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[ PRODUCT PROFILE]
What’s old is new
A combination of factors lead to a resurgence in pipe smoking
by Maura Keller
If you visit a college campus on any given weeknight, you may notice people walking in stride with book bags slung over their shoulders and laptop computers in hand. Although some may be heading toward parking ramps or libraries, others are heading to the local watering hole to smoke a pipe with their collegiate chums, a clear indication that pipe smoking is making a comeback.
"Marketing is currently undergoing what I would call a 'retro' phase," said Arron Sissom, president of Nashville, Tenn.-based Music City Marketing. "Automobile manufacturers are a great example of this. Ford, GM and Chrysler are all introducing new models that are being designed to remind you of vehicles from the '50s and '60s, and even prior. Tobacco companies are bringing back the old-style tins and packaging that was prevalent in the early to mid-1900s. We are even seeing the re-introductions of brands and blends that haven't been available for many years. This in itself is increasing business throughout the industry."
So long stigma
Pipe smokers have always had a decent, if sometimes "tweedy," stereotype associated with their hobby.
"If you think of the image most people have of pipe smoking it is either Santa Claus, Sherlock Holmes, a miscellaneous professor or Hugh Hefner," said Paul Creasy, general manager of Altadis U.S.A.'s pipe tobacco division in Richmond, Va. "Back in the '60s and '70s, pipe smoking was the 'hip' thing to do."
But starting in the mid-1970s and through the '80s, pipe smoking became associated with the "establishment," and somehow became unhip.
"It still retained its benign stereotype, but lost some of its cool edge," Creasy said.
Today, part of the increase in pipe smoking in the young-adult crowd is part of an overall trend towards people developing more sophisticated tastes.
"We have seen this everywhere, not only in the cigar business with the incredible growth in the premium cigar industry, but in wines and spirits, specialty cheeses and gourmet foods in general," Creasy said. "We are, in general, more of a sophisticated nation now than we were back in the '50s and '60s. Consumers have access to hundreds of choices, where before there might have only been two."
Brian Levine, specialty products manager with Charlotte, N.C.-based Peter Stokkebye International, said that pipe smoking recently got a big boost from the Lord of the Rings movies.
"All the hobbits and the good guys smoke pipes in the movie series," Levine said. "In the past, the pipe smokers had been pegged as the bad guys, but not anymore."
In fact, today's pipe smokers generally have four years of college, if not more, will usually smoke their pipe on a daily basis and are extremely loyal to shops where they get their tobacco.
Creasy added that pipe tobacco is perfectly suited towards those with a sophisticated palette.
"The intricacies of flavors, not only in the aromatic lines of pipe tobacco, but in the English Styles and Matured Virginias, can keep an active smoker engaged for decades," he said. "The whole ritual associated with smoking a pipe – selecting your blend, packing your pipe, tamping it in, lighting it – is part of the experience and enjoyment."
However, Joe Girage, communications manager at Tucker, Ga.-based Lane Limited, manufacturer of Dr. Grabow Pipes, said that while the number of younger pipe smokers may be on the rise, they are not long-term consumers of pipe tobacco products.
"Pipe smoking is trendy, not a long-term means of smoking," Girage said. "Pipe smoking involves more tasks, packing properly, lighting excessively, cleaning the pipe, pipe cleaners and pipe filters."
In the "immediate gratification" society in which we live, younger consumers don't often have the patience to stick with lengthy tasks.
Changing tastes and methods
As tastes have become more varied and pipe smokers have moved away from the "old line" products toward the more exotic, smart manufacturers follow the trend. In fact, one of the main ways those who have succeeded in the business have done so is by offering variety. Thirty years ago, Altadis' predecessor in the pipe tobacco business – Sutliff Tobacco Company – had two products: Mixture 79 and Heines Blend.
"Now we have over 800 different items for sale in pipe tobacco," Creasy said. "In our bulk tobacco line we have 300 different flavors."
Manufacturers have not only introduced many new products, but they have developed innovative ways of packaging them to appeal to the consumer's changing interests.
"When we introduced our Tobacco Galleria line several years ago, we designed the display to hold four jars in the space of two. We know that shelf or counter space is at a premium and we reacted to it," Creasy said.
Two years ago, Altadis also introduced its Tobacco Galleria line in gold pouches, which was well received.
"This allowed those retailers who want to get into the premium pipe-tobacco business, but don't necessarily want to buy scales and sell bulk, an opportunity," Creasy said. "Thirty years ago a person who smoked a pipe only smoked his brand and no other. Now, most pipe smokers enjoy a range of blends and may smoke up to five or six different products rather than just one. Offering them variety is the best way to keep them coming back into your store."
In fact, changes in the retail market have also affected the purchasing patterns of pipe smokers. As Levine explained, the mass-market channel, such as Walgreens, CVS and Wal-Mart, have moved tobacco products off the main aisles and put them behind the counter, thus reducing the set size.
"For example, Walgreens went from a 20-foot tobacco set down to a four-foot set behind the counter," Levine explained. "By getting it behind the counter you have to reduce the set, which forces you to loose feet of tobacco products. Therefore, they are only going to keep the top-selling items."
Pipe tobacco is not a top-selling item compared to other mass-market cigar products, so the pipe tobacco selections have gotten a lot smaller.
"That has increased the opportunity at the smaller tobacco outlets, because that consumer who used to buy a mass-market brand lost the opportunity," Levine said. "Instead of 30 SKUs, they now may have eight to choose from at a drugstore."
