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March, 2008

Renegade-Auction

Big Month...

For the first time in many decades, Fidel Castro will not be the president of Cuba. The communist leader of the island nation (and resident US agitator) recently announced he will be passing the leadership baton on to a new generation in the form of his younger brother: the 76-year-old Raul Castro. Will this have any change on the US embargo of the Caribbean cigar kingdom? Well, for the time being, it does not appear so - in the midst of an American presidential campaign, none of the front-runners are looking to embrace Cuba with open arms, and unless there is some radical shift in policy from either nation, there may remain some icy relations in this global neighborhood. (For more analysis, see the Cuba story on pg. 30)

And, it finally happened. After months and months of momentary starts and finishes, Turkey’s state-owned tobacco group Tekel is firmly in hands of the private sector. British American Tobacco (BAT) has won the auction bid to the potentially lucrative tobacco property (see story on pg. 32 for more info). Unfortunately for BAT, the sale comes on the heels of the Turkish parliament passing a public smoking ban and raising the price on tobacco products. We can allow the cynics and the realists to battle it out if they think this is this a move that might not have happened had Tekel still been an official patron of the public coffers.

The Tekel takeover was BAT’s first major takeover for the stalwart tobacco giant in five years, but it wasn’t the only big mover lately. Following the spin-off earthquakes of PMI and PM, the US-based Loews company will be spinning off its Lorillard Tobacco holdings - the home to such popular US brands as Newport and Kent. Other manufacturers are continuing to search out sanctuary in the form of diverse holdings. Several of the big boys are venturing into snus, moist tobacco, and cigars. In December, General Cigar (itself a newly-acquired arm of the Swedish Match empire) acquired Havana Honeys, one of the big names in the exploding flavored stogie market.

Meanwhile, the romanticized smoky Meccas of France and Germany are no more, as the dawn of ’08 rang in the joy of bans in cafes and bars. Even the fabled debauchery of Munich’s Oktoberfest will be a little less smoke-filled, as the Bavarian state will even ban smoking sections inside public areas.

Some things change, some things stay the same. But as some are learning, through diversity, comes strength. And, as we roll into the new world market, the survivors and thrivers might just be those with hands in the most cookie jars.

- Evan D. Dashevsky


Tobacco International - March, 2008

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