all walks to its clothing and jewelry
lines sold alongside its cigars at the
events. This is a natural diversification
for Carlon, who, at one time, owned
two boutiques and had her own
children’s clothing line.
“We brought in biker apparel
and jewelry and set it up in another
tent at Sturgis [Motorcycle Rally],
and who would have thought we’d
sell the same amount of clothing as
Bigger Is Not Better
“We learned that when we go to
bike events, people don’t typically
want a Churchill or a huge Torpedo,
they want mostly smaller nubs or even
half-Coronas because even if they’re
sitting around, they don’t want to sit
around too long. Ultimately, they’re
36
MAY/JUNE 2014
enjoy a cigar, and then off they go.”
cigars?” Carlon relays, adding that the
margins on the branded 4 Smokin’
Blondes T-shirt and tank-top event
apparel have often helped “make
overhead,” as she puts it.
“I knew we had to do something to
brand our name and our business—to
put our logo on clothing items that
people could walk away with from
the event,” she says, adding that it’s
tough to rely only on cigar margins.
The rent at the annual Sturgis rally
was the highest she paid last year—
over $3,000—and this year, “we’re
going for a prime location and will be
spending more than double that,” she
tells TB. “But we know the traffic will
be unbelievable, and we’re going for
even higher visibility now.”
Apart from the branded clothing,
another business diversity for the
cigar lounge initially tested at Sturgis
was portable hookahs and a hookah
bar. “We see it getting even bigger at
concerts this year,” Carlon reports.
Broader Targets
While riding events like Arizona
Bike Week and Sturgis were the
biggest business targets for 4 Smokin’
Blondes in 2013, this year “we’re
trying to change it up a bit more,”
according to Carlon. So for 2014,
the venues include more art shows
and concerts. Carlon attempted to do
“I knew we had to do something to brand our name
and our business—to put our logo on clothing items
that people could walk away with from the event.”
38
MAY/JUNE 2014
“There’s a bigger market than we initially
thought for this. We’re finding out that there are,
literally, different avenues we can go down
with a cigar trailer.”
some golf events, “but we found we
can’t be on golf grounds—it’s against
regulation—so sometimes we get a
few road blocks.”
In addition to broadening its
event horizons, the business is also
targeting a wider age group. “We
have a really young following; we
used to think it was 30 on up, but
really, it is more like 21 on up,” she
says. “When we did a college bowl
series, we were full every night. The
younger adult crowd is very attracted
to this.”
Realizing that she and the business
are “still on a learning curve,” Carlon
sees that “there’s a bigger market
than we initially thought for this.
We’re finding out that there are,
literally, different avenues we can go
down with a cigar trailer.”
One of those is currently in the
works; a major cigar distributor is
interested in contracting 4 Smokin’
Blondes to be its mobile distributor
at various events held around the
country. Recognizing that this and
other opportunities will present
40
MAY/JUNE 2014
events that overlap has been the
impetus for Carlon to purchase a
second trailer.
Right As Rain
Naturally, there have been, and
will continue to be, some challenges
for the business. One expected
challenge that pleasantly did not
materialize was inclement weather.
Carlon figured that a bad bout of
rain would ruin the day for this type
of event-based business, but last year
at a car-racing event where it rained
the entire weekend, “we blew our
inventory out—we actually ran out
of cigars,” she says. “We could leave
the tailgate down and the front door
open, so customers could smoke
inside and there was a breeze coming
through,” she explains. “Basically, it
was a place for [event attendees] to
come and get away from the rain; it
didn’t affect us at all.”
Beyond that, the fact that
Carlon and her crew are taking
the business from one state to the
next is taxing—both literally and
figuratively—from a state taxation
point of view and from the physical
aspect of traveling by trailer to
make a living.
Regarding taxes, Carlon does
her homework long before pulling
up into any state with her cigar
trailer. “I go online to find the tax
and withholding office in the state,
I see how their tobacco licensing
breaks down, then I call and talk to
someone directly to let them know
exactly what I’m bringing with
me invoice-wise,” she explains. “I
document everything and I explain
what I’m planning to do.” This
has, so far, resulted in the states’
cooperation and Carlon avoiding
any potential logistical nightmares.
The other taxing part of Carlon’s
business is the physical wear and
tear. “We drive for days sometimes
to get to an event. Then we put in
shifts from 8 a.m. ‘til midnight.
Putting in 14-hour days and more
on the road is tough,” she says,
laughing, “but then we get to come
home and sleep for a while.” TBI
Picking up on Pipes
A new generation of pipe smokers is discovering the appeal.
By Erik Stokkebye
I
attended a fantastic Tobacconists of America Association
(TAA) convention in late March and had a great chance to
catch up with lots of good friends. In a survey of the TAA’s
80-or-so retail members, 90 percent reported considerable sale
increases in pipes and pipe tobacco over the last year. Survey
participants who added comments said things like “many younger
adult smokers are intrigued about pipe smoking and the lifestyle of
smoking pipes.”
What welcome feedback! As an industry, we should continue to
appeal to this market segment to keep that (sometimes a bit fickle)
interest alive.
On the Style Front
“Wait…is that a ‘murse?!’”
That’s what my 20-something-year-old kids asked
incredulously—with a teasing laugh to boot—when they first
got an eyeful of my new pipe bag. Soon they
were both fighting to “borrow” it. A murse,
in case you aren’t up on such fashion terms,
is a “man-purse,” apparently a very fashionforward accessory sported by male celebs
and hipster types.
My new bag is too casual to be a briefcase—
or even more pompously, an attaché case—and
definitely not meant for a serious job interview.
It’s too big to be just a pipe accessory bag—
mine also holds a tablet and whatever other necessities I need
throughout the day. It’s too stylish to be a laptop case—and way
nicer and grown-up than a backpack. It’s not big and chunky
enough to be a messenger bag—though it can be worn cross-body,
whether you are biking across town or hurrying through the airport.
At the risk of sounding awfully British, maybe we need to go back
to the good old-fashioned term “satchel.”
Whatever we ultimately decide to call it,
it’s a handsome accessory handcrafted in Italy
from cool suede that looks all raw and beat-up
(the wife informs me it’s called “distressed”).
From inside the flap, a burnt-orange leather
lining peeks out—just like on its little brother,
the “4th Generation” pipe case. (You can
check it out for yourself at our new website,
4thgentobacco.com.)
Of course, pipe bags come in a wide range
of shapes and sizes, as do murses. A simple
Google search will turn up a wide enough
range that you’re sure to find the right bag
for you—or to bring into your store for your
customers. They also make great gifts for pipe-smoking pals.
Plus, thanks to the popularity of the murse, you may find them
tough to keep in stock. TBI
Trendspotting: Blast from the Past
In 1965 the hip item on campus was the slide rule. Kids
who weren’t even taking a math course wanted to be
engineers to validate that K&E slide rule they carried
around on their belts. Ironically, crew cuts and white
pipes completed the outfit. It was the fashion. I know
because I was there, and I had a slide rule and a crew cut
and was lousy in math. Ahhhh, those were the days.
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MAY/JUNE 2014
electric
ALLEY
Tanks Come
Rolling In
By Renée M. Covino
N
The “open system”
tank category is
undeniably driving
the next wave
of e-vapor growth,
according
to the latest
industry research.
44
MAY/JUNE 2014
ever underestimate the steady
mobility of a tank. In the
e-vapor world, the vapor/
tank/open system sub-segment may not
have Big Tobacco behind it (at least not
yet), but it’s accelerating and driving the
next wave of e-vapor growth, says Wells
Fargo Tobacco Analyst Bonnie Herzog.
In fact, a recent Tobacco Talk survey
conducted by Wells Fargo predicts that
vapors/tanks will grow in 2014 at twice
the rate of the e-vapor category as a
whole (which includes disposable and
rechargeable e-cigarettes that come in
stick form, as well as personal vaporizers/
tanks), assuming vapors/tanks are not
hindered by FDA regulation.
