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Page 2 of 2 July:
A horrendous bill to support the re-authorization and expansion of the State Children’s Health Insurance Plan (SCHIP), to be funded by new taxes on all forms of tobacco, was introduced in Congress. The Senate version included not only a massive increase in the tax rate for cigarettes, cigars and other forms of tobacco, but raised the Federal tax cap on cigars to $10.00 each from the current 4 7/8 cents and imposed a floor tax to collect that tax retroactively on existing retailer stocks.
After a long and stormy courtship, Britain’s Imperial Tobacco finally obtained an agreement from the Altadis, S.A. board of directors to buy the company for 50 Euro per share. The transaction is scheduled to close in early 2008 and will make Imperial the world’s fourth-largest tobacco company and the world’s largest cigar company.
August:
The 75th Retail Tobacco Dealers of America convention and trade show is the final “RTDA” show as the organization’s name is changed to the International Premium Cigar and Pipe Retailers Association (IPCPR). Among many products introduced at the show is the first Zippo-made butane torch lighter, the ZippoBLU.
Swedish Match buys the expanding retail, wholesale and Internet retailer Cigars International of Bath, Pennsylvania for an undisclosed sum. It gives Swedish Match, for the first time, a direct-to-the-consumer retail presence, similar to that of J-R Cigars, which is majority-owned by a subsidiary of Altadis, S.A.
September:
The U.S. House of Representatives passes the Senate’s version of the SCHIP bill, with a $3-per cigar tax cap and no floor tax. President George W. Bush promises to veto the bill.
October:
Bush vetoes the SCHIP bill and although the Senate votes to override the veto, proponents of the bill cannot get enough votes in the House and the bill dies.
November:
The world’s largest cigarette company, Altria, buys John Middleton, Inc. for $2.9 billion in cash. Middleton is famous for its Black & Mild line of small, machine-made cigars. Altria said that 1.2 billion Black & Milds are sold annually.
Oregon’s Measure 50 is soundly defeated by a 60%-40% margin. The initiative would have amended the Oregon state constitution to add an 84 1/2-cent tax on packs of cigarettes (and a similar percentage increase on other tobacco products) to pay for expanded health care in the state.
Christie’s annual auction of rare and vintage cigars in London included dozens of lots which sold for more than $1,000 per box. At the top was a Hoyo de Monterrey Diademas Humidor from the 1980s that included 96 of the large perfectos and sold for $16,400.
December:
General Cigar purchased the handmade cigar segment of the Havana Honeys flavored cigar business from founder Joe Gold. Wide speculation followed that additional cigar concerns, especially in the machine-made sector, would be swallowed by Big Tobacco in 2008.
The U.S. Congress passed a barely-modified version of the SCHIP bill, but it was vetoed again by President Bush and no override vote was even taken by the end of the Congressional session.
A General Accounting Office report criticized the U.S. Treasury’s Office of Foreign Asset Control for its concentration on enforcement of the Cuban trade embargo at the expense of national security concerns. The report included this passage: “After 2001, OFAC opened more investigations and imposed more penalties for embargo violations, such as buying Cuban cigars, than for violations of other sanctions such as those on Iran.”
What’s next? Stay tuned for what promises to be a wild 2008; in the meantime, enjoy the New Year with a cigar!
~ Rich Perelman
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