The Minnesota House has passed a tax bill that would include a $1.60 per pack cigarette tax increase, and up the OTP tax rate to 95%, greatly impacting retailers who sell tobacco products in the state.

The bill could raise revenue $2.1 billion and would also up taxes on high-wage earners and corporations. Representatives passed the bill by a 69-65 vote early Monday morning, May 20, the Minnesota Pioneer Press reported.

The bill now heads to the Senate.

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Patrick Hurd Promoted to Kretek Sales VP.

Albert José is appointed Djarum brand trade marketing manager, and Jerry Yalowitz as trade marketing manager for EZ Cig e-cigarettes. 

Kretek International Inc., exclusive importer and marketer of Djarum Cigars, Cuban Rounds Cigars, EZ Cig and Cig2o e-cigarettes, along with Voodoo Hookahs and a broad range of general merchandise brands, has announced Patrick Hurd as Kretek vice president of sales. 

Hurd will report to Kretek CEO Mark Cassar.  He will also retain his current duties as general manager of Ventura Cigar Co., Kretek’s premium cigar group.

Hurd will supervise Kretek sales department structure and oversee new retail business development. 

“As Kretek’s business grows and our product lines extend into new retail categories, we felt that it was time to combine oversight of our field sales force and customer stewardship in Moorpark,” Cassar stated.

“We’ve got a terrific sales group in place, so I look forward to helping move Kretek to the next level with our customers,” Hurd remarked.  Prior to his role as general manager of Ventura Cigar, Hurd was general manager of Kretek Canada for 10 years. 

National Sales Director Roger Sachs will continue in his current role & Rick Sherlock will retain his responsibilities as trade promotion manager and distributor account sales manager.  In addition to Hurd, Kretek also announced the appointment of Albert José as Djarum brand trade marketing manager, and Jerry Yalowitz as trade marketing manager for EZ Cig e-cigarettes. 

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LOGIC Technology, makers of premium electronic cigarettes, announced the results of Nielsen’s Brand Rank Report indicating LOGIC outperformed all e-cigarette brands in Q1 of 2013 for sales per point of distribution*.

As more major tobacco companies continue to enter the e-cigarette space, this report shows that LOGIC continues to outsell the competition and remain on top.

Based on sales from convenience stores across the U.S., the Nielsen Brand Rank Report showed that LOGIC’s Black Label was the highest ranked for the electronic cigarette category.  In addition to the Black Label’s success, LOGIC’s Platinum Label was the second highest selling electronic cigarette.

“LOGIC has experienced solid, continuous growth over the past few years and we are delighted to have the Nielsen Reports validate what we already know—that LOGIC is number one among Americans.  LOGIC offers a smarter alternative to traditional cigarettes and it is great to see that smokers across the US are converting and choosing a quality product,” said Eli Alelov, CEO of LOGIC Technology.  “This is another milestone our company has achieved and we are thrilled to see the success of LOGIC across the country compared to the other brands.”

The electronic cigarette industry is rapidly growing and was recently reported to support revenues reaching $500 million.  LOGIC’s superior product and innovation have contributed to its tremendous sales growth, rising 600% in 2012. In addition, the total sales for Q1 in 2013 outperformed total sales in 2012. According to the Nielsen Report, LOGIC was the number one selling electronic cigarette in the Northeast and entire Southern region.

LOGIC e-cigarettes are available in disposable and rechargeable versions and can be purchased at convenience stores nationwide.

* LOGIC calculation based in part on data reported by Nielsen through its Service for the Total Anti-smoking Product category for the 13-week period ending 03/23/2013, for the Total US market and Total Convenience channel. Copyright © 2013, The Nielsen Company.

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Altria Group Inc., the largest seller of tobacco in the U.S., is getting into the e-cig business. The company announced that its subsidiary Nu Mark is planning to introduce an electronic cigarette in the second half of 2013, Bloomberg reported.

The electronic cigarette will be sold in an undisclosed market.

As demand traditional cigarette sales are declining, electronic cigarettes are inching closer to the mainstream. Chief Executive Officer Martin Barrington is aiming to catch up to smaller rivals, such as NJOY and Lorillard Inc. (LO), which says its blu eCigs brand controls more than 40% of the U.S. market. Reynolds American Inc. (RAI) said this week it plans to expand its Vuse e-cigarette this year, according to Bloomberg.

Lorillard CEO Murray Kessler told analysts yesterday the company estimates that electronic cigarette sales displaced consumption of about 600 million cigarettes in the first quarter. That totals an annual rate of roughly 2.4 billion cigarettes, accounting for about 1% of the U.S. market, according to Kenneth Shea, a Bloomberg Industries analyst in Skillman, N.J.

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NTC and V2 Cigs expect to expand distribution to no less than 30,000 additional retail locations this year alone.

V2 Cigs, America’s largest volume online retailer of electronic cigarettes, announced today a strategic partnership with National Tobacco Co. (NTC), distributor of the iconic Zig-Zag and Beech-Nut brands.

The two companies have joined forces in the development of a new line of electronic cigarette products for the retail market. The new products will debut at this year’s NATO show in Las Vegas, April 22-24.

The new line will feature a redesigned V2 Cigs Disposable model that will be sold alongside V2’s new rechargeable Express Kits and refill cartomizer products.

Products will be showcased in a variety of multi-product display units designed to stand out on the counters of c-store and tobacco retailers.