The survey also supports the idea
that the recent traditional e-cig sales
growth deceleration identified in earlier
2014 research reflects that category
volume is fast moving toward vapors/
tanks.
$2.2 billion to $3 billion
The Tobacco Talk survey found that
the retail e-vapor market is much larger
than the $750 million captured recently
by Nielsen data—it’s more like $2.2
billion to $3 billion.
“The discrepancy is due to about 60
percent of e-vapor sales through untracked
channels, such as online and vape shops—
an estimated 5,000 [retail entities] in
the U.S.,” says Herzog. “On one hand,
this should ease concerns around e-cig
category growth deceleration, but on the
other hand, it highlights the pressures blu
e-cigs and the e-cig category are facing
from vapors/tanks.”
According to Wells Fargo, the average
vapor/tank consumer’s weekly spend
is about 30 percent less than that of
the e-cig consumer, which is also likely
contributing to the lower revenue and
decelerating growth of the overall e-vapor
category.
electric
ALLEY
e-Vapor Retail Sales Mix Evolving
65% Weighted Towards E-cigarettes vs. VapoRS/Tanks
70%
65%
60%
50%
40%
30%
33%
20%
10%
0%
2%
E-Cigs and Accessories
Vaporizers and Accessories
Other
Source: Wells Fargo Securities, LLC
The 65/35 Split
The survey also found that the e-vapor
retail sales mix is evolving to be 65 percent
weighted toward traditional e-cigs versus
35 percent toward vapors/tanks; however,
vapors and tanks are overwhelmingly
taking e-cig share, according to 90
percent of respondents who revealed that
the transition to vapors is the “natural
progression” after e-cigs.
One retail respondent commented, “We
have seen our rechargeable cig-alike sales
get cannibalized, especially over the last 12
months. We ask every inactive customer
why they have discontinued the purchase of
cartridges, and 70 percent of those we asked
responded that they had switched to vapor/
tank systems.”
Another surveyed retailer mentioned
that vapors/tanks are less expensive, much
more customizable, and most are not in a
form that resembles a traditional tobacco
product, “causing less confusion and
consternation about where and when they
can be used.”
46
MAY/JUNE 2014
consumers More Committed
Vapor/tank consumers were found
to be much more committed than
their e-cig consumer counterparts,
according to 84 percent of the Tobacco
Talk respondents. Many opined that
despite the higher initial investment
and somewhat steep learning curve,
consumers tend to stick to vaping
because of the various advantages over
e-cigarettes, namely the sophistication
of product offerings, the enhanced flavor
profiles, the more diverse uses of the
products, the “coolness” quotient, and
the lower cost of vaping.
Plainly put, “Passionate vapers don’t
use cig-alikes—[it’s as] simple as that,”
stated one respondent.
Stated another, “Most consumers start
with e-cigs and move to tanks. It’s more
work, but the commitment is greater.”
Another participant commented
that as consumers follow the “logical
path from disposables to vaping, they
become more personally satisfied with
the change and the results.”
So what does this mean for retailers,
both from the tobacco sector and the
c-store channel, who truly want to move
forward in the e-vapor arena? For one
thing, those who only sell traditional
e-cigs are already becoming dinosaurs,
according to the latest research.
“Retailers really have to rethink this
category,” offers Herzog, who praises
c-stores like The Pantry, which is already
selling tanks. “They have to be more flexible
than the old days; they have to adapt.”
She advises forward-thinking retailers
to invest more time into educating their
employees so they know “how to talk to
the vaping consumer. They need to think
about it like a wine shop; that is what
this is evolving into.”
To give an example, Herzog references
vape shops, which are growing rapidly
and seem to have a handle on how to
approach ‘hobbyist’ consumers. “This is
the challenge and the opportunity,” she
says. TBI
48
MAY/JUNE 2014
The Latest
SC O OP
on the
“Others”
It’s not all
about e-cigs
and vapes;
there is still
a very viable
(and expanding)
world out there
of other tobacco
alternatives and
non-combustibles.
By Renée M. Covino
A
“
mazing” growth, “exploding”
sales, and “extreme” growth
are just a few of the adjectives
that tobacco retailers use to describe
the e-cig and vape phenomenon
that has taken the industry and
their businesses by storm. But in the
second breath of positive news, many
mention the “other” alternatives,
such as smokeless tobacco, snus and
modified-risk products, as very viable
growth categories. All are segments
to which many retailers are devoting
more merchandising space. And so,
Tobacco Business offers the latest scoop
on these non-combustibles that bear
no “e” in front of their name:
Smokeless Tobacco
Industry observers and retailers
from varying channels report good
news and positive growth from the
49
TOBACCO BUSINESS
BUSINESS INTERNATIONAL
INTERNATIONAL
TOBACCO
MAY/JUNE 2014
2014
MAY/JUNE
The Latest
SC O OP
smokeless tobacco category. “The headwind
for combustibles becomes the tailwind for
smokeless,” says David Bishop, managing
partner at Balvor.
Smokeless has been growing “consistently in
the mid-single-digits for a long time now; it is
the little train that could,” benefitting from all
the negative press surrounding combustibles,
says Bishop.
Morgan Stanley recently referred to the U.S.
moist smokeless tobacco category as “a large,
established, growing and high-margin business”
with no MSA or material legal defense costs.
Different forms of value are driving moist
smokeless tobacco’s growth—namely portion
pouches and low price, according to Balvor
research that is based on Nielsen c-store data.
“While portion pouches are growing at a faster
rate, low price is contributing more in absolute
50
MAY/JUNE 2014
bases—64 percent of can growth—given its
size,” says Bishop. “However portion pouches
still drive an impressive 33 percent of can
growth.”
In the tobacco outlet channel, “noncombustibles such as moist snuff,” along with
e-cigs and e-liquids, “were by far the driving
factors attributing to our sales growth in
2013,” relays Darren Collett, owner of Collett
Enterprises, a 26-store chain of Smoker
Friendly authorized dealers. Hence, many of
the chain’s back bars were remerchandised to
highlight the moist snuff category. Additionally,
moist snuff SKUs were expanded.
Collett expects continued growth in
smokeless tobacco this year “as more smoking
restrictions push smokers to look for alternative
products.”
Similarly, Bill Grantz, owner and operator of
The Latest
SC O OP
18-store chain Cox’s Smoker Outlet, has seen
“steady growth” in smokeless for the past two
years. He expects the category to do even better
in 2014 than 2013.
The way one c-store retailer views it, even
with all the many prohibitive smoking bans and
restrictions, “you can still go to a bar here and
ask for a spit cup,” as Jeremy Goerts, operations
manager at Speedi Car Wash & Fuel, tells
Tobacco Business. “So apart from e-cigs and
vapors, we’re seeing more demand for smokeless
now. People are asking for it by name. We’re
getting a lot of requests for the Kodiak brand
currently.”
He is also witnessing more requests to buy “a
whole log,” or five cans in a pack, indicating that
the category has staying power with consumers
now.
Growth is also being witnessed on the
manufacturing end. U.S. Smokeless Tobacco
52
MAY/JUNE 2014
Company, owned by Altria Group, recently
reported that it will invest about $118 million
to build a new processing facility and expand its
existing plant in Kentucky.
Snus
Originating in Sweden and also known as
“dry smokeless tobacco” because it is not only
smoke-free, but spit-free as well (users place
the pouch discreetly under their lip), the U.S.
snus category is probably about the size (in sales
volume) of the RYO pipe tobacco segment,
which is also about the size of the little cigar
category, according to Bishop. It is a bit smaller
than e-cigs, “but it is a category that continues
to grow,” he says. “Demand for snus is growing
as the segment expands,” and “demand is
shifting as the assortment evolves,” he adds.
