 Plus: Cigar distribution in England changes to meet the smoking ban
Los Angeles, July 11 – Although a firm bid for Altadis, S.A. has been expected for more than week from both Britain’s Imperial Tobacco and European private-equity firm CVC Capital Partners, there is speculation that the two groups may work together.
The Financial Times has reported that the two groups could join forces instead of getting into a bidding war. That has depressed the Altadis stock price on the Madrid exchange to 48.14 Euro (about $66.18 U.S.) at the end of trading on Tuesday, down from a high of 51.10 Euro (about $70.26) in May. However, both figures are considerably higher than the 38 Euro (about $52.25) level the company was trading at before Imperial announced its intention to bid for Altadis.
The Financial Times report noted that despite confidentiality agreements and an agreement with Altadis to disclose any intention of a joint bid, a bank which is in line to provide financing for the deal has been shuttling messages between the two prospective bidders.
Analyst speculation has focused on Imperial’s interest in the tobacco end of the Altadis business, joining together the fourth and fifth-largest tobacco concerns in the world. CVC could be coveting the cash-generating logistics business, which Altadis has already indicated it would be spinning off as a separate entity.
Little is being said about the cigar business, which reportedly has the added complication of a Cuban agreement to any transfer of ownership of the 50 percent share of the Habanos, S.A. distribution arm of the Cuban cigar industry now controlled by Altadis.
English smoking ban changing the retail situation:
Instead of crippling the cigar trade in England, the new English smoking ban that began on July 1 is simply re-shaping it.
In Huddersfield, a town located in the middle of the country and northeast of Manchester, a well-known wine shop – Taste Fine Wines – has suddenly added a humidor and is stocking a selection of Havana cigars that previously might have been available mostly in restaurants where smoking is now disallowed.
“People who used to enjoy a cigar after a meal in a restaurant may no longer be able to do so,” said co-proprietor Tim Marriott in an interview with the Huddersfield Daily Examiner.
“Cigar distributors are keen to make sure people have a good choice of fine and specialist cigars to enjoy in the comfort of their own homes.”
Thus Hunters & Frankau, the British distributor for Havana cigars, is simply moving its sales locations from humidors located in restaurants to wine shops and similar establishments. With the demise of the restaurant business in cigars the Huddersfield area, the Taste Fine Wines store becomes essentially the only local supplier of cigars, but maintains availability of cigars in the region.
Naturally, Hunters helped the store to install a humidor to ensure that the stock is kept in proper condition. So much for Prohibition.
C.A.O. to distribute Henri Wintermans:
In a move which surprised absolutely no one, C.A.O. has taken over the U.S. distribution of the Henri Wintermans small cigar line known as Café Creme as well as the Nobel Petit brand.
Both are made by C.A.O.’s corporate owner, ST Cigar Group of The Netherlands and Café Creme is sold in more than 100 countries. The Café Creme line debuted in 1963 and is the leading small-cigar brand in Australia, France, Great Britain, Hong Kong, Portugal, Russia, Singapore and Spain. Both Café Creme and the Nobel brands were previously distributed by Davidoff of Geneva.
C.A.O. is gearing up for a busy time at the upcoming Retail Tobacco Dealers of America show in Houston. In addition to its wild, annual party, C.A.O. will unveil its third “nation”-named brand, the C.A.O. America. It will feature a “barber pole”-style wrapper with more of a “pinstripe” rather than evenly-striped design, using Connecticut Shade (the thin stripe) and Connecticut Broadleaf (thick stripe) leaves.
The result, when combined with a Brazilian binder and Dominican, Italian, Nicaraguan and U.S.-grown ligero filler leaves, is full-bodied. It will be available in three sizes: Potomac (5 inches by 56 ring), Landmark (6 x 60) and Monument (6 1/4 x 54 torpedo), all offered in boxes of 20.
Anti-smoking advocates in Canada are worried:
Anti-smoking zealots in Canada cheered when the Supreme Court of Canada upheld a 1997 law which circumscribed when, where and how tobacco companies could advertise their products.
Now they’re in a funk.
While the strictures of The Tobacco Act were upheld, it also made clear that the advertising opportunities for tobacco allowed under the Act – adult-oriented publications, in bars and pubs and by direct mail – were open for business. Until the Supreme Court decided on the challenge to the law, tobacco companies had not availed themselves of the opportunity. But they may now.
According to Rob Cunningham of the Canadian Cancer Society, quoted in the Edmonton Sun, “We’re concerned about youth exposure and that’s why we’re calling on Federal Health Minister Tony Clement to have a total ban on advertising.”
Mr. Cunningham wants a ban on advertising, but it clearly has nothing to do with youth exposure. As the Act allows ads in areas in which adults are allowed and young people are not, how is a ban on ads going to impact young people? It isn’t. But it will get Cunningham and his cancer campaigners further down the line toward Prohibition.
With dozens of ongoing investigations into massive cigarette smuggling (and illegal resale) by organizing and unorganized crime elements in Canada, there are people throughout the Great White North who hope Mr. Cunningham will succeed.
Rumor of the week:
Telephones were buzzing at the end of last week with a whispered rumor that General Cigar was about to acquire Padron Cigars. Inquiring minds want to know, so we asked.
Came the response: “we’re not buying Padron.” Now you know.
~ Rich Perelman
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