Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
Page 13
Page 14
Page 15
Page 16
Page 17
Page 18
Page 19
Page 20
Page 21
Page 22
Page 23
Page 24
Page 25
Page 26
Page 27
Page 28
Page 29
Page 30
Page 31
Page 32
Page 33
Page 34
Page 35
Page 36
Page 37
Page 38
Page 39
Page 40
41TOBACCOOUTLETBUSINESSMARCHAPRIL2009Atpresstimevirtuallytheentiretobaccoindustrywasreeling-romtheshockingx14althoughnotsurprisingx14newsthatPresidentObamahadsignedabillexpandingtheStateChildrenx19sHealthInsuranceProgramSCHIPintolaw.Temovebroughtabitterendtoastruggleinwhichretailerswholesalersandmanu-acturersacrosstheindustrybandedtogethertocontestameasureuniversallyviewedasun-airandimpracticalaswellaspoten-tiallyruinous-ormanyAmericanswhomaketheirlivingsintobaccoortobacco-relatedindustries.x1cTeimpacto-theSCHIPexpansionbillwillbesimplydevastatingx1dpredictsomBriantexecutivedirectoro-theNationalAssociationo-obaccoOut-letsNAO.x1cTe-alloutwillincludeasmanyas117000Americanjobslostintheretailingwholesalingandmanu--acturingsegmentso-theindustryduetoadeclineo-asmuchas10percentormoreinsaleso-cigarettesortobaccoproducts.x1cTelivelihoodso-manyretailownerswillbewipedoutasadirectresulto-theSCHIPtaxincreases.x1dx1cTisisyetanotherinaserieso-dev-astatingblowstoourindustryx14Ix19mnotcertainhowmanymorewecanwith-standx1dagreesJonUrbanownero-thePoughkeepsieNewYork-basedTri-tyBeveragesandSmokes4Lesschains.x1cItisun-airandunexplainable.Inanequalanddemocraticcountrythex2ngerhasbeenpointedtoomanytimesinourdi-rection.x1dDespitethelikelyex1ectontheindus-tryx2ghtingthebillx14whichwill-undtheexpansiono-healthcarecoverageto4millionchildrenbyraisingtobaccotaxesx14provedanuphillbattle.x1cPickingontobaccoandalcoholiseasy-orpoliti-ciansx1dpointsoutSteveVoellerpresidento-theArizonaFreeEnterpriseClubapro-growthadvocacygroupwhoaddsthatpoliticiansarereluctanttobeseenasunsupportiveo-achildrenx19shealthcareprogram.x1cAndsmokersareaminoritysoyougetlessresistancex14peoplewhoarenx19tax1ectedjustdonx19tcare.x1dWithnoparticularstakeintobaccotheArizonaFreeEnterpriseClubobjectedtothebillonprincipleaddsVoeller.x1cWeareagainstitbecausewethinkitx19sbadtaxpolicytoarbitrarilytaxaminoritygroupo-peopleinordertodramaticallyexpandagovernmentprogramx1dhesays.x1cItx19saterribleideaonaphilosophiclevel.x1dWillitWorkLikemanywithinandoutsidethein-dustryVoelleralsoseestheplanto-undagovernmentprogramas-aulty-roma-easibilitystandpoint.x1cIdonx19tthinktherevenuewillmaterializex1dhesays.x1cTestateo-Arizonaattemptedtoraiseto-baccotaxestopay-oragovernmentpro-gramanddidnx19trealizetherevenuestheyprojected.Whenyouraisethepriceonsomethingthatsignix2cantlypeoplex2ndotherwaystogetit.x1dJohnSingletonaspokesman-orReynoldsAmericanagreeswiththatpoint.x1cI-youlookatahealthinsuranceprogramclearlythepoolwillexpandandgrowovertimeaswillthehealthcarepremiumsx1dhenotes.x1cSoa-undingmechanismbasedontheuseo-tobaccoproductsx14whichtendstodeclineby2to3percentayearx14isnotagoodmatch.x1dIn-actthepublicpolicyresearchin-stituteTeHeritageFoundationesti-matesthatproducingtherevenuesthatCongressneedsto-undSCHIPexpan-sionwillrequireexactlytheoppositeTecountrywillneedtoproduce22.4millionnewsmokersby2017.AndyetReynoldsAmericananticipatestheSCHIPbillx19s61-centincreaseinthe-ederalcigarettetaxwillprompta6to8percentvolumedeclineinsales.Governmentofcialsde-endthatdis-connectbylabelinganyactionthatcausesadeclineinsmokingapositiveoutcome.Butthatpremiseis-aultyaswellsaysSingleton.x1cYouwillgetsomepeoplewhoquitbutalotmorewhomovetoillegalorox1-the-booksmarketssuchaspurchasingovertheInternetoronNa-Anewlawisexpectedtohaveadramaticimpactontheindustry.Herex19salookathowSCHIPhappenedandwhattheramifcationsarex10ortobaccoretail.ByJenniferGelfand41TOBACCOOUTLETBUSINESSMARCHAPRIL2009