Regarding the former observation, snus
unit sales are growing at just over four percent
The Latest
SC O OP
Smokeless
Market Share
SKOAL
8%
GENERAL
6%
MARLBORO
5%
Camel
81%
compared to the year prior, according to the
Balvor/Nielsen figures. Regarding the latter
observation, Marlboro and Skoal brand snus
are struggling with declining sales, while
Camel stays steady and General grows, reports
the same source.
Bishop reports that there are four major
snus players in the U.S. (Camel, General, Skoal
and Copenhagen), “but it is dominated by one
brand: Reynolds Camel,” he relays. “It was the
first to launch nationally, and it has proven to
be a sustainable offering.” Still, “we have seen
[that] General has been able to grow in recent
years with relatively little distribution,” he
notes.
Furthermore, Swedish Match’s General, a
Swedish snus introduced in the U.S. in 2011,
has pushed further innovation in the category.
Released on the shelves in the first quarter of
this year, General’s “revolutionary packaging”
not only features a premium brushed metal can
with a fresh foil seal, but also an ergonomic
design with a hinged metal lid, which the
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MAY/JUNE 2014
company claims is a first for the smokeless
tobacco category, and is intended to provide
an “easy experience for the consumer when
opening and closing the can.” The new cans
are featured in the flavors of Nordic Mint and
Classic.
On a personal level, Goerts from Speedi
became a snus user about six years ago for the
times he “couldn’t light up in 65-mile-an-hour
winds. I tried a free can from Camel and I was
sold.”
So he put it in his store—the Camel snus—
but it came out shortly after. “We tried it and I
put it in my own freezer with ice cream, but the
county health department had a conniption, so
we took it out,” he relays.
But now, with good growth in the overall
smokeless category, he’s ready to put snus back
in. “The top seller is Camel and I’m talking to
my RJR [R. J. Reynolds Tobacco Company]
sales rep—as long as we have a contract,
we can get one of the little coolers you have
to merchandise it in,” Goerts says. “Snus is
The Latest
SC O OP
Moist Smokeless Can Growth
Total MST
Portion Pouch MST
While portion pouches are growing at
a faster rate, low price is contributing more in absolute bases (e.g., 64
percent of can growth) given its size.
However, portion pouches still drive
an impressive 33 percent of the can
growth. Two-thirds of portion pouch is
being driven by the low-price segment,
which is essentially flipped versus two
years ago.
Low Price MST
Premium MST
0%
5%
10%
completely different from moist snuff and long
cut. It’s sweet, it’s not as strong, and it’s overall
more attractive. I’m expecting it to do well now
with all the emphasis on alternatives. Customers
are ready and eager to try new things.”
In the tobacco outlet channel, leading
player Smoker Friendly puts credence in snus
growing for 2014, according to Jeremy Weiner,
marketing and purchasing director.
At Nothin’ Butt Smokes, snus hasn’t had a
great following so far, as stated by Vice President
Shon Ross, but he’s not discounting it—not at
all. “Snus has not taken off like people in the
industry imagined, but we still have a decent
section dedicated to it,” he explains. “We want
to make sure we try all of these alternatives in
small doses until they take off. We know it’s all
still playing out.”
Reduced- and
Modified-Risk Products
The future of the tobacco sector is paved with
reduced-risk products (RRPs), modified-risk
products (MRPs), next generation products
(NPGs), and overall tobacco harm reduction
(THR). All referring to the same group of
56
MAY/JUNE 2014
15%
20%
SOURCE: BALVOR/CSNEWS RESEARCH
products, the day will likely come when one
wins out as the definitive designated acronym.
In the meantime, whatever you want to call this
emerging category, it clearly warrants research
and investment for both the short and long
term.
The Wall Street Journal’s Corporate
Intelligence blog recently reported that “coming
up with something new to sell is a matter of
existential importance” for major cigarette
companies “whose core product is in longterm decline,” and who have been investing in
“reduced-risk products.”
Philip Morris International CEO André
Calantzopoulos said at a recent investor
conference that “reduced-risk products” are
“our greatest growth opportunity in the years
to come, which we believe has the very real
potential to transform the industry.”
RRPs continue to be Philip Morris’s “greatest
growth opportunity,” agrees Wells Fargo
Securities analyst Bonnie Herzog. She reports
that Philip Morris remains on track to launch
its Platform 1 RRP (HeatSticks) in two test
cities in the fourth quarter of this year, with
the first national launch set for 2015. Platform
The Latest
SC O OP
1 has been described as a device that uses an
external heat source to heat tobacco instead of
burning it. (There are two other platforms
that are further from commercialization:
Platform 2, previously described as similar
to Platform 1 but utilizing an internal
heat source, and Platform 3, said to create
a nicotine aerosol rather than utilizing any
heating or burning methods.)
The tobacco giant’s initial plans are to
produce HeatSticks in its factories and
outsource the electronics, but as its RRP
technology and processes mature, it plans
to transfer its expertise to its existing
factories for capacity expansion, according
to Herzog. Philip Morris has made note
that it expects profit margins on these
products to be comparable to combustible
cigs over time. More specifically, “Philip
Morris estimates the potential adult smoker
volume base for RRPs could be 30 to 50
58
MAY/JUNE 2014
billion units of the 1-trillion-unit market,
assuming an adoption rate of three to five
percent,” Herzog states.
Meanwhile, newcomer Mynus Corp
launched a 45-day, crowd-funding campaign
in late March on indiegogo.com to finance
the production of a device that allows
the user to control the amount of smoke
and nicotine inhaled from a conventional
cigarette, as written in a company release.
The California-based company unveiled
the “Ten Disk System,” which creator Kelly
Adamic claims has nothing to do with an
e-cig. He explains that Mynus is a designled device that allows users to insert a fresh
cigarette along with one of the ten metering
disks (which control the amount of smoke
and nicotine that is inhaled), giving smokers
the ability to gradually reduce their intake
by changing disks over time.
Also in March, North Carolina-based
e-Nicotine Technology (eNT), self-described as
“a healthcare company committed to reducing
the harms associated with combustible tobacco
products,” said in a press release that it is moving
toward the launch of its family of electronic
nicotine delivery products that “do not look like
cigarettes or e-cigarettes and emit no secondhand
vapor,” thus giving consumers “a satisfying and
discreet nicotine experience anytime, anywhere.”
The eNT products are touted to use 40 to 70
percent less nicotine than cigarettes and existing
e-cigs. Jeff Williams, CEO of eNT, says that the
company believes that its products “are poised
to capture a significant market share given that
they can be marketed at a substantially lower
cost and can be used discreetly.” The eNT
platform is adaptable to eventual development
as a more traditional nicotine-replacement
therapy product, Williams adds. The company’s
initial product will first be launched across
Europe. TBI
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MAY/JUNE 2014
New Moves for
M&R Holdings
Leveraging the
success of
Dean’s Cigars and
Farmer’s Gold brands,
this Pink Hill, North
Carolina-based
company has been
on a new productlaunching spree.
By Jennifer Gelfand
60
MAY/JUNE 2014
O
ne might call M&R Holdings
an old new company. While
the company was founded in
1997—qualifying it as relatively new
by tobacco standards—Co-Founder
Dean Rouse can trace his family’s
tobacco-trade legacy all the way back
to 1734, when his ancestors grew
tobacco on North Carolina farmland.
By the time M&R was launched,
Rouse himself had a long history in the
business, one spanning everything from
tobacco growing and leaf dealing to
manufacturing and retailing.
“I started learning how to blend
tobacco when I was about 18 years
old; when some pinhookers took me
under their wing,” he says. (Pinhookers
were tobacco-blend experts who
canvassed warehouses looking for topgrade tobacco before going to tobacco
auctions; they then blended and
resold the tobacco to manufacturing
companies.) “Since then I’ve been
involved in every aspect of this industry.”
