New York state and county attorneys argued last week in New York’s top court that the government can lawfully tax Indian cigarette and prosecute sellers of untaxed smokes, The Associated Press reports.
The Cayuga Indian Nation, in response, argued that such actions encroach on tribal rights and that the Cayugas do not have to collect the tax for the state from non-Indian smokers. "The liability for the tax is on the consumer," an attorney for the Cayugas said.
More than one-third of the cigarettes sold in New York go without tax stamps to Native American merchants, state officials said. If all were stamped and taxed, New York would have collected $825 million in revenue in 2008.
Governor Paterson has proposed enforcement rules that would limit supplies of tax-free reservation cigarettes to those for use by tribal members only.
The court is expected to rule on the issue, which has been a long and contentious one, next month.
понедельник, 29 марта 2010 г.
понедельник, 15 марта 2010 г.
URA destroys over 1,300 cigarette cartons
THE Uganda Revenue Authority (URA) has destroyed cartons of contraband Supermatch cigarettes that were impounded while being smuggled into the country.
James Abodi, a URA official, said 1,340 cartons of the cigarettes were seized between April 2009 and last month from Dibia, Arua, Adura and Lira.
The cigarettes were destroyed at the Bank of Uganda incinerator in Jinja on Friday.
Abodi said the cigarettes were valued at sh600m and about sh840m in taxes.
He explained that the three vehicles involved in the smuggling were also seized.
“We have managed to contain the smuggling and it has decreased,” Abodi said, adding that most smugglers hide the cigarettes in clothes, sacks or wrap the packets around their bodies.
He said the smugglers use ungazatted routes, warning that the roads are now known to URA enforcement officials.
Abodi cautioned business people to desist from smuggling, saying they risk being arrested and charged.
James Abodi, a URA official, said 1,340 cartons of the cigarettes were seized between April 2009 and last month from Dibia, Arua, Adura and Lira.
The cigarettes were destroyed at the Bank of Uganda incinerator in Jinja on Friday.
Abodi said the cigarettes were valued at sh600m and about sh840m in taxes.
He explained that the three vehicles involved in the smuggling were also seized.
“We have managed to contain the smuggling and it has decreased,” Abodi said, adding that most smugglers hide the cigarettes in clothes, sacks or wrap the packets around their bodies.
He said the smugglers use ungazatted routes, warning that the roads are now known to URA enforcement officials.
Abodi cautioned business people to desist from smuggling, saying they risk being arrested and charged.
вторник, 9 марта 2010 г.
North Korea Re-exported Cigarettes to Generate Currency, FT Says
North Korea has been generating foreign exchange by re-exporting cigarettes manufactured by British American Tobacco Plc, the Financial Times reported, citing documents that it had seen.
BAT sold the cigarettes, made and packaged in Singapore for the North Korean market, to a Singaporean distributor for shipment to Nampo, a port near Pyongyang, the FT said. At least 15,000 cases, worth $6.3 million, were re-exported out of Nampo to ports in Vietnam and the Philippines to go to markets where they commanded a higher price, the FT said.
BAT said it halted exports to North Korea after discovering a diverted cargo in August, the FT reported.
BAT sold the cigarettes, made and packaged in Singapore for the North Korean market, to a Singaporean distributor for shipment to Nampo, a port near Pyongyang, the FT said. At least 15,000 cases, worth $6.3 million, were re-exported out of Nampo to ports in Vietnam and the Philippines to go to markets where they commanded a higher price, the FT said.
BAT said it halted exports to North Korea after discovering a diverted cargo in August, the FT reported.
понедельник, 1 марта 2010 г.
Tobacco Category in Flux
Since gaining a tremendous share of market from supermarkets and drug stores in the last decade, the c-store industry's share of the tobacco category, particularly cigarettes, has been stable. But last April's increase in federal excise taxes (FET), further restrictions on public smoking and changing consumer preferences are stirring the pot.
On the radar: Some headway by the drug channel in cigarette sales, and greater consumer interest in other tobacco products (OTP), which is lifting sales at tobacco outlet stores and infiltrating convenience store strategies.
According to industry market share figures provided by c-store wholesaler Eby-Brown Co., the c-store/gas segment holds a 67-percent share of the cigarette market, up from 55 percent in 1998. Tobacco outlets account for 10 percent of the market -- the same as a decade ago -- and supermarket and grocery combined account for 9 percent, down from 22 percent. The drug channel accounts for 5 percent, up 1 percentage point, while liquor stores and "all other" retail sites maintained market share at 3 percent and 6 percent, respectively.
Sales in the last 10 months, though, have been shaken by unexpected, fast-changing shifts in consumer demand following the FET increase.
At United Refining Co. of Pa., operator of more than 290 Kwik Fill/Red Apple Stores and 25 Smoker Outlets tobacco stores, cigarette volume fell quickly, as smokers cut back or went to other sources, such as the Internet or Native American stores, after the FET increase, according to Cliff Brazie, director of retail marketing at the company. However, thanks to rethinking the generic category, aggressive promotional activity and additional buydowns, the retailer recovered to within 3 percent of last year's cigarette volume.
