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58TOBACCOOUTLETBUSINESSMARCHAPRIL2009RYOwillstillhaveanenticement-orpeopleonabudgetx14eventhoughitx19llbeatighterbudget.x1dHealsobelievesthecategorywillcontinuetogrowx1cinthe-aceo-x4re-sa-ecigarettes.x1dSinceJan.1exashasmadex4re-sa-ecigarettesmandatoryinthestate.Rossrelaysthatcustomershavex1cnotbeenhappywiththetasteorthe-actthattheygoout-aster.Customerssaytherex19saheavypapertasteandtheydonx19tgetthetobaccox2avortheyx19reusedto.Buti-youmakeyourowncigarettesyouavoidalltheseproblems.x1dRosshaskickedupthestoreeventsscheduledwithRYOmanu-acturersx1ctocomeinandsampleproductsandteachcustomershowtomakethemx1dhesays.x1cWehavethreescheduledwithinonemonthtoeducateourcustomersandshowthemitx19snotdifcult.x1dAccordingtoRossx1cBytalkingtomanu-acturerscustomersalsolearnthattheyx19remakingmoresizesandx2avorsavailableitx19snotlikeitwasevenacoupleyearsagowhenthecategorywasmuchmorelimited.x1dCoxx19sSmokersOutletinLouisvilleKy.isalsolookingintoRYOmanu-acturersamplingsandeducationdespitetheSCHIPtaxes.x1cWex19reactuallylookingintoexpandingthecategorynowx14probablyinmostinstanceswecandoublethespaceinourstorestoaboutan8--ootsectionx1dsaysSteveGrantgeneralmanager.x1cKentuckyisproposinga70-centtaxincreaseandi-itgoesthroughwethinkitx19llbeagoodincentive-orourcustomerstodiscoverandsavemoneywithRYO.Somearealreadytryingitandrealizinghoweasytheyaretomake.x1dAtSmokerx19sHavenstoresKersteinwasatpresstimex1cworkingwithmanu-acturerstotryanddesignspecialpromotionstobelaunchedonApril1andtherea-terwhichwillcontinuetogetcustomerstotryRYOcigarettes.x1dHeenvisionsthosepromotionsasstarter-kitpackageswherebyMYOtubesareincludedatadiscountedpricehealsoseesdoingsomecouponsin-storeandorFSIdrop-ships.x1cIx19mdoingthisonbehal-o-mystoresx14butthisisaverysmallindustryandIx19msuremanu-acturerswilltakeittoothercustomersaswellx1dKersteinsays.x1cAsanindustryweneedtohighlightthe-actthatwhilethepercentagemayhavechangedthereisstillasignix4cantcostsavingsi-youmakeyourowncigarettes.x1dO-coursenoteveryonecanbesobullishonthe-ateo-thecategory.Tegeneralconsensusisthatthehigherthestatecigarettetaxthebetterthestatewill-areinRYOMYObecausetherewillbeabiggergapinpricingbetweenmanu-acturedcigarettesandRYOx14makingRYOmoreo-abargain.x1cInstateswithrelativelyhighcigarettetaxrateswestillexpecttosee-airlysubstantialRYObusinessx1dstatesKerstein.Butsomestilldonx19tseeitasworththetroubleeveninastatewith-airlyhighcigaretteexcisetaxessuchasWisconsincurrentlyat1.77.Jex1Steinbockpresidentandownero-Milwaukee-basedUhlesobaccoCo.andalsoaNAOboardmemberisonesuchretailer.PriortotheSCHIPlegislationbeingpassedSteinbocktoldTobaccoOutletBusinessthati-itpassedhewouldtakex1cacoupleweekstolookatitbutIx19mthinkingtheRYOindustrywillbedead-orme.Wedoreallywellwithhigher-endcigarsandpipetobaccotheRYObusinessislessthan15percento-myvolume.Iwasnx19tplanningongettingouto-ituntilthishappenedx14butchancesarewewillbecompletelyouto-itbyApril1.Ix19llprobablydiscountitandpromoteitasalastchancetobuyRYO.x1dKersteinhasheardevenworsedoom-and-gloom-rompeoplesayingtheindustryasawholewilldieasaresulto-theSCHIPlegislationbeingpassedx14buthedisagrees.x1cTerex19sdex4nitelyashake-upinRYOtherearedex4nitelyjoblossesandwemayseesomesmallermanu-acturersgoouto-businesswhichisashamebecausetheymakeagoodproductx1dhesays.x1cButIdonx19tthinktheindustrywilldiex14itx19sstillaviablebusiness-ormanyo-us.MYOcigaretteshavebeenaroundsincethiscountrywas-oundedanditisstillimmenselypopularinmanypartso-EuropeandtheFarEasttheindustryisnx19tgoingaway.Itwilladapt.Tereareintelligentmanu-acturersandentrepreneurswhowillkeeptheindustrygoingandkeepthingshappeninginthebusiness.x1dTOBBraveNewTaxRatesSCHIPTaxRatesonRYOMYOEectiveApril12009thesearethenewederaltaxratesonproductsintheroll-your-ownmake-your-owntobaccocategoriesincludedherewithpercentageincreasesrompreviousratesRYOtobaccoandcigarwrappers24.78perpounduprom1.0969perpounda2159percentincreaseCigarettepaper3.15centsper50papersuprom1.22centsper50papersa158percentincreaseCigarettetubes6.3centsper50tubesuprom2.44centsper50tubesa158percentincreaseSCHIPFloorStocksTaxThefoorstockstaxisdueandpayabletotheU.S.TreasuryonorbeoreAug.12009.TobaccooutletretailersaswellaswholesalersandmanuacturerswillpayafoorstockstaxonalltobaccoproductsincludingRYOMYOproductsbutexcludinglargecigarsheldininventoryat1201a.m.onApril12009.Thefoorstockstaxequalsthedierencebetweenthenewtaxratesandtheoldtaxrates.Eachretailerwillreceivea500credittowardthefoorstockstaxhoweverthisisacreditpercompanyandnotperstore.SourceTheNationalAssociationofTobaccoOutletsNATO