That knowledge paid off after
regulation of the cigarette market
began to intensify. Foreseeing the
enormous price hikes that the Master
Settlement Agreement would demand
from cigarette manufacturers, Rouse
and a partner (who has since left the
company to pursue a career in premium
cigars) spotted an opportunity to
significantly grow his loose
tobacco business. “Good
friends in the industry told me,
‘Look, if you manufacture your
own blend of loose tobacco, we
will buy it because we know that you
know tobacco,’” he recalls. “That’s how I
got the leg up.”
An Impressive
Product Portfolio
Determined to pay homage to the
tobacco farming community, Rouse set
about creating a loose tobacco blend
worthy of the name “Farmer’s Gold,”
a term farmers give their premiumgrade crops. Launched in 1997, the
mild-flavored tobacco quickly became
popular for delivering a great flavor at
an economic price. Today, Farmer’s Gold
Pipe Tobacco is available in four flavors
and packaged in eight-ounce, one-pound,
or five-pound bags (see sidebar, p. 64,
for a full product list). Since the brand’s
inception, Rouse has also made a point
of using American-grown tobacco and
delivering good customer service to his
customers. “‘Made in America’ has always
62
MAY/JUNE 2014
symbolized quality products,” he says.
“Unfortunately, customers are a lot more
price conscious today, and you have a lot
more imports to compete with.”
Fortunately, M&R also has a product
it launched in 2004 that is geared toward
this cost-conscious competitor: Dean’s
Cigars. Available in soft-pack 100s, the
cigars quickly gained popularity and the
line has since been extended to encompass
Dean’s Large Cigars and Dean’s Heavy
Weight Cigars, all of which are available
in nine flavors. “Dean’s is a quality
product, but also very price conscious
for the U.S. market,” says Rouse, noting
that his industry contacts provide access
to tobacco that other companies don’t
have. “I have the capability of getting
tobacco from everywhere now at a very
competitive price.”
That access proved valuable
last year when M&R decided
to venture into more specialized
blends, with the introduction of
English Blend, Canadian Blend and
Turkish Blend specialty tobaccos, as well
as three vibrantly packaged new flavors of
its Dean’s Pipe Tobacco: Out of Control,
Running Wild and Just Chillin’.
“These are getting the most
attention of any new product [that]
we’ve introduced,” reports Rouse, who
attributes the interest in part to colorful
packaging and niche market appeal. “The
Turkish, Canadian and English blends
are a higher-end niche product retailing
at about 25 percent more than the other
blends. People seem to really like them.”
Electrifying Dean’s
Last year, once again spotting an
opportunity on the industry landscape,
M&R developed a Dean’s E-cigars
product line. Initially dubious about this
emerging category, Rouse soon found
himself a convert. “I’m impressed,” he
admits. “They taste good, they look
The Lineup
Dean’s Large Cigars: Dean’s Large Cigars come in soft-pack 100s and are available in nine
flavors: Full, Menthol, Mild, Cherry, Vanilla, Peach, Chocolate, Wild Berry and Rum. There
are 10 packs per carton and 20 sticks per pack.
Dean’s Heavy Weight Cigars: Weighing more than four pounds per 1,000, Dean’s Heavy
Weight Cigars come in soft-pack 100s and are available in nine different flavors: Full,
Menthol, Mild, Cherry, Vanilla, Peach, Chocolate, Wild Berry and Rum. There are 10 packs
per carton and 20 sticks per pack.
(All Dean’s Cigars and Farmer’s Gold products are made in the U.S. and 100 percent guaranteed)
Dean’s E-Cigars: Available in Full, Mild and Menthol, Dean’s E-Cigars are packaged eight
sleeves to a case containing five pop-ups per sleeve and 10 sticks per pop-up.
Farmer’s Gold Pipe Tobacco: Available in flavors Full Aroma, Smooth, Cool, and Natural,
Farmer’s Gold Pipe Tobacco comes packaged in eight-ounce, one-pound or five-pound
bags.
Dean’s Pipe Tobacco: Designed to provide a great taste at a lower price, Dean’s Pipe
Tobacco comes in Full, Smooth, Cool and Natural flavors in eight-ounce, one-pound or
five-pound packages.
Dean’s Specialty Blends: Six new blends were introduced in 2013. They include English
Blend, Canadian Blend, Turkish Blend (all packaged in eight-ounce bags), and three Dean’s
Pipe Blends available in three-ounce bags: “Out of Control,” featuring flavor reminiscent
of an energy drink, “Running Wild,” featuring a strong full flavor, and “Just Chillin,’” a
menthol flavor.
64
MAY/JUNE 2014
The Importance of
Involvement
good, the packaging is great, and they
are selling. We started slow and we are
now aggressively moving up with them.
Retailers who are already carrying Dean’s
lines are picking them up and telling
customers, ‘If you want an e-cigar, you
should try Dean’s E-cigars.’
“It is definitely amazing how this
industry endlessly evolves,” he reflects. “I
never thought I’d see anything like this.
But while people are buying lot of the
e-products, I don’t think they will replace
old-fashioned products. I think it will be
more of an alternative product.”
Rolling With
Regulatory Concerns
Rouse foresees additional taxation
impacting the pipe tobacco category, but
says that M&R will adapt. “The question
is, ‘How will they reclassify these products
that have been on the market for hundreds
of years?’” he notes. “No one has a crystal
ball, but the only thing we see making a
difference is classing all the products at
the same tax rate. We are prepared to do
whatever the law requires. Of course, our
biggest concern is that they could tax our
products right out of business if tax hikes
make them so expensive that consumers
can’t buy them.”
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MAY/JUNE 2014
On the regulatory front, the
potential for a ban on flavors is a
concern. “If they ban flavors, I believe
people will still continue to smoke
our branded products based on price,”
says Rouse. “If they do both—increase
taxation and ban flavors—the story
could be different. I don’t know of any
strategy that will address that. The
only thing you can do is stay on top of
the developments.”
Information and support is one
of the ways M&R distinguishes
itself from competitors, adds Rouse.
“When a retailer or anyone calls our
company, I always call them back
personally and see if I can help,”
he says. “We don’t ask someone in
our ordering department to answer
specific questions regarding tobacco.
I want my customers to know [that]
they can access me personally and
that I’ll do anything I can to help
them.
“Since the very beginning, our
company has always operated as
a partnership with our customers;
whatever they need, we want to
provide. Our philosophy is, ‘If you win,
we win.’ We have been around a long
time so it must be working!” TBI
Having weathered sweeping industry
changes more than once during his
35-plus years in the business, Rouse
has learned how to roll with the
punches. “First of all, you have to
stay informed,” he says. “You have
to know what is coming at you by
always staying abreast of the news
and developments.”
For many years, Rouse learned
about changes from the trenches
while serving as chairman of Friends
of Tobacco, an association of growers
that lobbied on behalf of the industry
in Washington, D.C. Involvement,
he says, is often the best way to get
access to information and to help
shape the industry’s future. “When
something threatens your livelihood,
you have to stand up and be counted
and do what you can,” he says. “My
father always told me, ‘There is no
reason you can’t stand up and fight
for your industry.’”
Other organizations representing
the industry have taken the baton
from Friends of Tobacco, but Rouse
is able to stay informed about new
developments through friends who
are still involved in the legislative
arena. “Involvement and networking
[are] the best way[s] to protect your
business,” he asserts.
Are You Ready
for
By Jennifer Gelfand
Donald E. Stephens Convention Center
Serving the B2B market, a brand-new
trade show featuring electronic tobacco
products will be held May 7 and 8.
E
ven as the market for electronic
tobacco products continues on a
trajectory of rapid growth, retailers,
manufacturers, wholesalers and industry
experts will gather at the first annual Vapor
World Expo. This all-vapor, business-tobusiness conference and exposition will take
place in Rosemont, Illinois at the Donald
E. Stephens Convention Center, located
just minutes from O’Hare International
Airport in Chicago.
