A DTM/Orlik Question for Those in the Know

[chilllucky]

Eric Stokkebye makes himself available for talks at pipes and tobaccos events and shows worldwide. He is, so far as I know, the most notable concern making special - above market prices - limited edition tobaccos. See 4th generation Peaty Kentucky, etc. it would not be too hard to ask him if he's had success with the model and what the technical limitations are.

 

[VDL_Piper]

But what constitutes an $80 USD tin, to you? What would make an American tobacco retail in that price range justifiably?

These houses already hand strip and hand blend their products. Pressed are loaded and unloaded by hand. A steam press wouldn’t even be a new product to market but just a new product for that manufacturer, that other manufacturers sell at standard prices.

I feel you’d really have to have something notably special to shoot something so high above standard market value.

I think we are all lamenting the demise of many great blends either through varietal or process loss. That said, look at the way Gawith clears the shelves in short order, no one blinks an eyelid.......why? I think the answer is simple enough. The process of steaming plug tobacco and either marketing them as plugs or slicing them and presenting them as flakes adds to the smoking experience. Blends presented in this way are smoother, cooler burning and to me more flavourful and then there is the capacity of the tobacco to age with the steam having nullified the mold issue to a very large extent. I already pay way over the odds for tobacco so to add $20 or $40 to a tin that is what I believe a superior product is neither your arse nor your elbow. I would also go so far as to suggest that the lesser quality or varietal availability could be extended or morphed from the current iterations to something much better/new. By this I mean a blend like Telegraph Hill by G.L.P. for example, I wonder what changes would take place if this was presented as a plug formed under pressure and steam. It's already a great blend but would it become "the" most sought after VaPer and command a premium in the market place, maybe, I doubt we will ever find out though.

 

[fireground_piper]

I think we are all lamenting the demise of many great blends either through varietal or process loss. That said, look at the way Gawith clears the shelves in short order, no one blinks an eyelid.......why? I think the answer is simple enough. The process of steaming plug tobacco and either marketing them as plugs or slicing them and presenting them as flakes adds to the smoking experience. Blends presented in this way are smoother, cooler burning and to me more flavourful and then there is the capacity of the tobacco to age with the steam having nullified the mold issue to a very large extent. I already pay way over the odds for tobacco so to add $20 or $40 to a tin that is what I believe a superior product is neither your arse nor your elbow. I would also go so far as to suggest that the lesser quality or varietal availability could be extended or morphed from the current iterations to something much better/new. By this I mean a blend like Telegraph Hill by G.L.P. for example, I wonder what changes would take place if this was presented as a plug formed under pressure and steam. It's already a great blend but would it become "the" most sought after VaPer and command a premium in the market place, maybe, I doubt we will ever find out though.

I mean, I smoke what most would consider garbage by that standard haha.

I don’t partake in Gawith, and I prefer the broken flake of C&D over the crisp flake from MacBaren though I love the C&D crumble cake like blockade runner over all else. The only blend I really wish didn’t disappear was a D&R blend that retailed for $8.

I just don’t get caught up in all of the jazz. My preferences are in minimal prep. All of the desires you listed are detractors for me.

 

[karam]

All great comments! It's not that a high price means quality, but at the same rate... it can.

I think price changes your perception of quality. I have done a bit of pricing research professionally and found it an interesting field, but it’s not my area of competence. There is such a thing as “too cheap”, where consumers ignorantly doubt the quality of a product because it’s much cheaper than similar products. I don’t think we are there with tobaccos. There’s economically-justifiable price, there’s break even, marginal, profitable prices…all can be either close together or far apart. I don’t like C&D’s products but I never thought they are of poor quality.

Taking it further, though not sure how applicable this is to the US, airlines like Easyjet and then Ryanair and others showed to the world how much air travel really costs. Low-cost airlines know the one thing they can’t afford is having a plane crash (touch wood), so safety and quality of their planes and crews is paramount, everything else can be discounted. Of course I remember when we got a 20-25kg checked-in bag, 1 drink, 1 meal, 1 snack, nice customer service, convenient flight schedules all included in the price of a ticket, but when Easyjet stripped all this off and offered 2-5 times cheaper tickets the customers (and their money) started flowing in.

