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66TOBACCOOUTLETBUSINESSJANUARYFEBRUARY2012cigarettebrandsarenow5rmlyentrenchedintheSoutheasternstatesinwhichtheyx19resoldVirginiaWestVirginiaNorthCarolinaSouthCarolinaMarylandDelawareennesseeandKentucky.ApplyinginnovAtioninCigArsWhilecigarettesremainattheverycoreofthecompanymorerecentlytheBaileyshaveturnedtheirattentiontocigars.TatjourneybegantwoyearsagowhenStevenBaileybeganseriouslyconsideringtheideaofdevelopingacigarproduct.x1cOneofthethingsIhaveagreatdealofpassionforiscreatingtobaccoproductsx1dhesays.x1cTerex19snotellinghowmanyhoursIhavespentpacingtheooratnightandtryingtosolveproblemsintobaccoland.x1dInthecaseofthecigarmarketBaileysawtwoproblemsthatdovetailedtogethernicely.Firsttocompeteinthecrowdedcigarmarketplaceheknewhewouldneedtooersomethingdierent.Secondhefeltthatoneofthebiggestissuesfacingsmokersofbothcigarettesandcigarsisodor.x1cMyobservationovertimehasbeenthatthoseofuswhosmoketendnottorecognizeorcaremuchabouttheodorweleavebehindx14whichisnotthecasefornonsmokers.Sothequestionwashowdoyoucreateanaromathatwonx19tbotheranonsmokerintheroomx1doachievethatgoalBaileydrewonhisknowledgeofthecigaretteindustrytocreateacigarthatwassmoothandpleasurabletosmokeandthatalsoleftbehindanaromathatwasnotjustinoensivebutactuallypleasant.LiketherestofSMx19sbrandsthecigarswouldbemachine-madeandcontainAmerican-growntobacco.x1cWedonx19tconsiderthetobaccoweproducehereonthelevelofa10cigarx1dsaysBailey.x1cOurproductisdierentinthatweareusingseveralU.S.-grownvarietiesoftobaccotoproducethisblendwhichthengoesthroughacomplexprocessunusualtothecigarindustryx1dhesays.x1cItisagoodsmokableproductthathasagreattasteandleavesawonderfularoma.Ihavetestedandretestedthisoverthelasttwoyearsandconcludedthatifmygrandmotherwalksintoaroomwhereoneoftheseisbeingsmokedshewillnotturnuphernose.Wex19vegottenravereviewsineverytestmarketwex19vedone.x1dDubbedLEX1212standsforthenumberofsticksineachpackagethePiPePotentiAlInadditiontocigarettesandcigarsSMBrandshasbeenfaringwellwithitspipetobaccoacategorythathassoaredsincethepassageoftheSCHIPlegislationwhenroll-your-owncustomersturnedtopipetobaccoasawayofavoidingonerouscigarettetobaccotaxes.ButlikemanyintheindustryStevenBaileyseesthepipetobaccoboomasarevenuetrainthatwilleventuallysputtertoahalt.x1cIamsemi-committedtothecategoryx1dhesays.x1cIfullyanticipatedCongressclosingthatloopholebutatthesametimewithwhereweareintheelectioncycleIwouldbesurprisedifCongressdoesanythingbetweennowandnextFebruarysoIx19mactuallymorecommittedtothecategorythanIwastwoorthreemonthsago.x1dSMcurrentlysellspipetobaccoin16-ouncebagsandseveraldierentstyles.x1cWewillbeintroducinganotherpipeproductthatwewillpushonanationalscalex1daddsBailey.x1cItx19sallapriceproposition.Atsomepointtheloopholewillbepluggedbutuntilthenconsumersarelookingforanalternativetopaying30foracartonofcigarettes.Sothereisanopportunitytomakemoneyinthepipebusinessuntilsomethingchanges.x1dx1cItx19sallapriceproposition.Atsomepointtheloopholewillbepluggedbutuntilthenconsumersarelookingforanalternativetopaying30foracartonofcigarettes.x1dx14StevenBailey