“The market for electronic and vapor
devices is growing worldwide as more
smokers are turning to these products
as an alternative to the traditional
tobacco products,” said Ed O’Connor,
president/CEO of TMG International,
in announcing the show’s launch. “Vapor
68
MAY/JUNE 2014
World Expo is the first-of-its-kind trade
show that will bring the world of vapor
together for two days to meet, do business,
and learn what to expect as the vapor
phenomenon continues to expand across
the globe. Offering enormous consumer
appeal, vapor products are positioned to
take over a good percentage of the market
as more health-conscious individuals
purchase these products.”
In addition to a trade show floor teeming
with innovative new products and industry
networking opportunities, Vapor World
Expo will feature educational seminars on
issues and trends affecting the e-cigarette
and vaping market (see sidebar, p. 70). This
not-to-be-missed industry event will:
• Attract electronic medium exhibitors
Hyatt at Rosemont
Marriott at Rosemont
Educational Seminars
SFATA’s Cynthia Cabrera
AEMSA’s Linc Williams
E-Cigarettes—Today and Tomorrow
Industry observers say that e-cigarette sales could
surpass those of traditional cigarettes within 10 years. At
the same time, the category is rapidly evolving as both
innovative technology and regulatory developments
continue to drive change. In this compelling presentation,
SFATA’s Cynthia Cabrera, TVECA’s Tom Kiklas,
FIVAPE’s Dumas de Rauly, VapAria’s Bill Bartkowski
and AEMSA’s Linc Williams will offer their perspectives
and address questions about the future of this exciting
category.
Vapors, Myths and Reality
Wells Fargo’s Bonnie Herzog and Troutman Sanders’
Bryan Haynes will cover sales trends and the evolving retail
landscape, as well as the latest sales data, the category’s
prospects for Big Tobacco versus smaller contenders, the
evolving retail regulatory landscape, and the cig-alikes
versus tank-style vapor devices debate.
TVECA’s Tom Kiklas
Wells Fargo’s Bonnie Herzog
Just the Facts
WHAT
Vapor World Expo 2014
Two-Day Business-to-Business
Trade Event for the Vapor Industry
WHERE
Troutman Sanders’ Bryan Haynes
FIVAPE’s Dumas de Rauly
and suppliers to the expo.
• Bring together buyers, wholesalers, manufacturers and
retailers from convenience and drug stores, supermarket
chains, and the tobacco outlet store communities to
consider, evaluate and make purchasing decisions to
support their electronic marketing strategies for the
upcoming months.
• Identify and attract the most knowledgeable market,
product and regulatory specialists, bringing perspective
and direction to burning marketplace issues through
seminars, round tables and attendee collaborations.
For more information about this exciting industry event,
visit vaporworldexpo.com. TBI
70
MAY/JUNE 2014
Donald E. Stephens Convention Center,
Rosemont, IL
WHEN
May 7-8, 2014
WHO
Buyers and Sellers of Vapor Products,
Retail Stores, Wholesalers, Distributors,
Convenience Stores, Head Shops, Smokeshops,
Importers, Exporters and Others
C-STORE CORNER
Private
Time
Should convenience stores be jumping
into private-label e-cigarettes?
By Jennifer Gelfand
C
iting “tremendous success” in
test markets, Mapco Express
recently announced the rollout
of its proprietary GreenStix brand of
disposable e-cigarettes across the chain’s
373 stores. “It is clear to us that smokers
are looking for alternatives to traditional
cigarettes and that electronic cigarettes are
becoming more and more popular,” says
Patrick Neuman, director of private labels
for Mapco, in explaining the rollout. “Our
GreenStix brand has quickly established a
loyal following with our customers.”
Mapco isn’t the first retail chain to take the
e-cigarette private label path.Smoker Friendly
launched its own e-cigarette brand way back
in 2009. “We started looking at them even
before the technology was perfected,” says
Curtis Farkas, national director of sales for
Smoker Friendly, who credits Terry Gallagher
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MAY/JUNE 2014
for spotting the category’s potential early on.
“Today, e-cigarettes represent two percent of
our tobacco sales and out of that two percent,
the majority of sales come from our SF
brand.”
A number of drug stores and c-stores
have also successfully debuted proprietary
brands. However, thanks to the complexity
of both the product and the regulatory
climate, the private-label e-cigarette path is
no small undertaking.
A Solid Supplier
Choosing a manufacturer is one of
the most critical pieces of the privatelabel puzzle. “Do your due diligence,”
urges Farkas. “Make sure the company is
financially sound and will be able to make
good on its promises. There’s nothing worse
than launching your own brand and then
not being able to get product when you
need it.”
In fact, Smoker Friendly went through
exactly that with its Smoker Friendly
e-cigarette brand, eventually opting to
switch manufacturers after its previous
supplier inked a deal with a large partner
and became overwhelmed. “We’ve now
partnered with FIN and we just launched
our new private-label e-cigarette on March
4,” reports Farkas. “We’re excited about it
because the products are great and FIN’s
national sales force will be selling our brand
as a value-priced offering alongside their
own. Our private-label e-cigarette is a good
option for retailers who aren’t able to do
enough volume to create their own brand.”
In addition to seeking a supplier that can
meet inventory demands, retailers should vet
a potential partner’s quality control process.
C-STORE CORNER
“There are really only 50 manufacturers of
e-cigarettes in different locations around
the world, and only about four or five make
a quality product with the right quality
control mechanisms and measurement
controls to meet the standards that the
FDA and other regulatory bodies will likely
be enforcing,” notes Brent Willis, CEO of
Victory, the company that manufactures
GreenStix for Mapco. “So it is not that easy
to get a good quality e-cigarette consistently
delivered on time as promised. Retailers
need a manufacturer who is willing to be
flexible—to partner with them and provide
them with the assurance you need to put
your own brand name on something.”
In choosing a supplier, one of Smoker
Friendly’s criteria was consistency. “When
we sat down and tried the products, the
experience with the one [our current supplier]
made was consistent all the way through
disposables, rechargeables and cartridges,”
says Farkas. “That’s important since people
tend to start with disposables and graduate
up the line. If the experience isn’t the same
across the line, they won’t like it.”
Ideally, retailers should look for a privatelabel manufacturer that is closely monitoring
the changing regulatory landscape. Industry
observers expect to see new regulations
regarding e-cigarette packaging, flavoring
and merchandising in the near term, and
an experienced manufacturer will be able
to advise the retailer on taking proactive
measures to possibly reduce the headaches
of having to redesign packages, rethink
flavoring, or change manufacturing
practices due to new regulations.
FDA Focus
To some extent, however, retailers are
less vulnerable to the FDA’s whims. In
fact, Smoker Friendly recently decided to
move forward with flavored e-cigarette
products—a subcategory it had avoided
out of concern that the FDA would issue
a ban—for exactly that reason. “We were
holding off for a while, thinking something
would happen with the FDA,” says Farkas.
“But flavors are the name of the game right
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MAY/JUNE 2014
Private-Label E-Cigarette Checklist
• Be sure to carry other national brand e-cigarette SKUs in addition to
your private-label product. There will always be customers looking for
name brands and you don’t want to leave money on the table by not having a
brand that they will buy. Smoker Friendly, for example, carries seven brands
in addition to its own.
• Choose your partner wisely. Escalating reports of poorly-made e-cigarettes
exploding and patent-infringement lawsuits underscore the need to go with
a reputable manufacturer.
• Be cautious with your packaging. Any wording that might seem to tout
the health benefits or relative safety of e-cigarettes over traditional cigarettes
will make your product an immediate FDA target.
• Live up to your claims. In a similar vein, ensure the validity of promises
regarding the number of puffs per stick or battery life. You’ll lose customers
to misleading claims.
• Launch large. If possible, it’s a good idea to introduce both a disposable
and a rechargeable version of your e-cigarette. You’ll gain credibility and
visual impact. Plus, customers tend to start with disposables and migrate to
rechargeable units.
now; they’re really exploding. Our thinking
is that FDA action could take a while and
when they make a decision, they usually
give those of us on the retail side time to
move inventory.”