I guess Costco and Vanguard could claim the same for retail and investing respectively. Reduce costs and margins at the price of convenience and pass on these savings to consumers and volume brings in the profits.

 

[jbfrady]

But what constitutes an $80 USD tin, to you? What would make an American tobacco retail in that price range justifiably?

Reduce costs and margins at the price of convenience and pass on these savings to consumers and volume brings in the profits.

I'd say these two are related. The problem, as to @karam regarding profits... is volume. This holds in items with rampant sales figures - it's why Costco has elected to corner the wine industry. Because over 90% of wines retail for under $10, one might think the sub-$10 range is the safest place to compete, but that's not quite true. Selling a product by its price makes the product about price. If you begin a winery and intend to compete for that ideal 9.99 market, you can't claim a superiority of product versus your competitor because the argument falls on deaf ears. For the consumer, it was the price driving the sale.

The other pitfall is that most businesses are never truly profitable. Bringing the cost down often engulfs so much spending, so many purchases for equipment that take years to pay back, that most companies find themselves constantly having to spend more money that's meant to reduce costs and bring in more money, ad infinitum.

There should always be tobacco tins in the $10-15 range, but by no means is it a solid market. The competition is fierce, especially if you lump in RYO, cigarettes, vapes, gas station cigars, etc. The reason liquor companies from Old Forester to Johnnie Walker carry the full range, from $20 bottles to $1,000+ bottles. Not only does it service a wide range of customers, but it serves as an in-house education. You liked the red label? Great! Try green next.

To @fireground_piper I'd continue the same analogy as above. If grain is grain, then there should be no difference between a $20 bottle of Scotch and a $500 bottle. But there is a discernable difference. The more labor is involved - especially specialized labor - the smaller the batches and the higher the cost.

Running a whole leaf rolled release wouldn't require much in ways of machinery, but you'd have to pay people to sort the leaves and the find the healthiest, most vibrant of the stock. Then you'd have to pay them to brush the maple, to roll them, place them properly in storage. You'd have to buy the oak barrels to store them in, and you'd have to allow them to occupy warehouse space for the interim before selling them. Because this would be a new process, some wouldn't turn out right and would have to be discarded, adding an increment to the cost.

But at the end of the process, you'd have a product that does not currently exist on the market, as well as a built-in sales pitch precisely because there's nothing like it on the market.

 

[anotherbob]

I was assuming that was likely the case, given that everything else I've had from Dan tobacco is either a hot press flake or a cube cut. Still, I find the process intriguing.

I was talking with Jeremy Reeves about the same matter back at the Muletown show. I had asked if they had any plans to begin hot pressing and he said that they would have an impossible time acquiring the machinery but that he would love it if they could. So I asked about coins instead and he gave me a similar answer.

The reason I find it intriguing... Per Jensen's Jamestown video goes over how rolled tobaccos developed in the early 1600's. Don't get me wrong, I understand the desire for the machinery to do all the cutting, but I find it surprising that nobody has tried either replicating old world techniques, or else developing new machinery. Perhaps the demand just isn't sufficiently built for such costs.

I remember an experiment years ago when one snuff maker produced carrots (sorta what would happen if a rope and cigar had a baby) by first making ropes. The process by hand doesn't seem replicatiable on an industrial scale. Was an interesting thing to see the results of.

 

[karam]

big quote!

You make many interesting points, I don't think we can get any conclusions, but interesting nonetheless!

 

[Chasing Embers]

Pipe smoking is too niche to support the cost. Were it not for the cigarette and chew industry, growers wouldn't make enough capital for the products that pipe tobacco manufacturers profit from. From there, aromatic sells keep blenders afloat well enough for their non aromatic blends to be made.