An Update on the STG Mac Baren/Sutliff Acquisition from Leonard Wortzel
Leonard
admin
Howdy folks. Long time no chat. I'm still with STG, but starting in April in 2021 until this July I was 100% focused on trying to create new division focused on alternative categories. Hence my absence from the forum, pipe shows etc.
So, what have I been doing for STG since July of 2024? Analyzing the global Mac Baren / Sutliff portfolio to decide which items should be continued and which items should be discontinued.
I'll give you an update and then ya'll can ask questions and I'll respond as best I can.
FYI: I attempted a test of an update on the Pipes Magazine forum and that didn't go so well. The moderators shut down the thread within two hours after people started cursing each other. We are a closer knit community here, so I'm confident we won't have those issues.
That being said, you should all feel free to complain to me and to blame me. I'm not here to defend any of the decisions I've made, nor do I need anyone else to defend me. Just be respectful to each other as you always have.
On to the update....
As it pertains to the U.S. portfolio, Sutliff sells 988 items (including items from the Mac Baren family). That is a very, very large portfolio. For reference, the Lane portfolio, which does far more volume, has about 125 items. 700 of their items sell less than 100 lbs. annually. This is a very, very small amount. Only about 30 items sell more than 1,000 lbs. per year. Anything under that would be considered small batch in a modern factory.
The Sutliff facility is comparatively small, older and well suited for during short production runs for the U.S. market. The STG facility in Denmark has extra capacity and well suited for long production runs to serve the needs of pipe smokers in more than 70 countries around the globe. Plus there is the Mac Baren facility, also in Denmark, that is sort of a mix between the STG and Sutliff facilities.
So I was faced with a conundrum. Maintaining three pipe tobacco factories was never going to be a financially viable option. Producing small batch items at STG's facility will not work with our current setup. The other two facilities do not have the capacity to produced the combined portfolios.
Based on this and multiple other factors, I recommended that we discontinue the majority of the Sutliff portfolio. STG followed my advice. The Sutliff produced items that we are keeping will ultimately be produced in Denmark. The Mac Baren items we are keeping will also be produced in Denmark. No Lane items are being discontinued (we discontinued low volume items from 2018 - 2020). I don't have the full list of the Sutliff/Mac Baren items we are keeping right now, but will in the coming weeks.
So, not good news - even that 988th item is someone's favorite blend - but those are the facts. I did not take these decisions lightly. I knew full well that in making my recommendation it would almost certainly lead to closure of the Sutliff factory. This was indeed the case, and last month I stood in front of those employees as the STG representative when the announcement was made.
Pipe tobacco is a profitable but declining category. In the past 15 years, companies like McClelland and Daughters & Ryan have chosen to cease operations. Larger companies such as Reynold's, Altadis, Swedish Match, and now Mac Baren, have decide to walk away from pipe tobacco. In each of these latter cases, STG has stepped in and it is only because of this that many of the brands and blends we love still exist. As painful as it has been, I believe the decisions I've made are what's best not simply for my company, but for the long term health of the pipe tobacco category.
So, what have I been doing for STG since July of 2024? Analyzing the global Mac Baren / Sutliff portfolio to decide which items should be continued and which items should be discontinued.
I'll give you an update and then ya'll can ask questions and I'll respond as best I can.
FYI: I attempted a test of an update on the Pipes Magazine forum and that didn't go so well. The moderators shut down the thread within two hours after people started cursing each other. We are a closer knit community here, so I'm confident we won't have those issues.
That being said, you should all feel free to complain to me and to blame me. I'm not here to defend any of the decisions I've made, nor do I need anyone else to defend me. Just be respectful to each other as you always have.
On to the update....
As it pertains to the U.S. portfolio, Sutliff sells 988 items (including items from the Mac Baren family). That is a very, very large portfolio. For reference, the Lane portfolio, which does far more volume, has about 125 items. 700 of their items sell less than 100 lbs. annually. This is a very, very small amount. Only about 30 items sell more than 1,000 lbs. per year. Anything under that would be considered small batch in a modern factory.
The Sutliff facility is comparatively small, older and well suited for during short production runs for the U.S. market. The STG facility in Denmark has extra capacity and well suited for long production runs to serve the needs of pipe smokers in more than 70 countries around the globe. Plus there is the Mac Baren facility, also in Denmark, that is sort of a mix between the STG and Sutliff facilities.