Sales in Kwik Fill/Red Apple Stores were strong last January through March, fell drastically after federal and state tax increases, whimpered through the summer, then began moving again last September. "We moved as many promotions out of Philip Morris and R.J. Reynolds as we could," Brazie said. "The Indian reservations can't tap into these promotions, so offering $2 off a pack was significant for our customers."
Lorillard's buydown allowances also helped the chain, especially on the Newport brand. Particularly powerful was the introduction of Liggett's Pyramid, which Kwik Fill/Red Apple began promoting in June. The stores displayed 38- by 48-inch signs outside that read "You deserve a bailout too," offering Pyramid at a very competitive price.
"They were the least expensive cigarette I could offer our customers," Brazie said.
Despite such creative marketing by c-store operators, the industry continues to buzz about Walgreens' attempts to increase its cigarette sales and the drug channel's threat. Total tobacco and tobacco accessory unit sales in drug stores (with at least $1 million in sales) grew nearly 12 percent for the 52 weeks ending Nov. 28, 2009, according to Nielsen. Unit sales of cigarettes were up nearly 14 percent, while chewing tobacco unit sales rose 10 percent.
Indeed, drug store customers spend almost twice the amount on cigarettes as on cold/allergy remedies, according to The Nielsen Co. Tobacco also accounted for nearly $3 billion in sales as of August 2009, an increase of 18 percent from the year before.
But some industry players see little threat from drug stores. "It will be a battle between the c-store channel and the tobacco outlet channel to win over the consumer who has been abandoned by drug, grocery and mass merchant," said Frank Davoli, director of purchasing for South Bend, Ind.-based Richmond-Master Distributors Inc., a supplier that owns and operates 10 Bonkers c-stores and 37 Low Bob's Discount Tobacco stores, plus has another 85-plus Low Bob's Discount Tobacco licensee sites.
Shoring up the discount tobacco channel: growing demand for OTP products. OTP sales were up nearly 5 percent in c-stores for the 52 weeks ending Oct. 31, 2009, according to Nielsen. Behind this growth was a 5.7-percent increase in cigars, 7.7-percent gain in papers and 4.1-percent bump in smokeless tobacco.
The April FET increase has some consumers moving to smokeless, cigars and pipe tobacco, which roll-your-own smokers are using instead of higher-priced cigarette tobacco, Davoli noted. Also on Davoli's watch list: Camel Snus, which gained wider distribution last winter, and new dissolvable products by R.J. Reynolds Tobacco Co.
The tobacco store channel has shrunk in recent years, accounting for 12 percent of the tobacco market today, down from a high of 16 percent in 2001, after which manufacturers no longer offered the channel special allowances based on the size of their inventory. Even so, survivors are positioned to gain market share, as they offer more variety and adults shop freely in stores that require consumers to be of legal age to enter, Davoli noted.
To keep up with the quick-changing dynamics of the tobacco category, Richmond-Master Distributing changes tobacco planograms daily. "It sounds nuts, but we went through a three-to-four month period where even the manufacturers were caught short on OTP products," Davoli said. "We thought the excise tax increase would wipe the OTP category out, but we saw the opposite. We learned a big lesson: Consumer moves are not always predictable and we better move fast."
One prime example was huge increases in pipe tobacco sales. "We reset the roll-your-own and pipe tobacco section five times between April and January," Davoli said.
The emergence of large-filter cigars also happened quickly. "As little cigars increased at retail more than $1 a pack, many shoppers shifted to large-filter cigars," Davoli said. "That is a segment that popped up overnight. If you were an operator who was aware of that, you gained new customers. But reaction time had to be very quick."
At United Refining's convenience stores, Brazie has seen "a nice increase" in sales of cigars of all types and of Copenhagen Wintergreen, "which has soared. Our customers see cigars as a treat they deserve, unlike cigarettes. Now Swisher and other OTP makers are stepping up with promotions and new products, making the segment very competitive."
A change in the tobacco company's strategies has led Brazie to adapt new cigarette sets in the convenience stores and Smoker Outlet sites. "We had 8 feet of cigarette packs and 10 feet of cartons in our Smoker Outlet sites. We are adjusting our sets to provide more room for new opportunities in OTP.
"Manufacturers are emphasizing OTP now, wanting us to take out cigarette SKUs," he said. "They want us to scale back on cartons and scale up on OTP -- for good reason."
On the radar: Some headway by the drug channel in cigarette sales, and greater consumer interest in other tobacco products (OTP), which is lifting sales at tobacco outlet stores and infiltrating convenience store strategies.
According to industry market share figures provided by c-store wholesaler Eby-Brown Co., the c-store/gas segment holds a 67-percent share of the cigarette market, up from 55 percent in 1998. Tobacco outlets account for 10 percent of the market -- the same as a decade ago -- and supermarket and grocery combined account for 9 percent, down from 22 percent. The drug channel accounts for 5 percent, up 1 percentage point, while liquor stores and "all other" retail sites maintained market share at 3 percent and 6 percent, respectively.
