Altria takes aim on the cigar industry

Had someone from retail send this article to me knowing that I had over 30 years in the cigar selling business.


United States

Testifying at a Washington, DC Council hearing on September 29th, representatives of Altria Group Inc. said they would support a bill that would ban the sale of single cigars, except in tobacco shops, introduces weight-based requirements for the number of cigars per package, and requires all tobacco products to be sold from behind the counter. (Washington Examiner 09/30)


So when I read this I went “oh my it’s happening”. What are your thoughts on Altria’s insistence of placing it’s hands on the entire tobacco industry, now specifically cigars? My thoughts focus on the knowledge I have gathered from retailers that confide with me that they could build their tobacco business better if Altria/PM would just stop interfering. This can not be good! So many years with very little interference is coming to end in the cigar business.

Many have told this old cigar guy that this is not good at all!

Tell me I’m wrong! Or tell me am I right! Are those that have told me these things right or wrong?

Big Pharma and the Nicotine War

I’d like to explore what some believe is the truth behind the “anti-smoking” movement. The following thoughts may be controversial to some. So let’s get right to the topic of discussion!

Some in the industry believe Big Pharma in it’s quest to gain control of the nicotine empire has been a great supporter of the anti-smoking movement. Many will tell you that the anti-smoking movement has just been a cover for the anti-tobacco movement. An anti-tobacco movement that bodes well for the pharmaceutical industry.

At stake is the control of the largest market known to humanity, with an estimated 1.2 billion customers on this planet. The projected financial returns to Big pharma from smoking “cessation” (which, in reality, is not cessation, but a different way to assume nicotine) are truly staggering, and beyond the imagination of many including those in the tobacco industry. The battle is well worth the multi-billion dollar investments by Big Pharma as it seeks to control international and national institutions, politicians, and the media.

I admit I have a bias. I have spent my entire life in the tobacco industry. Am I just blinded by my bias or am I on target? I have watched those on the anti side argue the “no smoke deal” only to win that battle but not be satisfied. They then take to what I believe was their true cause an “anti-tobacco” movement. The tobacco industry has been accused of misleading the public. But has Big Pharma taken over that role? Is the government their tool as it seems that harm reduction is a “no-no” unless governed by Big Pharma and in the very near future it’s partner, the FDA?

If you disagree with my thoughts, let me know why. If you agree I’d like to know why. What are your thoughts? What do you think about Big Pharma and Nicotine? Do you agree or disagree about their involvement in the anti-smoking movement? The anti-tobacco movement?

Altria Closes UST Acquisition – What Does This Mean?

 

Altria Group Inc. announced on January 6th that it has closed its acquisition of UST Inc., the parent of US Smokeless Tobacco Company, in a $10.4 billion, or $69.50 per share, deal announced in September 2008.  Altria will assume $1.3 billion in debt. Altria’s purchase of UST gives it a leading position in the growing smokeless tobacco market. Altria Group CEO Michael Szymanczyk said the integration of UST will position the company well, as domestic cigarette sales are declining by 3-4% annually (AP 1/6). 

 

The long rumored, highly anticipated rumor has come to reality as the acquisition has come to a close. But now a new chapter will be written as the industry in the midst of it’s most severe challenges will watch how this acquisition plays it’s part in the never ending tobacoo saga.

 

So what does this acquisition mean to the industry?

What affect will it have on retail?

What about it’s affect on cobsumers?

Will it encourage the argument for the the reduction of harm of moist tobacco products?

What are your thoughts on how PM will integrate USST into their business?

How will it affect product development?

Will it affect taxation of moist tobacco products?

Will pricing of moist tobacco products be affected by the ever increasing price of a pack of cigarettes?

Or will the low end MST products hold pricing in line?

So many questions?

What do you think?

What does this acquisition really mean?

What’s the title of the next chapter?

Health Advocates Call For Changes In Cigar Tax

Public health advocates in the US are trying to curb cigar and cigarillo use, especially among young people, by campaigning to have these products taxed at the same rate as cigarettes; currently the Federal excise tax on cigarettes is 39 cents per pack of 20 pieces compared with the cigar excise tax of a maximum of five cents per piece. Little cigars, which are equivalent to the size of cigarettes and are also sold in packs of 20 pieces are taxed at 4 cents per pack. The US Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau defines cigars as any roll of tobacco wrapped in tobacco leaf or a substance containing tobacco. Debra Annand, director of health education services for the American Lung Association, said many young people do not perceive the consumption of flavored cigarillos as smoking, and Federal regulations define cigars in a way that allows manufacturers to avoid the higher taxes imposed on cigarettes. The Cigar Association of America estimates that per capita consumption of cigars has more than doubled since 1990. The Campaign for Tobacco-Free Kids estimates that consumption of little cigars, which resemble cigarettes except in color, has increased 154% between 1998 and 2006. The group also wants States to tax all tobacco products to bring them in line with cigarette taxes. Art Resnick, a spokesman for the Treasury Department’s tobacco tax bureau, said it is reviewing public comments and considering possible changes to the definition of little cigars since the National Association of Attorneys General said manufacturers are essentially disguising cigarettes as cigars to take advantage of the tax difference. AS for the flavorings used in cigars, Norman Sharp of the Cigar Association said they go back to the 1500s, and in the 1600s people in the Netherlands smoked tobacco flavored with lavender, rosemary, nutmeg and coriander (Washington Post 11/4). 

As I think of the affect this will have on my business I wonder what retailers, smokers or other manufacturers think about this possibility?

Are you a little cigar smoker? Why do you smoke little cigars? Were you a cigarette smoker?
If your a retailer what affect do you think a change this drastic will mean to your business?
Do you think cigar smoking is as bad as smoking cigarettes. Do you think the premium sector of the cigar business should be taxed the same? And what about the thought of all tobacco being taxed the same? I have heard some encourage that tobacco products should be taxed as it relates to it’s harm level. What are your thoughts? I’d like to know!

What’s happening at Altadis?

First a price increase in June. Then another in September? Volume declines while others are growing? And what’s this I hear about a mandatory 3% shipping charge? Is this a first? Is money that tight? I hear folks are not happy with all this? What’s next? Is there something we need to know? Any one know what’s going on at Altadis?  Or is it an effect caused by consolidation of the industry? Give me the scoop! I wanna know what’s up!

REYNOLDS AMERICAN INC. BUYS LORILLARD TOBACCO?

So will this be a future headline that we will all be greeted by or is there another entity that will reach deep into their pockets and ante up a whole lot of peso’s. Or will Lorillard actually reach out and diversify their business? Is Swedish Match in their sights? How does Nat Sherman or National Tobacco fit? Or does Reynolds go down to Jacksonville and talk to the Swisher boys? So what are your thoughts? Are there any other combinations that make sense. So as the consolidation continues has it affected the business? Or is that all still to come in the future? I’d love to hear your thoughts.

I am Fuente and I have been in the Tobacco business many, many years I and appreciate the opportunity that Chris Crawley has offered me to post blogs on this very informative tobacco blog.