Pennsylvania Governor Ed Rendell is proposing an excise tax on tobacco..

January 27, 2007 - Pennsylvania Governor Ed Rendell is proposing an excise tax on tobacco.. Pennsylvania may be the only state that does not collect any tax on cigars and smokeless tobacco products. Governor Ed Rendell is proposing an excise tax - on top of the existing sales tax - at a rate of 36 cents per ounce of smokeless tobacco and roughly 3.6 cents per cigar. It's part of his "Prescription for Pennsylvania" plan to raise $151 million to improve health care. Besides the traditional opponents to a smokeless tobacco tax they now have 2-powerful cigarette companies as allies - Philip Morris and R.J. Reynolds. Both companies are test marketing moist snuff products in limited markets, but expect a wider rollout soon. Reynolds also owns the smokeless tobacco company Conwood which accounts for 16% of Reynolds'overall revenue. The excise tax on cigarettes has risen from 30 cents a pack in 2001 to $1.35 a pack in 2007 and maybe $1.45 later in 2007. It is claimed that the word 'stogie," a common name for a cigar, is derived from the name of a small town called Conestoga in Lancaster County (Monday, February 26, 2007, Timing may be right for state to institute tax on snuff, cigars; Bill Toland, Pittsburgh Post-Gazette)

Read more...

Philip Morris International acquires Swedish SNUS manufacturer Rocker Production AB..

October 4, 2006 - Philip Morris International acquires Swedish SNUS manufacturer Rocker Production AB.. Philip Morris International Inc. (PMI) announced today that it has, through one of its affiliates, acquired Rocker Production AB (Rocker), a privately owned manufacturer of the smokeless tobacco product, Swedish snus. "I am extremely pleased with this acquisition, which provides an entry for PMI into the profitable and growing market for snus in Sweden," said Jos Arkes, Area Director Nordics, PMI. "The acquisition of Rocker will allow PMI to gain product development and manufacturing expertise in this important market segment, where we are not currently present." Rocker, located in Arvika, Sweden, manufactures and sells the Rocker brand of snus and holds an estimated market share of 0.1% (Source: AC Nielsen, July YTD 2006) of the Swedish snus market. Rocker Production AB was established in 2000 and is a privately owned snus manufacturer based in Arvika, Sweden. Click on image to enlarge..

Read more...

Reynolds American Inc. acquires Conwood..

May 31, 2006 - Reynolds American Inc.(RAI) on May 31, 2006 completed its $3.5 billion acquisition of a holding company (from business interests of the Pritzker family) that owns Conwood (traces its roots back to 1782 the founding of the Garrett Snuff Company), the nation's second largest manufacturer of smokeless tobacco products. Conwood is UST's largest competition, its share of the U.S. moist snuff market is approximately 13%.

The transaction, which was announced April 25, 2006, received required approval from the Federal Trade Commission on May 23, 2006. Reynolds American funded the $3.5 billion acquisition purchase price with the net proceeds of its private offering of $1.65 billion of senior secured notes and borrowings under its $1.55 billion senior secured term loan facility, each of which also closed today, as well as available cash. In addition, RAI entered into a $550 million revolving credit facility today.

“We are excited about the growth prospects Conwood brings to Reynolds American,” said Susan M. Ivey, RAI’s chairman and chief executive officer. “Conwood’s strong, well-positioned brands are gaining share in the growing moist snuff market, and its high margins will enhance our ability to continue to provide an excellent return to our shareholders.”

Reynolds American will combine its Lane Limited subsidiary, currently headquartered in Tucker, Ga., with Conwood in order to drive growth in the companies’ portfolio of other tobacco products (OTP). Lane markets a range of specialty tobacco products, including cigars and little cigars; roll-your-own and pipe tobaccos; and Dunhill and other premium international cigarettes. The headquarters of the combined companies will be in Memphis, Tenn., and full integration of the two companies is expected to be completed by year-end 2007.

Conwood is the only company to compete in all five segements of the U.S. smokeless tobacco industry, manufacturing moist and dry snuff, and loose leaf, plug and twist chewing tobacco. Conwood holds the No. 1 or No. 2 position in every segment of the smokeless tobacco market. Moist snuff accounts for more than 70% of Conwood Sales, led by both its premium priced brand Kodiak brand and its rapidly growing value-priced Grizzly brand. Conwood will operate as a subsidiary of Reynolds American (Reynolds American News, April 2006). The purchase of Conwood gives Reynolds a quarter of the U.S. smokeless market (The Advocate, 9/19/2006).

Susan Ivey RAI chairman, president and CEO points out that Conwood has an impressive performance record. It’s the nation’s second largest manufacturer of moist snuff. It has No. 1 or No. 2 position in every smokeless category. Conwood has been the growth leader in the moist snuff category, where it has built a 23% share of the market. The moist snuff category, itself has been growing at an annual rate of 4 to 5% for the past five years.” Ivey said. Ivey goes on to say, this purchase, “provides us with an immediate platform that would have taken us years to build,” Ivey said. This purchase “gives us a strong presence in virtually every domestic tobacco category.”

FACT SHEET - Reynolds American enter smokeless tobacco market with acquisition of Conwood.

Reference: Reynolds American Completes Acquisition of Conwood, Reynolds American, 5/31/2006; Reynolds American Enters Smokeless Tobacco Category Via Acquisition of Conwood.
Read more...

Snus is the Swedish Alternative to Cigarettes...

May 27, 2005 - Snus is the Swedish Alternative to Cigarettes... Sweden is just a few days from joining the select group of European countries that have banned smoking in restaurants and bars. But unlike Ireland, where the ban upset pub owners, or Italy, where cappuccino drinkers complained loudly about having to smoke outdoors, no one expects the June 1 event to be met with much protest here. The main reason for this indifference is a four-letter word: snus. A moist, finely minced snuff tobacco inserted under the user's upper lip, snus is the Swedish alternative to cigarettes. The substance, which is prohibited in the rest of the EU (Sweden got a special exemption when joining the Union in 1995), has been used widely here for almost two centuries, and has grown rapidly in popularity in recent years. As smoking is banned in eating and drinking establishments, it is expected to become still more popular. Read more...

Swedish Match To Acquire Remaining Ownership In General Cigar..

April 22, 2005 - Swedish Match To Acquire Remaining Ownership In General Cigar.. STOCKHOLM, Sweden -- Swedish Match (STO:SWMA) announced on February 22, 2005 that it has agreed in principle to acquire all outstanding shares of General Cigar currently owned by the Cullman family. Under this transaction, Swedish Match will own 100 percent of General Cigar. The transaction is expected to be consummated on or before April 1st (actual date April 22, 2005). Currently, Swedish Match owns 64 percent of General Cigar, while 36 percent of the company is owned by the Cullman family. General Cigar produces the number one selling premium cigar in the United States, Macanudo, and several other leading premium brands in the US, including Partagas, Punch, and Hoyo de Monterrey. The company traces it roots to 1906, and has been managed by the Cullman family since 1961. Recognised as a world leader in the premium cigar business, General Cigar is the market leader in the US, and is one of the leading growers of high-quality Connecticut shade wrapper. In 1994 United State Tobacco (UST) transferred its cigar business, Tampa-based U.S. Cigar Sales, to Swedish Match. U.S. Cigar Sales owned and operated a premium factory in Danlí, Honduras, producing and marketing the Don Tomas, Astral, and Helix brands, among others. During 2006, Swedish Match acquired two well-known cigar brands: Hajenius and Oud Kampen. These well-reputed cigars are sold mainly in the Netherlands, Belgium and Germany.

Read more...