With cigarette consumption steadily declining in the U.S., the leading cigarette makers - Altria and Reynolds American - have both been looking for products, such as cigars and smokeless tobacco, to fill the gap. But the trend isn’t limited to just the U.S., and in the arena of mergers and acquisitions, non-core tobacco holdings that were once of little interest to suitors are now themselves key targets.

Now that the fourth-largest cigarette maker in the world, U.K.-based Imperial Tobacco, is the owner of the largest premium cigar maker in the world, Altadis S.A., one begins to wonder if domestic efforts to separate the public’s impressions of premium cigars from cigarettes and “Big Tobacco” in the fight against tobacco regulation and taxation will ultimately become an uphill battle among the decision makers as anti’s reiterate that “tobacco is tobacco.”

Several tobacco analysts have even placed greater-than 50 percent odds that Altria - parent company of Philip Morris - may seek to acquire Swedish Match AB, parent company of Swedish Match North America and General Cigar Co. this year. Such a match-up would create a single tobacco supplier with No. 1 market share in cigarettes, premium and mass-market cigars, and chewing tobacco, and place it among the top three players in smokeless.

Certainly there is every incentive for each segment within the tobacco industry - not just cigars - to fight for their own interests in the most effective and appropriate way possible, for example snus makers in Scandinavia have, for years, cited research about reduced harm inherent to its products, and may view marketing restrictions differently than other tobacco segments.

For the newly-minted International Premium Cigar and Pipe Retailers Association (IPCPR), the priority has been to drive home the point that premium cigars are a handmade product, pursued and savored much like fine wines or other spirits - more a leisure activity than a habit.

Yet, there has been much hay made about competing approaches to fighting legislation and at times last year’s RTDA Trade Show seemed a flustering exercise for manufacturers attempting to dash between yet another emergency meeting called to address the looming tobacco tax-funded proposed SCHIP expansion. While President Bush prevailed and the industry escaped this time around, that fight will resume again in due time.

The hot-button issue of moment is FDA oversight of the tobacco industry - all of it. And even there, loyalties are divided: while Philip Morris and UST Inc., the nation’s largest maker of smokeless tobacco products, support the measure - the rest of the industry is squarely against it.

To be sure, there is never a one-size-fits-all approach to fighting incursions into any industry. Naturally, it’s a case of survival: if the FDA seeks to ban flavored products with the exception of menthol, a Philip Morris has very little to loose, while a small manufacturer that makes primarily flavored tobacco products has everything to loose.

Can premium cigar industry’s bid to distance itself from the lightning rod of the tobacco world hold up if viewed as a convenient acquisitions along the diversification path by major cigarette makers?

E. Edward Hoyt III