Beverage Dynamics

Beverage Dynamics July-August 2011

Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.

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EDITOR’S NOTE Some Thoughts on Cigars and Cigarettes A mong the many thousands of beverage alcohol retailers nationwide, a fair percent- age of them sell tobacco products, where legal. The explosion in cigar sales during the 1990s convinced some of these retailers to build walk-in humidors to house an inventory of premium cigars, and they benefitted with sometimes fantastic incremental sales that added nicely to the bottom line. Then, that market slowed in the early part of the 2000s, but even the financial meltdown and the recession of 2008-2009 didn’t completely squelch this market, which is apparently picking up again. Indeed, cigar sales grew by about 5% last year and are predicted to gain that same amount in 2011. And while brands like Macanudo, Montecristo and Perdomo continue to provide the prestige in the marketplace, the real growth appears to be occurring among the expanding segment of small cigars, as well as flavored cigars. At the same time, sales of cigarettes have been declining, though that market still dwarfs that of cigars. Cigarette sales were down by mid-single digit percentages last year, but the major tobacco companies, which have tremendous pricing power, made up for the shortfall through price increases. And industry observers are predicting that cigarette sales will decrease by 4% again in 2011. Generally speaking, retailers who sell cigars also sell cigarettes, and if you haven’t yet heard, the latest FDA decision concerning cigarette packaging is something you should be aware of. Beginning September 2012, FDA will require larger, more prominent cigarette health warnings on all cigarette packaging and advertisements in the U.S. These warnings mark the first change in cigarette warnings in more than 25 years, and they are pretty dramatic. Though most people who follow these issues have been aware this is going to happen, it still will be fairly shocking when these cigarette packs begin arriving in stores. To review, the warning labels must cover the top half of the cigarette packages. They’ll consist of any one of nine different images, which, for example, include the image of a man smoking through a hole in his neck, healthy lungs pictured beside a set of diseased lungs, a cancer-stricken mouth full of rotting teeth, and a dead body with autopsy stitches down its chest. Pretty gruesome stuff. And the words accompanying these images on the labels also pull no punches. Some examples: “Smoking Can Kill You” and “Cigarettes Cause Cancer.” Obviously, the jury is out on whether these shocking images and blunt language will have the desired effect – getting people to quit smoking or not start in the first place. The vast majority of people who smoke already understand that it is potentially harmful to their health; yet, they are willing to take their chances. Still, the FDA feels that its mission is to raise public awareness of the risks of smoking cigarettes. News reports confirm that these types of graphic labels are already required in more than 40 countries around the world; however, commentators remain mixed concerning how they affect consumer buying decisions. Executive Vice President and Group Publisher Charles Forman Tel: 845-426-6072 Fax: 845-426-6423 email: cforman@m2media360.com Editor-in-Chief Richard Brandes Tel: 212-353-3832 Fax: 212-353-8214 email: rbrandes@m2media360.com Managing Editor Jeremy Nedelka Contributing Editors Dan Berger Harriet Lembeck F. Paul Pacult Robert Plotkin Michael Sherer Cheryl Ursin Associate Publisher Anthony Bongiovanni Senior Regional Sales Manager Mark Marcon Senior Regional Sales Manager Debbie Rittenberg Senior Regional Sales Manager Jeanette Sims Art Director Adam Lane Vice President, Circulation and Collateral Services Joanne Juda-Prainito Research Director Eric Schmidt List Rental Manager Cheryl Naughton RETAILER EDITORIAL ADVISORY BOARD Charles Bailes III ABC Fine Wine & Spirits, Orlando, FL Ralph Bondon Berbiglia’s, Kansas City, MO David Breitstein Duke of Bourbon, Canoga Park, CA Jim Shpall Applejack Liquors, Wheat Ridge, CO Hal Gershman Happy Harry’s Bottle Shop, Grand Forks, ND Ron Junge Brown Derby Stores, Springfield, MO Dan Manning Haskell’s, Minneapolis, MN Burt Notarius Premier Liquors, Kemmore, NY Charles Sonnenberg Frugal MacDoogal’s, Nashville, TN Greg Wonsmos Centennial, Dallas, TX M2MEDIA360 President/CEO Marion Minor Vice President, Finance & Operations Gerald Winkel Beverage Dynamics is published by The Beverage Information Group a division of M2MEDIA360 Richard Brandes. Editor-in-Chief 6 • Beverage Dynamics • www.beveragedynamics.com • July/August 2011 Editorial and executive offices at 17 High St., 2nd Fl., Norwalk, CT 06851 Telephone: (203) 855-8499 Fax: (203) 855-9446 E-mail: rbrandes@m2media360.com

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