58
TOBACCO OUTLET BUSINESS
SEPTEMBER/OCTOBER 2012
later renamed Scandinavian Tobacco
Group. Today, the company is the
largest manufacturer of cigars and
pipe tobacco in the world and a strong
regional player in RYO tobacco.
Why did this global powerhouse snap
up Lane Limited—a company focused
primarily on the troubled American
tobacco market, mired as the country is
in onerous FDA regulation and ever-
escalating taxation? “The idea was that
STG is the biggest pipe producer in the
world, shares the No. 1 spot in cigars
and has a significant share in RYO, but
had only a small foothold in the U.S.
market,” explains Jesper Kjærgaard-
Jensen, marketing director of STG
Lane. “Buying Lane gave the company
not only a lot of interesting brands, but
also a foothold that could be expanded
further, to turn STG Lane into a one-
stop shop for all OTP products.”
While
acknowledging
that
STG Lane is closely monitoring
developments on the regulatory front,
Kelly Michols, managing director,
commercial of STG Lane, also pointed
out that navigating the moving
target that industry regulation often
represents is simply business as usual
for the company. “STG operates in
many countries throughout the world
so they have a high level of expertise
dealing with different regulatory
environments,” says Michols, who has
been with the company for a little
over a year. “Regulation is a fact of
doing business. We have to work with
the legislators and have a voice where
we can and where that is appropriate,
but the law is the law. We need to be
responsible, do things right and move
our business forward strategically.”
Moving the business forward
strategically is where Michols and
Kjærgaard-Jensen have focused their
The tobacco retail landscape is continually shifting.Currently,many in the RYO business are
concerned about the ever-dimming prospects of the in-store rolling machine retail channel.
But STG Lane’s Kelly Michols and Jesper Kjærgaard-Jensen are taking the demise of the
once-promising new format in stride. “The current legislation will effectively shut down that
type of store, not only because of tax issues but because of manufacturing standards that
would need to be met,” says Kjærgaard-Jensen. “However, while there have been pockets
where these machines have been popular, I don’t think they account for as much of the U.S.
market as you might have been led to believe by the media coverage.”
Asked about other changes and trends in the marketplace, Kjærgaard-Jensen
points to movement toward smaller packages of cigars. “We’re seeing more interest
in cigars sold as singles, two-packs and three-packs,” he says. “And in RYO we
have seen an increase in the people who are rolling their own cigarettes out of an
interest in better quality rather than a price benefit.”
Consumers are also more concerned with freshness, particularly in the cigar business,
adds Michols. “We’re seeing more smaller packs of cigars that you can reseal to keep that
freshness in place,”he notes.“We’re also seeing more foil wrappers as opposed to cellophane.”
Kelly Michols
On the Horizon
Jesper Kjaergaard-Jensen
