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ALTRIA MOVING MORE MIDDLETONS Print E-mail
ImagePlus: Favorite cigars revealed by Rush Limbaugh and Ron Perlman

Los Angeles, August 6 – Cigarette giant Altria Corporation, which is now the domestic-sales side of Philip Morris, purchased machine-made cigar giant John Middleton, Inc. last year for $2.9 billion on the assumption that it could sell a lot more of its iconic Black & Mild brand.

So far, it looks like Altria was right.

In the first quarter of 2008, Middleton sales were up by 8.2 percent, compared to the first quarter of 2007, in the total number of cigars shipped, totaling 312 million. Excluding tobacco taxes, Middleton products – principally Black & Mild, Gold & Mild, Prince Albert and Cherry Blend – had $76 million in revenues and generated $41 million in operating income (!), a profit margin of 54 percent.

But the full impact of the integration of Middleton into the Altria distribution and sales network was not felt until the second quarter, when the same folks who place Marlboro cigarettes for sale began working on the cigar side as well.

Thus, it was no surprise that Altria’s second-quarter results showed that Middleton’s revenues jumped to $85 for the quarter, operating income for the three months leapt to $50 million and shipment volumes increased to 355 million in the quarter, up 11.0 percent over the same quarter in 2007.

Altria also noted that the Black & Mild market share at retail rose 2.6 percentage points – a big move in a single quarter – “to 27.8% of the machine-made large cigar segment.” Other reports place Middleton second only to Swisher International in retail share in the machine-made category. Some financial analysts who study the tobacco field have suggested that Swisher is an attractive acquisition candidate for another big tobacco concern, perhaps Reynolds American.

On the cigarette side, Altria’s earnings note stated that “For the full-year 2008, PM USA estimates a total cigarette industry volume decline of approximately 3% to 3.5%.” Even so, the company shipped 83.7 billion cigarettes in the first six months of the year, worth $4.06 billion in revenue after deleting tobacco taxes (vs. $161 million for Middleton). Its leading brand, Marlboro, now has a 41.8% U.S. market share.

Rush Limbaugh’s favorite cigar:
Conservative radio icon Rush Limbaugh was interviewed recently by Jed Babbin, editor of Human Events magazine. Among the questions was how Limbaugh would describe his “cigar philosophy”; his reply:
The “Rush Limbaugh Cigar Philosophy” is find one you love and smoke it. And I happen to agree with [Winston] Churchill. I like kick-a** cigars. I like the strongest cigar I can find and I start the day with it. I’m not one of these people that start mild and builds up to the grand finale kick a** cigar after dinner – I want one when my palette is clean and fresh and untouched by anything else in the morning, that’s when I smoke my favorite cigar. It’s a “La Flor Dominicana Double Ligero Chisel.” It is made in the Dominican Republic, obviously, and it is just a delicious cigar. I think cigars [have] to be savored. If you’re going to play golf or something that’s when you can get something just to have in your mouth just to puff around. If you’re really going to savor it, if you’re really going to have an experience of it, its something that needs to be approached with devotion and certainly you have to be true to yourself in what you like. Now, this doesn’t mean you have to always smoke your same favorite cigar all the time because you need to experiment and find out other things. Sometimes you don’t want something that is double corona-sized and lengthy; you just don’t have that kind of time. But, it’d be tough to sum up as briefly as Churchill did other than to say “find one you like a smoke it – and preferably, among a bunch of people who don’t like it.”


 
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"Belinda" which means "very pretty" in Spanish, is made in Honduras (hand-made) and Cuba (machine-made).