By Joe Biesk
The Associated Press

FRANKFORT - A Senate panel has approved a controversial measure that would restrict cigarette manufacturers from making marketing deals with the state's retailers, dictating their share of shelf space.

Retailers had mixed reactions to the proposal. While proponents say the marketing agreements put some retailers at a competitive disadvantage, opponents argue these deals are what keeps them in business.

"We're forced into signing these contracts for the bottom line of our business, not what's right or wrong," said John Kemplin, who testified before the Senate Committee on Agriculture and Natural Resources in support of the proposal. "... I'm not sure I could keep my doors open without these promotions."

Cigarette manufacturers periodically offer retailers various discounts or other deals in exchange for their agreement to designate a certain percentage of their shelf space to their brand, said Andy MacRae, director of sales merchandising for Philip Morris USA.

The bill, which the committee approved by a 10-0 vote, would prohibit such deals. A similar measure was scheduled for a House committee review, but was postponed until possibly next week.

There are other incentives tobacco companies offer retailers, such as breaks if they keep cigarettes behind the counter or if they are vigilant at checking people's ages, MacRae said.

MacRae said the retail agreements are essential to their marketing efforts at a time when the cigarette industry has become more competitive than ever. He said the marketing agreements that cigarette companies make with retailers are similar to those that beer, soda and cereal companies make with retailers.

"The enactment of this bill could be a slippery slope," MacRae said. "They're all sold pretty much the same way."

Kemplin's family has owned a small store in Fort Thomas for the past 17 years. He said retailers end up losing money, and potentially customers, if they don't agree to the deals.

But Jerry Stith, who owns a cluster of cigarette outlet stores, said he opposes the proposal because, without these deals, he stands to lose $300,000 next year alone.

Retailers aren't obligated to sign these deals, so the decision should be left up to individual retailers and not the state, Stith said.

Still, Keith Humble, who has three small convenience stores, said he has reluctantly signed such deals with cigarette companies so he could participate in their various promotions. However, they make it difficult to sell as many different products as he would like.

"We need our rights back to our own store," Humble said. "We need to be able to sell whatever we want."