Abstract: Cigarettes are stored in one or more reservoirs at a customer location. A computer receives customer orders and transmits them to a dispenser. Upon receipt of a customer order, a pre-selected number of cigarettes is automatically removed from the reservoir(s) by the dispenser and then automatically packed in a container by a packer comprising a collation mandrel which is movable relative to the dispenser. A preferred type of substantially air-tight, self-sealing container has a lid portion, a body portion and a collar, which is mounted within the body portion. The body portion is provided with one or more upwardly extending protrusions on the upper surface of the base thereof. An air and moisture impermeable membrane is sealed about the upper periphery of the collar.