NATO Brings Unity Amid Volatility

Melissa Vonder Haar, Freelance Writer

NATO helps retailers steer clear of tobacco booby traps.

Since 2001, the National Association of Tobacco Outlets (NATO) has worked with tobacco retailers to protect the right to sell legal products in a responsible matter. Most retailers are aware of the important role NATO has played in battling the increasingly tangled web of regulations, but you might not be aware that the creation of NATO was inspired by another well-known industry association.

“I wanted to build this like NACS,” says Don Bores. “They had a magazine, they had a trade show and they had an association. That was what I wanted.”

NATO was the brainchild of Bores, a longtime tobacco veteran who owned the trade publication Tobacco Outlet Business. Bores also spent decades consulting for Management Science Associates (MSA), where he saw tobacco outlets as a growing trade channel with no industry association or representation.

In Tobacco Outlet Business, Bores had the magazine, and he later co-owned the Tobacco Plus Expo. All that was left to get was the association.

“Don realized that tobacco outlet stores did not have a national organization that monitored and responded to tobacco legislation,” says Thomas Briant, whom Bores recruited to serve as executive director of NATO in late 2000. “At that time, there were about 11,000 tobacco outlet stores and the segment was growing, which further necessitated a national organization to coordinate strategy on tobacco restrictions.”

With Briant on board, the two set out to recruit tobacco manufacturers to help get NATO up and running. Larry Sherman, executive vice president of Nat Sherman International, New York, received one of those early pitches.

“There was a little bit of skepticism from the group, having so many competitors working together, but also an understanding of how important it was for all of us to try and come together and try to create a singular voice,” he says. Nat Sherman has been an active member of NATO since the organization was formed.

Reynolds American Inc., Winston-Salem, N.C., was another early supporter, seeing the potential of an organization focused on the rapidly growing tobacco-shop channel.

“We saw value with an organization to represent the interests of that segment and to help fight some of the threats,” says Dave Riser, Reynolds’ vice president of external relationships—trade marketing and a 10-year veteran of the NATO board.

NATO was officially formed in March 2001; by the end of its first year, the association represented about 400 tobacco outlet stores. In 2009, it passed an amendment allowing any retailer that sells tobacco to join the association, officially opening the door to convenience operators. The move allowed NATO’s membership to grow exponentially, now representing about 51,000 stores across the United States.

In those 15 years, the regulatory environment under which tobacco retailers operate has changed drastically, from the birth of the U.S. Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP) to increasingly restrictive proposals at the state and local level. Here’s a look at how NATO has helped retailers and manufacturers take on these threats in its first 15 years.

When you ask retailers about the value of NATO, one of the clearest answers is its wealth of information.

Anne Flint, senior category manager for Cumberland Farms, says she has witnessed an  almost exponential increase in local tobacco restrictions” since the Framingham, Mass.-based retailer joined NATO in 2010.

Although, like many retailers, Cumberland Farms has its own in-house legal team, it does not specialize in tobacco—prompting Flint to rely on NATO as “a clearinghouse of information on tobacco issues.”

“I have found one of the most beneficial aspects of NATO membership to be the ability to call NATO staff members and get a clear, concise answer to a question about tobacco legislation or what a FDA regulation means, and usually the answer is immediate,” says Flint, who is vice president of NATO’s board of directors.

Beyond its knowledgeable staff , NATO has also assisted retailers through its NATO News bulletins and an alert system that helps retailers and their customers send letters or testify to elected officials about specific regulations.

“NATO has simplified the process for retailers to become active in the legislative process,” Briant says. “It is this simplification that drives so many more retailers to take that first step and take action when a tobacco restriction or tax increase is proposed.”

This has provided value for NATO’s retail, distributor and manufacturer partners, says David Sutton of Altria Group Inc.

“NATO is an excellent and important partner on public-policy issues,” says Sutton, a spokesman for the Richmond, Va.-based manufacturer. “NATO’s dedication to supporting retailers makes the organization very effective in advocating on issues related to the trade.”

NATO hasn’t just given the industry a wealth of resources; it also has helped retailers and suppliers find their voice.

“One of NATO’s great strengths is its grass-roots work with retailers to help make their voices heard in the public-policy debate,” says Sutton.

This refers to one of the key reasons Bores founded NATO back in 2001. “Tobacco retailers were being treated like second-class citizens,” he says. “The pressure on them was enormous—and they had nobody representing them.”

Though manufacturers such as Altria, Reynolds and Nat Sherman can—and do—certainly get involved on state and local issues, it’s significantly more effective when retailers and their associations provide testimony on how restrictions will affect local businesses.

“There’s been several issues where NATO’s been able to take a lead,” Sherman says. “They’ve been able to be more vocal and get heard better than any one of us could.”

That voice has been especially important given the latest regulatory trend on the local level: banning certain segments or subsegments (such as flavored products) outright, prompting customers to drive a few miles to the next city or town to meet their needs.

“The impact on retailers that are affected by these local regulations is magnified when local residents also buy their gasoline, snacks, beverages and other products from other retailers,” Briant says.

“NATO fights for retailers and helps retailers take a stand against legislation that could be devastating to their business,” says Flint, who operates in the regulations-heavy Northeast region.

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