So I was faced with a conundrum. Maintaining three pipe tobacco factories was never going to be a financially viable option. Producing small batch items at STG's facility will not work with our current setup. The other two facilities do not have the capacity to produced the combined portfolios.
Based on this and multiple other factors, I recommended that we discontinue the majority of the Sutliff portfolio. STG followed my advice. The Sutliff produced items that we are keeping will ultimately be produced in Denmark. The Mac Baren items we are keeping will also be produced in Denmark. No Lane items are being discontinued (we discontinued low volume items from 2018 - 2020). I don't have the full list of the Sutliff/Mac Baren items we are keeping right now, but will in the coming weeks.
So, not good news - even that 988th item is someone's favorite blend - but those are the facts. I did not take these decisions lightly. I knew full well that in making my recommendation it would almost certainly lead to closure of the Sutliff factory. This was indeed the case, and last month I stood in front of those employees as the STG representative when the announcement was made.
Pipe tobacco is a profitable but declining category. In the past 15 years, companies like McClelland and Daughters & Ryan have chosen to cease operations. Larger companies such as Reynold's, Altadis, Swedish Match, and now Mac Baren, have decide to walk away from pipe tobacco. In each of these latter cases, STG has stepped in and it is only because of this that many of the brands and blends we love still exist. As painful as it has been, I believe the decisions I've made are what's best not simply for my company, but for the long term health of the pipe tobacco category.
Comments
Thanks for the update.
I have two questions.
1. A lot of pipe shops buy their blending tobacco from Sutliff. What will happen to that part of the business?
2. Sutliff manufactured most of the Seattle Pipe Club Blends. What will happen to those blends and other private label blends produced by Sutliff.
Bye the way, we miss your interaction with the forum.
Most are going away, but I've heard the Seattle folks are already in conversation with C&D as well.
Thanks. I've tried many of the Seattle blends but the only ones I will miss are Plum Pudding and Plum Pudding Barrel Aged.
Hope you don't mind but I copied your update and posted it on the New Orleans Pipe Club Facebook page. We had our December meeting last night and the changes was one of the topics of discussion.
Thank you for the update.
Thank you.
Have a blessed Christmas.
Thank you for the update. I'm sure it's definitely not an envious position to be in, especially when you're placed in such a tough spot in choosing what to save. Personally, I really don't want to see the Hearth & Home and Warhorse blends going away, but again, I'm sure there was thought put into it, and if you could save them all logistically, I'm sure you would.
You have a Great Christmas, and try not to let other's anger get you down.
Good to hear from you sir. Thanks for communicating this to our group here. I can certainly understand and respect those tough business decisions you had to make. It's better to keep the business profitable and keep what can remain in production alive for the nitch pipe market. Thanks again
I didn't care for some of the decisions that had to be made. But like you said, considering the bottom line and overall welfare of the industry, it had to be done.
Question:
Will you or someone in your stead be present at the St. Louis Pipe Show or the Las Vegas Pipe Show next year?
I'll be at STL, and planning on attending the LV Show, and it would really be great to see you again...
Are you still with us?
Any comments on this email?
Are they really discontinuing ALL Sutliff tins?
And yes, all those Sutliff cans are going way.
The most popular was Molto Dulce. It sold about 700 lbs per year.
Regarding the pipe shows, we're still figuring that out. Starting now, I'm technically over the global roll-your-own portfolio, and Max Stokkebye is over the global pipe tobacco portfolio. Of course Max now lives in Denmark. So were still figuring out logistics...
I'm sorry for all the hate coming your way as you take the bullet for discontinuing so many blends. I just have trouble wrapping my mind around the U.S. being the largest pipe tobacco market ( but that make since due to the size of the country) yet pipe tobacco not being profitable.
I appreciate it, but there is literally nothing anyone could say to/about me that would get a reaction.
On the one hand, some random poster calling me names is nothing compared to all the folks who are losing there jobs.
And on the other hand, while I had to make some really unpleasant decisions, I'm convinced they were the correct decisions.
