For the week of March 24-28, 2008

LOS ANGELES - One of the most draconian smoking bans anywhere in the world is in the state of Washington. A bluntly worked initiative passed by voters in 2005 banned smoking in smokeshops as well as bars, restaurants and other locations. Now, the Cigar Association of Washington has mobilized to try to get an initiative on the November ballot that will permit smoking in cigar shops and cigar bars.

"Smokers and non-smokers alike should sign our petition and vote 'yes' on November 8 because we are only asking for the right to allow smoking in relatively few locations, without changing the ban elsewhere," said Rain City Cigar tobacconist Dale Taylor, who also serves as president of the state association.

Initiative 1016, as the proposed measure is known, would allow cigar shops, cigar bars and private clubs to allow smoking if they choose to do so. "These exemptions exist in most other states and we believe it is reasonable to request voters to allow them in Washington as well," said Taylor. The proposed statute defines cigar bars as facilities with minimal food service and on-site sales of cigars of more than $25,000 annually.

In order to get the measure on the ballot, a total of 225,000 signatures must be collected by June 30. Petitions are available in cigar stores, former cigar bars, private clubs such as the American Legion and Eagles and online at the Cigar Association of Washington Web site (www.cigarwa.com).

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>> After nearly a decade of producing its cigar as a local and regional brand out of Miami, the Guantanamera Cigars Company brought its Guantanamera brand onto the U.S. national market in 2007 with an appearance at the Retail Tobacco Dealers of America (RTDA) show in Houston. It's now made in Honduras, with a medium-to-full body in eight sizes.

However, a decision handed down by the Trademark Trial and Appeal Board (TTAB) of the U.S. Patent and Trademark Office on February 29 in Corporacion Habanos, S.A. vs. Guantanamera Cigar Company has held that the company may not register a trademark for the brand. The application for trademark protection originally filed in May 2001 was opposed by Habanos, the worldwide distribution firm for Cuban cigars jointly owned by the Cuban government and Altadis, S.A. (now part of Imperial Tobacco).

Habanos, of course, has its own Guantanamera brand, a machine-made line introduced in 2002 and consisting of four mild-bodied, modestly priced sizes that are aimed at developing markets such as Eastern Europe. The Cubans want to trademark the name as well - which is allowed under the terms of the U.S. Trade Embargo against Cuba - and have filed their own registration papers. They opposed the Guantanamera Cigars claim because their application is "geographically deceptively misdescriptive."

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>> The diversified food-service company Synergy Brands is selling its money-losing cigar division - Gran Reserve Cigars - for $400,000 to an investor group in a transaction expected to close shortly.

The Syosset, New York-based company has owned and operated Gran Reserve Cigars for several years, selling at retail through its Web site and at wholesale mostly to golf courses and private clubs. Its brands include Almirante, Andulleros, Breton Corojo Vintage, Breton Legend, Don Otilio, Mike Ditka, Nativo and Suarez Gran Reserve.

"Synergy believes that the cigar operation has become a non-strategic asset for the company and it plans to focus its efforts on its largest wholly-owned subsidiaries, PHS Group and Quality Food Brands," said the company's announcement, released Monday. "The cigar operation represented less than 2% of sales and less than 5% of gross profit and the operation was the sole entity that is expected to report a net loss in FY 2007."

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>> Short fillers: As Imperial Tobacco works to integrate the operations of newly acquired Altadis, S.A. into its existing structure, the company released a statement that it will take a charge of about $281 million in the current fiscal year. The costs are related to valuation of inventory, elimination of inter-company sales and depreciation adjustments. Imperial also confirmed - to no one's surprise - that it will continue marketing Havana cigars worldwide through its 50 percent ownership (via Altadis) of the Corporacion Habanos distribution firm. Comments by chief executive Gareth Davis also included a mention that the economic slowdown in the U.S. could cause a "slight" downturn for Altadis U.S.A.'s premium segment sales this year . . . find our latest tasting review, of the "pirate's cigar" from Spag & Co. and the unique Kinky Friedman line, in our News & Views archives for March 21.

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Heard in the Humidor is a publication of Perelman, Pioneer & Company. Copyright 2008; All rights reserved.

Rich Perelman

3/24/08

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