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.