“The new disposable electronic cigarette models in this line offer a major step forward in consumer experience provided by its vapor and battery performance,” said Dan Recio, president of business development at V2 Cigs. “Additionally they feature a soft and pliable form factor to more closely mimic the traditional smoking experience. Our new disposables have been focus group tested against the other major retail brands. Over a three-day trial period with the same consumers, the new V2 disposable was rated the best in overall experience, and the most likely to result in a repeat purchase. These new models feature over 400 puffs, with an aggressive MSRP while maintaining the integrity of trade margins. This allows us to offer a far more competitive value proposition than anything else currently on the market. Some brands boast that their disposables feel the most like a real cigarette—what good is that if it only has enough puffs to last a few hours?”

The new partnership will bring the V2 Cigs line of electronic cigarette products to a greatly expanded list of retailers across the nation. National Tobacco Co. will become the exclusive marketer and distributor of V2 Cigs products in domestic c-stores and other retail outlets.

“NTC products are currently sold in over 150,000 retail locations in the U.S.,” said Graham Purdy, vice president of sales and trade marketing for NTC. “We are very excited to add the V2 Cigs brand to our product arsenal. The manufacturing and online marketing power of V2 Cigs complements NTC’s extensive field sales organization and account management teams. This strategic partnership will allow retailers to tap into a significant portion of adult electronic cigarette consumers that can only find their brand today in the online environment. This represents a perfect synergy.”

With more than one million customers spread evenly across the country, V2 Cigs is perfectly positioned to drive online buyers into traditional retail outlets. The company will soon be adding a store locator to its Website at v2cigs.com, and a downloadable mobile app to help existing V2 Cigs customers find their favorite products at local retail stores.

V2 Cigs products are already sold in a variety of national retailers, such as HESS gas stations and Pilot Truck Stops, but the rate of retail deployment will increase significantly as a result of the new partnership. NTC and V2 Cigs expect to expand distribution to no less than 30,000 additional retail locations this year alone.

V2 Cigs will support its retail expansion with an extensive marketing program that includes TV and radio advertising, local promotional couponing, on-site demo teams and product demonstrations, free samples, zip-code targeted direct mailings, Sunday newspaper inserts and coupons, and web, mobile and event promotion. V2 Cigs will also provide retailers with a wide array of merchandising options, including small-footprint countertop displays.

“Over the past few years, traditional retail brands have been transitioning online, today we are seeing a new trend with the most successful online brands moving into retail,” said Andries Verleur, CEO of V2 Cigs. “2013 was already on track to be our best year, but post-NTC it’s likely we could exceed our own best projections by up to 30%. It’s time to show the competition the power of Internet dominance. This partnership will demonstrate the competitive power of developing high-demand brands on the Internet and making them available to a wider audience at retail. Our intent is to drive retail sales. V2 Cigs is setting the standard for quality, because, for the last four years, we spent our resources refining our quality control and manufacturing techniques. By delaying the high cost of traditional retail deployment, with its inherently low margins, we built a rapidly scalable and more vertically integrated supply chain than any of our competitors. With NTC running offense, we can maintain our focus on product quality—we don’t have to reinvent the wheel.”

“The partnership with V2 Cigs allows both companies to build upon their mutual strengths,” said NTC President and CEO Larry Wexler. “We are combining V2 Cigs’ excellence in product design and manufacturing with National Tobacco’s record of innovative introductions such as Stoker’s Moist Snuff Tubs and Zig-Zag Cigar Make Your Own Systems. This will provide our trade partners with a proven winner now only available on the Internet and allow them to profitably participate in the rapidly growing electronic cigarette segment with a product providing great consumer value.”

Bonnie Herzog, analyst for Wells Fargo Securities, estimates the e-cigarette category will surpass the $1 billion sales threshold in 2013 as more adult consumers migrate from traditional cigarettes to the innovative e-cigarette format. Continued exponential growth is expected as the category gains momentum in the marketplace.

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Mac Baren Tobacco Co. to acquire Pipe Tobacco Division of Altadis USA.

Mac Baren Tobacco Co., a 125-year-old pipe tobacco company based in Denmark, has reached an agreement with Altadis USA to purchase the company’s pipe tobacco division located in Richmond, Va.

The acquired pipe business will operate under its original name, Sutliff Tobacco Company, which was founded in 1849, making it one of the oldest pipe tobacco companies in the United States. The acquisition is expected to be completed later this spring.

For Altadis USA and its service company, Commonwealth-Altadis Inc., a unit of international Imperial Tobacco Group PLC, the move allows the company to focus on its strategic core cigarette and cigar businesses.

“This acquisition continues to build on Mac Baren Tobacco Co.’s considerable reputation as a world leader in the pipe tobacco industry,” said Paul Creasy, current general manager, who will continue to lead the business as president.

“I am also pleased to announce that Sutliff Tobacco Co. will continue to manufacture pipe tobacco at its Perdue Avenue factory in Richmond.” Sutliff, founded in 1849 in San Francisco, has been manufacturing in Richmond since 1953. It began manufacturing its flagship brand, Mixture 79, in 1933.

“This is a perfect strategic fit for both Mac Baren and Sutlilff,” Creasy said. Sutliff Tobacco Co. will import and distribute Mac Baren products in the Western Hemisphere. “This acquisition will not only strengthen the pipe tobacco portfolio of Sutliff Tobacco, but also will bring to the U.S. market Mac Baren Tobacco Co.’s significant knowledge and expertise, strength, commitment and leadership in pipe tobacco,” he said.

For further information, visit www.Mac-Baren.com and www.Sutliff-Tobacco.com.

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