Retailers should also consider whether
they can do enough volume to justify the
investment—on their own part and on that
of their manufacturer—that developing their
own proprietary e-cigarette and building
a market for it will involve. Willis sees $1
million as the minimum threshold of sales a
retail chain will need to deliver to make the
project worthwhile for both parties.
On the plus side, if your customers try
and enjoy your proprietary brand, you’ll
benefit from the 40 to 50 percent margins
typically realized on private-label products,
as well as a bump in customer loyalty as
shoppers return to your store to load up on
their new favorite e-cigarette.
“I expect this category to significantly
grow, and retailers who don’t have an
offering in the e-cigarette may miss a
significant opportunity that is changing
the face of this very big category for them,”
sums up Willis, who notes that the category
is still young and relatively open. “Those
that have acted quickly and quietly have
done very well, but for those who haven’t, it
is not too late. They just have to be forwardleaning.” TBI
trench marketing
BY MICHAEL GELFAND
Fumé’s Cigar Shop & Lounge
Attention to social media channels and an unyielding focus on a
clubby lounge for loyal members constantly have customers coming
back for more.
I
t’s often said that if you do what
you love, you’ll never work a day in
your life. One look at the evolution
of Ralph Alberto’s career since he first
started Fumé’s Cigar Shop & Lounge as
a hobby in Montclair, New Jersey nine
years ago proves that the axiom is true:
while he may literally be on the job more
and more, he’s working less and less in a
figurative sense.
Initially spawned by three friends’
collective passion for the cigar lounge
concept and their shared hope of
making—rather than losing—some extra
money on the side, Fumé’s has become
everything that Alberto hoped for. “We
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MAY/JUNE 2014
thought [that] we wouldn’t have time to
do it full-time, but now it’s turned into
something really great,” he says.
Back in the beginning, Alberto and his
pals looked around the sprawling New
Jersey suburbia near New York City and
saw a gaping need for the shop that they
envisioned. “It seemed that nobody had
a place that was comfortable to shop
or smoke in,” he recalls. “They were all
lacking ambiance, so we decided we’d
create that space. We carried boutique
products that big stores didn’t carry,
we created a man-cave-type feel for
the lounge, and we made it a place
where people of all types could come
in and enjoy the company of a great
group of guys and buy the products
and accessories [that] they wouldn’t see
elsewhere. I’m not sure if we created or
filled a niche, but it worked.”
Membership
Has Its Privileges
Fumé’s
storefront,
located
on
Montclair’s busiest thoroughfare, is
approximately 500 square feet, but
it is dwarfed by its 1,000-square-foot
membership cigar lounge in the back.
Decked out with dark paneled walls,
clubby arm and wingback chairs, gaming
tables, and wall-mounted TVs, the lounge
trench marketing
is optimized for members to hang out and socialize.
“We provide lockers, and members receive 15 percent off of
everything in [the] store,” explains Alberto. “Probably 30 to 40
guys come in here every day to play chess and cards or watch
a game on TV. We even have a quiet place to sit for members
who sometimes are seeking sanctuary and don’t want to deal
with anyone. There’s a free espresso machine, free WiFi for
easy Internet access, and a printer. Basically, we’re providing
members with all the amenities of home without them having to
worry about getting anyone upset with their smoking.”
The cushy lounge is obviously inviting for regular customers
to come in, sit back, and enjoy a good smoke. However, the
lounge wouldn’t be nearly as attractive a destination without
Fumé’s extensive selection of hand-rolled boutique cigars on
display in standing cases, including Perdomo, Tatuaje, Ashton,
Illusione, Oliva, Alec Bradley, Espinosa, Montecristo, Romeo y
Julieta, Gurkha, Rocky Patel, La Flor Dominicana, Fonseca and
PDR, just to name a few. The store also carries a wide array of
lighters, cutters and associated accessories, including brands
like Lotus, Prometheus and Colibri, among others, and even
carries fragrant lamps from Ashleigh & Burwood.
Social Media Drives Business
Alberto also looks to run regular events to draw existing and
new customers into the store. “We typically host something
at least once monthly from April through December,” he says.
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MAY/JUNE 2014
“Our most popular event is a special three-course dinner we do;
it’s sold-out every year. Basically we charge $200 per person
and cap the invitation list at 50 people. Each attendee receives
40 to 50 high-quality cigars so that they can try out products that
they might not otherwise be inclined to sample on their own.”
But what ties it all together is Alberto’s use of social media
tools—his store’s website, Facebook page, and regular mail
blasts play an ever-increasing role in Fumé’s success and
popularity by keeping his customers constantly updated on
special offers, upcoming events, and his own unique insights
on cigars.
His current website (fumecigars.com) has long been a
reliable source of basic information for his customers about
membership and monthly specials; however, the new
interactive site he’s launching in early spring will encompass
more information about the store and enable Alberto to
proactively develop the content—both text and photos—on a
daily basis without having to depend on any other resources
for support.
“I also want to develop a mobile app[lication],” he says, “that
lets my customers receive pushes and notifications. Maybe it’s
‘This week’s special on Romeo y Julieta is buy four, get one
free,’ or a rep comes in and wants to run a spontaneous event.
It’ll be well worth it [to pay for development of the app]. At best,
you get a customer who lives in the area[…to] come in and
download the app, [and] when they see a cigar they love on the
trench marketing
A website and Facebook presence drive business for Fume. The store already
has more than 380 Facebook friends, many of whom post to its page regularly.
app, they’ll come back in. At worst, you’re keeping yourself in
front of that customer and keeping your name in their head all
the time.”
The Power of Facebook Friending
In addition to his website aspirations, Alberto already relies
heavily on his store’s Facebook presence to stay in contact
with his clients and to constantly expand its presence to attract
new customers. “We started doing it about three years ago,
even though I was opposed to it for a while,” he comments.
“People started coming in and asking me about posts [that] I
had created, and they called the store and sent me messages,
so obviously it was working on its own. I saw the value of it and
started running Facebook-only buy three, get one free specials,
and that clearly boosted sales on days that we needed help
during winter months.”
The store already has more than 380 Facebook friends
following Alberto’s every post, and he says that he will increase
that number by continuing his practice of posting various
offers throughout the summer to encourage customers to try
something different, or to let them know about a discounted
product that they wouldn’t necessarily have come in for if
it wasn’t discounted. “Sometimes it’s as simple as telling
customers [that] if they mention a particular cigar and buy one,
they’ll get one free,” and that’s all it takes to get them in the
store.
While Facebook and his website are paying dividends,
Alberto didn’t find as much success with Twitter and Groupon.
“I started out using Twitter to get the word out quickly and
easily, but it turned out to be annoying for me and for users,”
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MAY/JUNE 2014
he recalls. “There were people following me from out of state.
Facebook just seems much more appropriate for conversing
with customers. I also tried using Groupon, but it didn’t work for
me. I was trying to attract a different demographic into the store,
but it was a complete failure because those customers who
came in for that deal bought the product, didn’t want anything
else, and never came back. They were just in it for the deal. Out
of 80 people who participated, I had one who came back in, so
I won’t do that again.”
Tie Everything You Do to Your Branding
Ultimately, all of Alberto’s effort put in to creating the attractive
environment with the diversified product mix and the right level
of traditional and online customer engagement and communitybuilding boils down to a solid branding strategy. “I believe in
branding, and in doing a lot of stuff that other retailers don’t or
won’t do,” he says. “I make sure [that] the store’s name is on
matches, cutters and bags that we give out, and I do holiday
season gift boxes that look like chocolate boxes—the wives
and girlfriends love them, so I do it even though it costs a lot
of money.