Sales in the last 10 months, though, have been shaken by unexpected, fast-changing shifts in consumer demand following the FET increase.
At United Refining Co. of Pa., operator of more than 290 Kwik Fill/Red Apple Stores and 25 Smoker Outlets tobacco stores, cigarette volume fell quickly, as smokers cut back or went to other sources, such as the Internet or Native American stores, after the FET increase, according to Cliff Brazie, director of retail marketing at the company. However, thanks to rethinking the generic category, aggressive promotional activity and additional buydowns, the retailer recovered to within 3 percent of last year's cigarette volume.
Sales in Kwik Fill/Red Apple Stores were strong last January through March, fell drastically after federal and state tax increases, whimpered through the summer, then began moving again last September. "We moved as many promotions out of Philip Morris and R.J. Reynolds as we could," Brazie said. "The Indian reservations can't tap into these promotions, so offering $2 off a pack was significant for our customers."
Lorillard's buydown allowances also helped the chain, especially on the Newport brand. Particularly powerful was the introduction of Liggett's Pyramid, which Kwik Fill/Red Apple began promoting in June. The stores displayed 38- by 48-inch signs outside that read "You deserve a bailout too," offering Pyramid at a very competitive price.
"They were the least expensive cigarette I could offer our customers," Brazie said.
Despite such creative marketing by c-store operators, the industry continues to buzz about Walgreens' attempts to increase its cigarette sales and the drug channel's threat. Total tobacco and tobacco accessory unit sales in drug stores (with at least $1 million in sales) grew nearly 12 percent for the 52 weeks ending Nov. 28, 2009, according to Nielsen. Unit sales of cigarettes were up nearly 14 percent, while chewing tobacco unit sales rose 10 percent.
Indeed, drug store customers spend almost twice the amount on cigarettes as on cold/allergy remedies, according to The Nielsen Co. Tobacco also accounted for nearly $3 billion in sales as of August 2009, an increase of 18 percent from the year before.
But some industry players see little threat from drug stores. "It will be a battle between the c-store channel and the tobacco outlet channel to win over the consumer who has been abandoned by drug, grocery and mass merchant," said Frank Davoli, director of purchasing for South Bend, Ind.-based Richmond-Master Distributors Inc., a supplier that owns and operates 10 Bonkers c-stores and 37 Low Bob's Discount Tobacco stores, plus has another 85-plus Low Bob's Discount Tobacco licensee sites.
Shoring up the discount tobacco channel: growing demand for OTP products. OTP sales were up nearly 5 percent in c-stores for the 52 weeks ending Oct. 31, 2009, according to Nielsen. Behind this growth was a 5.7-percent increase in cigars, 7.7-percent gain in papers and 4.1-percent bump in smokeless tobacco.
The April FET increase has some consumers moving to smokeless, cigars and pipe tobacco, which roll-your-own smokers are using instead of higher-priced cigarette tobacco, Davoli noted. Also on Davoli's watch list: Camel Snus, which gained wider distribution last winter, and new dissolvable products by R.J. Reynolds Tobacco Co.
The tobacco store channel has shrunk in recent years, accounting for 12 percent of the tobacco market today, down from a high of 16 percent in 2001, after which manufacturers no longer offered the channel special allowances based on the size of their inventory. Even so, survivors are positioned to gain market share, as they offer more variety and adults shop freely in stores that require consumers to be of legal age to enter, Davoli noted.
To keep up with the quick-changing dynamics of the tobacco category, Richmond-Master Distributing changes tobacco planograms daily. "It sounds nuts, but we went through a three-to-four month period where even the manufacturers were caught short on OTP products," Davoli said. "We thought the excise tax increase would wipe the OTP category out, but we saw the opposite. We learned a big lesson: Consumer moves are not always predictable and we better move fast."
One prime example was huge increases in pipe tobacco sales. "We reset the roll-your-own and pipe tobacco section five times between April and January," Davoli said.
The emergence of large-filter cigars also happened quickly. "As little cigars increased at retail more than $1 a pack, many shoppers shifted to large-filter cigars," Davoli said. "That is a segment that popped up overnight. If you were an operator who was aware of that, you gained new customers. But reaction time had to be very quick."
At United Refining's convenience stores, Brazie has seen "a nice increase" in sales of cigars of all types and of Copenhagen Wintergreen, "which has soared. Our customers see cigars as a treat they deserve, unlike cigarettes. Now Swisher and other OTP makers are stepping up with promotions and new products, making the segment very competitive."
A change in the tobacco company's strategies has led Brazie to adapt new cigarette sets in the convenience stores and Smoker Outlet sites. "We had 8 feet of cigarette packs and 10 feet of cartons in our Smoker Outlet sites. We are adjusting our sets to provide more room for new opportunities in OTP.
"Manufacturers are emphasizing OTP now, wanting us to take out cigarette SKUs," he said. "They want us to scale back on cartons and scale up on OTP -- for good reason."
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