As a result, bulk tobacco programs offered by the industry's manufacturers give tobacco retailers a renewed chance to get up to 60 percent to 70 percent in profit margin, as well as to generate a private-label type of business. They can service customers coming from the premium smokeshops and the mass market.
"What's more, tobacco sales via the Internet are being hammered by credit-card companies that won't allow processing from tobacco-related Web sites and shipping companies clamping down and saying they will only ship tobacco to licensed tobacco shops," Levine said. "So, this means that consumers are going to go to their local smokeshop and look for their pipe tobacco. If I owned a tobacco shop right now, I would be looking at all the pipe tobacco products that we sold mail order and on the Internet and try and get it into my store because those consumers are going to start knocking at my door."
Top sellers
According to Girage, additional demographics of today's pipe smokers include that most are married, retired or unemployed, live in a small town, have an annual income of $30,000 to $50,000, and have smoked pipes for over 20 years.
So what do these consumers look for in this niche market? "Pipe smokers say it is important to have a pleasant aroma for the people around them. The longer the cut, the better the tobacco," Girage said. "Being able to view the tobacco through the package is also important; cans are less desirable than bags. And aroma is not a reliable way to judge flavor."
For Altadis, on a national level, very few blends outperform the company's D40 Vanilla Burley.
"This product we have manufactured for over 20 years and in the several hundred accounts that carry it, it almost always is among their top three or four sellers," said Creasy. "Other blends that are almost 'gotta haves' for any retailer is our B20 Black Cavendish (a very mild all-black vanilla blend) and 1M (a mixture of Burley, Virginia and Black Cavendish with vanilla extract)."
Lane Limited's Captain Black is one of America's leading pipe-tobacco brands, accounting for 12.1 percent of the pipe tobacco sold in the United States. Lane's other major popular-priced tobacco brand, Sir Walter Raleigh, with 5.1 percent of sales, was initially sold regionally, beginning in 1884, with national distribution dating from 1927.
Every year, manufacturers introduce hundreds of new blends to the market. And many try their hand at unique blends, with great success. For example, in addition to its popular standby, Skandinavik, Peter Stokkebye recently introduced My Own Blend, a blend of three dozen different types and grades of tobacco from four continents.
Altadis' Tobacco Galleria line of products was originally designed as a "turnkey" system for a cigar shop to quickly and easily get into the lucrative premium bulk pipe tobacco business.
"We took our 25-plus years of experience of bulk tobacco and selected the best-selling blends and the results have been fabulous," Creasy said. "Stores that were missing out on pipe tobacco sales now have a quick and easy way service those customers."
What the future holds
Experts agree that pipe smoking has a good future as a niche tobacco business. Albeit a trend with younger smokers, for those with a longer passion for pipe smoking, the benefits are easily identifiable.
"I feel that this market will continue to experience steady increases," said Sissom. "People want to smoke but don't want to deal with the stigma attached to cigarettes. Pipe smoking not only provides the smoker with tobacco, but it provides the smoker with a wide variety of tobaccos and a wide variety of blends which are not available in cigarette form. If not for anything else, smokers will look to the pipe as a window into the past where life was less complicated and simpler."
"The perceived relaxation benefit that pipe smokers enjoy, along with the endless varieties of blends, pipes and accessories associated with the hobby, give it an appeal for the gourmet smokers in the country," Creasy said. "This has been a shift away from it being the mass-appeal item it was back in the '50s and '60s when 15 percent of the adult male population smoked a pipe. I honestly cannot foresee a return to those numbers, but the smokers now are far more sophisticated and loyal and will be here for years to come."
There are some unique ways for retailers to improve their pipe product sales now and in the immediate future.
"It's vital to offer the consumer a variety of flavors, pipes and keep the section clean, fresh and well-stocked," Girage said.
One of the best ways a retailer can increase the sales of pipe and pipe tobacco products is by having a monthly "Pipe Club" night.
"If a person has the space, opening up your store to your pipe smokers once a month is a great way to create a healthy pipe smoking community in your area and increase your sales at the same time," Creasy said. "Many manufacturers offer free samples of new products they have for you to give to these smokers on pipe nights."
"Private labeling also is a great way to win loyalty from your consumers," Levine added.
For example, retailers can rename much of their bulk tobacco offerings to a moniker that might mean something in their area, such as a local sports team.
"This enhances customer loyalty and also gives the consumer a feeling that the retailer is paying attention to and reacting to his needs," Creasy said.
Creating a "New Pipe Smoker" kit is also a good way to bundle the various accessories together to help win a new pipe smoker as a customer. For example, bundling a medium-priced pipe, pipe cleaners, a couple of pouches of tobacco, a tamper and a book of matches as a "kit" makes it an attractive purchase for those just getting into the hobby.
"Also, and most importantly, retailers should actively encourage sampling from their customers," Creasy advised. "Nothing sells pipe tobacco better than the tobacco itself. Bulk tobacco is perfectly situated for that, and the ounces of tobacco you might give away each month when consumers dip their bowls in the jar will pay off in pounds sold throughout the years when they find something they like."
With the holidays right around the corner, retailers should also consider pre-made gift sets.
"A lot of pipe tobacco actually is sold around Christmas and Father's Day and creating an easy way for the women in the pipe-smoker's life to give them a gift benefits all," Creasy said. "Altadis has a product called a 'Fine Tobacco Sampler,' which is a ready-made gift set, private labeled with the retailer's address and name of the blend already made up. This is a great way to bring in customers that might actually be regular shoppers at another store."
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