“I go above and beyond in branding and I treat people
differently, with more ambiance and more attention to details,”
says Alberto. “That works with whoever your clients are, and
we’ve got all types here. I meet lawyers, politicians and street
sweepers. They all get along because their common bond is
smoking cigars. Whether they’ve got a Ph.D. or a G.E.D. doesn’t
matter because they’re all talking to each other—everyone
from every walk of life, with the cigar being the commonality
between them. And they’re all here.” TBI
PRODUCT PROFILE
MAy/JUNE 2014
Kretek’s Three-Brand E-Vapor Launch
Kretek International announced that it is launching the most complete lineup of
e-liquids, personal vaporizers, e-pens, mods and e-vapor accessories in the evapor category. “We’ve been an innovation leader in the e-cigarette business for
five years,” notes Kretek CEO Mark Cassar. “We’ve committed all three of our
electronic cigarette brands—Cig2o, Voodoo and EZ Cig—to custom flavors and
new e-vapor technology as consumers move toward unique ideas and products.”
With a long history as a trusted resource and sales partner, Kretek offers retailers
a reliable source for quality and reliability in the e-vapor category. The company’s
three-brand strategy aims to deliver variety and choice for retailers to jump-start
their programs with premium, value and diversity for different consumers. “We
can build a complete and profitable e-vapor program for any retail chain.” Kretek
International, 800-358-8100, [email protected]
Republic Clears Things Up
Republic Tobacco’s new Kwik Kleer Lens Wipes are individually-packaged wipes with a clean, fresh scent. The moistened, non-abrasive sheets clean eyeglasses, sunglasses, cell
phone screens, computer screens and more. Ten individual
foil-sealed packages are packed per box for 99 cents each, or
a three-tier counter merchandiser ships ready to sell with 48
boxes per display. Republic Tobacco, 800-288-8888
84
MAY/JUNE 2014
Arango’s Three
Credos
Arango Cigar will be featuring three
novel cigar cutters from Credo (Marseille, France) in the Arango pavilion
at the IPCPR trade show of 2014—two
based on the Credo Synchro, and a
revolutionary three-in-one punch cutter. The double-blade “XXL,” with a
70-ring gauge opening, takes center
stage as one of the world’s largestcapacity cutters, able to cut any cigar made. The “Cutter RG 60” offers
greater economy and cutting capacity
than the original Synchro. The third
introduction is a three-in-one pocket
punch cutter available in the rectangular, aluminum version finished in
black, silver or titanium, as well as
the rounded-contour stainless steel
version in black, silver or bronze with
a key ring on a chain. The cutter’s
tri-fold design has two hinged side
wings that open out to reveal three
punches in 34-, 48- and 60-mm ring
gauges at a wholesale cost of $26.50.
Arango Cigar, 800-222-4427, [email protected]
PRODUCT PROFILE
MAy/JUNE 2014
PRODUCT PROFILE
JANUARY/FEBRUA
Zooming Alon
Vector Group recently
launch its ZOOM electro
first product, a superior
first e-cigarette. Sales a
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Zooming
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aDvERTIsER INdEx
More Cig2o Choices
Spark Industries and Kretek International have announced the launch of the Cig2o
brand line of premium e-liquids and personal vaporizer kits. The new personal
vaporizer kits include a choice of colors and battery activation, a 5-ml sample of
Cig2o classic tobacco premium e-liquid, and a USB battery charger. The kits are
contained in a slide-top hard-shell carrying case for continuing protection and
cleanliness.
The Cig2o ePro vaporizer features a push-button battery, while the Cig2o
MAXX has direct-flow vapor activation. Both models can be stocked and sold
in six different finish colors, including stainless, blue or red metallic, white, pink
and, of course, black. Both Cig2o units feature high-performance rechargeable
650-mAh lithium ion batteries and patented features such as advanced atomizer
and digital technology designed by Spark Industries, one of the most trusted
names in the e-vapor category.
Cig2o premium e-liquids are being launched in 12 flavors, including three tobacco choices—menthol, blue frost, red-hot—and six leading fruit flavors. Each
flavor has proven popularity with adult consumers in Cig2o rechargeable and
disposable e-cigs. The e-liquids come in 10-ml bottles with four different nicotine
choices. Bottles carry a tamper-evident seal and child-resistant twist-off cap.
Cig2o has developed several introductory displays to drive trial and volume,
including three-count value packs, 12-pack counter cartons, and a combination
acrylic merchandiser that fits with other Cig2o display items. Kretek International,
cig2o.com, 800-358-8100
86
MAY/JUNE 2014
Vector Altria
Group
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TOBACCO BUSINESS
JANUARY/FEBRUARY 2014
at least 300
TRU-PUFFS, the equivalent of
approximately two packs of conventional
cigarettes. ZOOM products use a proprietary U.S.-made e-liquid which produces
a premium quality vapor stream with the
consistent delivery of traditional tobacco
and menthol flavors preferred by smokers. ZOOM features a soft-tip filter and
proprietary packaging to complete the
best-in-class e-cigarette experience. Vector Group, zoomecigs.com
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PRODUCT PROFILE
MAy/JUNE 2014
DeSiena’s 312
Goes National
Adam DeSiena, founder and president of DeSiena Cigars, has announced the launch of the
new DeSiena 312, a boutique premium cigar.
The cigar honors the March and December birth
months of his two children, explains DeSiena,
who chose to have the cigar made at the Honduran factory of Nestor Plasencia. “He has created a
blend of truly world-class stature,” says DeSiena.
The medium-bodied DeSiena 312 is a complex blend, with all long-filler tobaccos that are
aged a full three to five years. The finished cigars
then rest in cedar for another three months. The
wrapper is Nicaraguan-grown Habano viso; the
binder is Honduran. The filler combines Colombian and Nicaraguan visos with Nicaraguan and
Honduran ligeros. All tobaccos are from Plasencia plantations. The cigars are bunched using the
entubado method, which prevents uneven burns
and hard draws.
The DeSiena 312 line consists of four popular
shapes: Robusto (4.5x52), Toro (6.6x54), Gordo
(6x60) and Corona Gorda (5.625x46). The cigars
are cello-tubed and packaged 20 cigars to a
Spanish cedar-lined wooden box with simple artwork that emphasizes the DeSiena name. Their
MSRPs run from $7.15 to $9.10.
“DeSiena 312 is price protected to support
brick-and-mortar tobacco shops,” explains DeSiena. “We will not sell to deep-discounters. For
a limited time, retailers also will receive one free
box of cigars for every five boxes they buy. Instore sales aids include branded cutters, matches
and Ziploc bags. Shelf-talkers and wooden display trays are forthcoming.” DeSiena Cigars, 800417-6653, [email protected]
88
MAY/JUNE 2014
DjEEP Debuts 24-Count Tray
Each of DjEEP’s new 24-count lighter tray displays uses less than onequarter of a square foot of counter space and can deliver more than $24
in retail profit. The displays come shrink-wrapped with proper DOT and
HAZMAT labels, with 18 trays per DOT-approved master shipper. Kretek
is promoting the new tray to enhance marketing of DjEEP’s Marilyn Monroe collector series, as well as new Denim and Camouflage designs.
Kretek International, 800-358-8100, [email protected]
A Stand-Up Idea
The new XistiX’s Cigar Clip and
Stand accessory allows users to
clip the cigar near the band and
continue normal smoking methods,
as well as stand the clip up on a flat
surface. The clip and stand has the
capability of grasping anything from
a cigarette-sized object all the way
up to an 80-ring gauge cigar. The
stand also allows cigar smokers to
“go beyond the band” and smoke
cigars all the way to the nub. XistiX,
xistixcigaraccessories.com
PRODUCT PROFILE
MAy/JUNE 2014
Tabac Sherman is Back
Nat Sherman has re-released its premium
Tabac Sherman pipe tobacco in tins. The
product has not been available outside the
flagship Nat Sherman Townhouse in New
York City since 2007. Nat Sherman has released three signature tins:
• Tabac Sherman No. 314—a light golden Cavendish with a hint of traditional
overtones.