(Yes, there have been moments when I wanted to post: "Listen you little #$@$! Who is the Chairman of the Pipe Tobacco Council who travelled to Washington, sat in front of the FDA, and ultimately convinced them to exclude pipe tobacco from the upcoming flavor ban? Had that ban gone into place there would be no pipe tobacco industry! You may enjoy smoking that cute little boutique blend every once in a while, but this industry is my !#@%@$ life!" But I digress...)
Pipe tobacco is very profitable in the U.S. Sutliff was profitable too. Just no where near as profitable as Lane, both in totality or on a pound per pound basis.
Here's an example: Back in the day I launched Lane Andullo. I loved this blend (smoking it now actually). And every can we sold was very profitable. We sold it for double what it cost to make. Doubling your money is great! Except when you only sell a couple of cases of it. Especially when it was a nightmare to make. The raw Andullo was so hard, it kept breaking blades on the cutter. I was forcing procurement teams in two different countries to track down this blade-breaking stuff. Accounting had to set up new vendor accounts. And our tin line at Lane wasn't automated. Every can was hand-packed and hand sealed.
Meanwhile, there are only so many hours in a shift at the factory. Instead of running the products that thousands and thousands of consumers were demanding, I had the entire cutting line shut down to make something only a few folks actually cared about. Instead of employees getting high-demand products out the door, they were in a back room hand tinning my stuff.
Andullo made great profit. But what makes even better profit per pound? Lane 1Q. So I was prohibiting the production of Lane 1Q (which sells more than almost the entire Sutliff portfolio combined), to make a few pounds of a blend loved by few.
Another part of the equation: What will those Molto Dulce smokers do now? Stop smoking a pipe? Or find another blend? Some will find something they like at Cornell & Deihl. Some will find something they like within a 100+ blend Lane portfolio that is the most widely available and is preferred by U.S. pipe smokers by about 8-1 vs. the competition. And that is also more profitable.
That keeps STG interested in this whole pipe tobacco thing. That prevents us from losing and more brands and blends. That is my ultimate objective.
Here's a funny story for you.
I have a relatively small cellar/collection of pipe tobacco. All the talk about which blends were going away prompted me to revisit my inventory list and update it.
As I've mention elsewhere in the forum, I have a grand total of 80 unopened tins. 63 of the unopened blends are just a single tin. The rest are two or three tins with the exception of one blend I have seven tins of.
I have one single tin of MacBaren Black Ambrosia. I had a tin of Seven Seas Black but it was appropriated by my oldest son when he found I had it.
I have four tins of Sutliff: 1 Hill of Slane, 1 Phantom Privateer (plus about a half of tin I'm still smoking), 1 tin of State of Virginia and 1 tin of Molto Dolce (bought in 2018).
I will probably miss the Seattle Pipe Club blends made by Sutliff more. Of there blends made by Sutliff, I have:
Plum Pudding Barrel Aged (2 + 1 on order)
Potlach (1 tin 2018)
Mississippi River (1 Tin 2021)
Plum Pudding Special Reserve (4 oz. tin on order)
I may have some other private label blends made by Sutliff but I haven't figured out who makes them.
I would tell you who makes most of the blends I like but I don't want STG buying them out and discontinuing them. LOL
It is reasonable to assume that at some point others will try to recreate discontinued blends. Much as Sutliff did things like Match Mixture 79.
Here is the annoying part: I simply cannot talk about those reasons. Nor can I respond to speculation on the reasons (so please don’t).
There are other blends that are on hold for the same (annoyingly undisclosable) reasons.
The three ingredients in @ghostsofpompeii ’s Mrs. Hudson's 221B Bakery Blend were three Sutliff aromatics: Vanilla Custard, Chocolate Mousse, and Crème Brulee. If you recall, some chose to substitute Molto Dolce for the Creme Brulee when mixing up a batch. But our discussions concluded that the two were similar but not the same. My experience was that Molto Dolce was a “better” version of Creme Brulee: tastier, better room note….. and more snap, crackle and pop.
…but where is Molto Dolce’s “snap, crackle and pop” if they are the same?
Just askin’…..
My guess is that it was from the excessive moisture/propylene glycol? in the tinned “Molto Dolce” There was so much moisture in those “Private Stock” tins, the bottoms of the cans rusted.