• Tabac Sherman No. 509—a mild aromatic, toasted Cavendish with a delightful
velvety smooth flavor.
• Tabac Sherman No. 536—a quintessential British blend of exotic Turkish Latakia and Oriental tobaccos with a spicy,
musky aroma and taste.
“There has been tremendous growth in
the premium pipe category over the past
few years,” says Nat Sherman Executive
Vice President Larry Sherman. “At our flagship [store known as] Townhouse in New
York City, we’ve seen overall pipe business nearly double since 2011. With this
relaunch, we are thrilled to provide Tabac
Sherman products to our fans across the
country.”
Tabac Sherman comes in traditional
two-ounce tins with a suggested retail
price of $12.95 per tin. Tins are available
individually or in sleeves of five wherever
premium pipe tobacco is sold. Nat Sherman, natsherman.com
90
MAY/JUNE 2014
Voodoo Launches Vapor Line
Moorpark, California-based Kretek International has rolled out a new
line of Voodoo brand e-vapor liquids and personal e-pens. Introduced
at the TPC show in Las Vegas, the expanded Voodoo lineup allows
“vapers” to customize and mix e-liquid flavor combinations in a refillable personal rechargeable vapor unit. Several merchandising units
are now available including open-stock counter display cartons and
two acrylic combination units.
Apple and Wild Berry are two of the 20 newly launched Voodoo
e-liquid flavors. Pop-up counter cartons display 10 bottles in single
flavors or in a series of variety packs. Each bottle can deliver up to
five refills for a Voodoo e-pen tank. Voodoo e-liquids are available in
2.1 percent, 0.6 percent, and zero percent nicotine levels. The 10-ml
Voodoo bottles have tamper-evident seals and child-resistant twistoff caps.
“Our goal is to be the trusted source for all retail channels with the
complete Voodoo brand line,” says Kretek’s Voodoo Product Director Charles White. “The category is not just e-cigarettes anymore.
Our flavor experience in Voodoo hookah tobacco combined with
Kretek’s multi-brand strategy in the e-vapor category should make
us the go-to company for the retail market.” Kretek International,
voodoohookah.com, 800-358-8100, [email protected]
PRODUCT PROFILE
MAy/JUNE 2014
Super Limited
by Nat Sherman
This New Haus
Mistic introduced its new Haus Personal Vaporizer at the Tobacco Plus
Convenience Expo in Las Vegas in January. The device will be sold nationwide in mass-merchandise, convenience, dollar store and grocery retail channels, including Walmart, Circle K, The Pantry, H-E-B, Winn-Dixie
and Bi-Lo, and other national and regional distributors.
“Mistic is setting the standard for quality, value and taste within the
electronic cigarette and vaping industry,” said John Wiesehan, Jr., CEO of
Mistic. “Our retail partners chose Mistic to develop Haus because of our
reputation for quality and increasing demand among adult smokers who
want to create their own vaping experiences as they transition away from
traditional cigarettes.”
Offered in blue or black with stainless steel fittings and a light activated on/off control, Haus features a streamlined, lightweight design and a
high-powered lithium ion battery at a suggested retail price of $24.99.
The Haus Personal Vaporizer is a complete starter system, equipped with
a specially designed unit and tank with a soft handle for added comfort, a
lithium ion battery, a USB charger, and a lanyard for easy carrying access.
“We listened to what our retailers wanted and developed an individual personal vaping unit to be rolled out nationally across multiple store
channels,” says Wiesehan. “Haus also provides the added convenience
for consumers of being available nationally from a trusted brand of vapor
products and accessories.”
Allowing vapers the flexibility to choose from a variety of taste profiles, five distinct blends will be available to use with the Haus Personal
Vaporizer: American Blend, Cool Ice, Washington Red, Java and Ocean
Mist. Retailing at $7.99, Mistic’s e-liquid, like all of its other electronic
cigarette products, is made and bottled in the United States. Mistic,
misticecigs.com
92
MAY/JUNE 2014
Nat Sherman is offering a limited production format in three of their most popular blends from
the Dominican Republic: The Timeless Collection, 1930 and Sterling. The Super Lancero measures 8x38, a half-inch longer than a traditional
Laguito No. 1 Vitola. “The lancero format is an
extremely elegant size, allowing the smoke’s flavor to remain focused, without incorporating as
much air into the smoke as larger ring gauges
do,” says Michael Herklots, executive director of
retail and brand development for Nat Sherman
International. “The extra length of the cigar gives
greater opportunity for the experience and flavors to change and develop from start to finish,
while keeping the smoke cooler longer.”
“The Super Lanceros are manufactured in limited quantities at The Quesada Factory [formerly
known as MATASA] in Licey, Dominican Republic, just outside of Santiago. Only one team of
rollers is tasked with making this coveted size,”
adds William Sherman, executive vice president
of Nat Sherman. “Small ring gauges are among
the hardest vitolas to make, as it’s very easy to
under-fill or over-fill. We have one expert team in
the factory that is carefully bunching and rolling these cigars to ensure they’ll draw and
burn perfectly.” The Super Lancero
Timeless
Collection
comes packed in boxes of 10 cigars with
an MSRP of $110 per
box, the 1930 Super
Lancero is $150 per
box, and the Sterling
Super Lancero is $180
per box. Nat Sherman,
natsherman.com
PRODUCT PROFILE
MAy/JUNE 2014
Export ‘A’s Sleek Slide-and-Shell
Count on Cuatro
In 1968, the first premium Nicaraguan cigar was hand-rolled in Estelí
under the Joya de Nicaragua seal.
Joya de Nicaragua is honoring the
45th anniversary of that occasion
with the release of the Cuatro Cinco
Limited Edition cigar. Cuatro Cinco is
an authentic Nicaraguan puro, handrolled in Estelí with tobaccos grown
in the region and in Jalapa, with a
special five-year-old ligero that the
factory has been saving in its bodegas for this special occasion. As
if that time wasn’t enough, the filler
tobaccos have been specially aged
in oak barrels for more than a year
to give them distinctive and sophisticated notes, and the silky smooth
wrapper and binder are Nicaraguan
grown in the Jalapa valley.
“We are very excited about Cuatro
Cinco, for this is one of the few limited editions we have produced,” says
Dr. Alejandro Martínez Cuenca, chairman of Joya de Nicaragua. “While
this cigar promotes our heritage, it is
also a celebration of the future and
the many years we still have ahead
of us. It’s been 45 years already, and
we are just getting started!” Joya de
Nicaragua, joyacigars.com; Drew Estate, drewestate.com
94
MAY/JUNE 2014
Export ‘A’ has an updated, sleeker pack design that gives this super premium
cigarette a new look. Artfully crafted for a natural, smooth taste since 1928,
Export ‘A’ cigarettes are made from premium Virginia leaf tobacco for a great
balance of taste, strength and smoothness with no added flavors. The brand
is supported with a 100 percent product guarantee, as well as generous trade
incentive programs. JTI USA, 888-976-4085, exportacigarettes.net
Making Waves
Wave’s
expertly
crafted
American blend has tradition
you can taste—and Wave is
honoring that craftsmanship
with a new Limited Edition
Pack. The Limited Edition
Pack celebrates Wave’s premium tobacco quality, represented by its signature crest.
This combination of taste,
strength and unparalleled
smoothness was created by
master blenders with more
than a century of experience. The Limited Edition Pack is available in king-size in
all five popular Wave styles: Full Flavor, Menthol, Menthol Green, Blue and Silver.
Wave is supported by the JT International U.S.A. Field Force and offers unique
integrated marketing programs typically associated with premium brands, including consumer coupon mailings, exciting consumer promotions and a dedicated consumer website (wavecigarettes.com). JT International, 888-976-4085,
wave-value.com

SC O OP - Tobacco Business Online

Transcription

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