Tobacco Cellaring Strategy

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conlejm

Lifer
Mar 22, 2014
1,433
8
I have started to stock up on tobaccos that I enjoy smoking. I keep hearing that "the price of tobacco will only go up" and that primarily due to increased taxation. As I look at the pricing of tobacco, it seems obvious to me that buying large quantities of bulk tobacco, when available, is most cost effective, even after the cost of mason jars is factored in. So I have quite a bit of bulk tobacco in mason jars.
But I also buy tins in 50 gram, 100 gram, 2 oz, 8 oz, etc. The reason why I buy the tins is because ... unopened, sealed tins have a better resale value than bulk, I believe. If I buy a 100 gram tin today for $10 here in the USA, and tomorrow we're taxed liked Canada is taxed, that tin is now effectively worth $100. In theory I could re-sell the tin for $80 and make a significant return on my initial investment. I say "in theory" because I'm not sure I could legally re-sell a tin of tobacco. Otherwise, I'm buying the tins because they are sealed for long-lasting shelf life. And specifically for tins, I buy highly-rated, much sought after blends like Dunhill and Escudo. Whereas for bulk I purchase the Stokkebyes and 4noggins and other good-quality bulk brands.
I figure if the Tobaccogeddon hit tomorrow, I'd cut back my consumption to 2 oz per week, or about 6.5 pounds per year. So for example a twenty year reserve I'd need 130 pounds. Easy enough to do with bulk; a lot more costly to do with tins.
But I see some people storing up several hundreds of pounds of tobacco. More than I could conceivably smoke in a lifetime. Do you think that they are doing so for the opportunity to resell? Or are they really smoking ounces and ounces of tobacco per day, and that is just their way of ensuring a lifetime cost-effective supply of their favorite blends? I'm sure the right answer is "yes to both", but I thought I would ask the question and gain some insight into how others plan their cellaring strategy.
Thanks!

 

cmdrmcbragg

Lifer
Jul 29, 2013
1,739
3
I'm not worried about tobaccogeddon/tobaccocalypse. Taxes may go up, but not to the point where everyone is going to quit (like they "want" us to do) nor will the price skyrocket. We are a capitalist society and one that has a relatively healthy appreciation of a (regulated) free market. There is a certain recognition that if taxes get too high the products either end up going to the black market (where there are no taxes to collect for the government, part of the reason why CO and WA legalized marijuana $$$) or the usage stops (which results in less taxes collected).
Taxes may incrementally increase, but they won't skyrocket because at the end of the day for the government it is about revenue collection, not health and safety. Not saying that nobody is concerned for public health, but the excise tax on tobacco products is a nice chunk of cash that you can only carve into so much before the revenue stream is thrown in reverse.

 

cmdrmcbragg

Lifer
Jul 29, 2013
1,739
3
... also I cellar for future use (revisiting blends) and also to age for when the leaf is supposed to be even better than new. I've thought about long term aging because I'm sure someone down the road would pay some coin for a well aged unopened tin of something (only guarantee that it has actually been aged is a sealed original tin).
I probably won't because I value my space and also because it doesn't seem like that worthwhile of an "investment" unless I tucked it in a safety deposit box.
I think @peck keeps his cellar in vault beneath a mountain that has a well payed private army watching around the clock.

 

rmbittner

Lifer
Dec 12, 2012
2,759
1,994
I cellar to smoke for the future, and I only buy/cellar tins.
However, tobacco is currently proving to be an outstanding investment if you're willing to hold onto tins for even as little as 3-5 years. I bought Penzance for $9/tin in 2004/2005. I've sold a few of those tins on eBay for over $60 each. Not every blend is going to be so desirable 3-5 years from now, though, and that's where it's a bit more like playing the stock market. We're also going to be at the mercy of eBay or wherever folks might sell on the Internet in the future. After all, if you're limited to selling aged tins locally, then you likely wouldn't see anything like a 600% return on your investment. If reselling is important to you, then you need an easy way to market your tins nationally and internationally. If that should disappear -- or become overly regulated -- you might be stuck.
So: I say cellar what you enjoy and what you think you'll enjoy 5-50 years from now, making allowances for changing consumption patterns. (You might smoke twice as much after you retire. Or you might slow down if you get a different job, have a child, etc.) And if you need or want to part with some tins for profit down the road, consider that "gravy."
Bob

 

cigrmaster

Lifer
May 26, 2012
20,249
57,280
66
Sarasota Florida
I recently completed my cellar and I now have a 25 year supply smoking 10 pounds a year. I have 28 blends I enjoy and most of it is tins. The only bulks I have are SG Best Brown, FVF and St James, Stonehaven and Solani Silver Flake. I bought my tobacco to smoke, now if I die early, my kids know my tobacco will be worth a large sum of money.
I have a large number of bags of Stonehaven. I paid 30-35 a bag and I have seen them go for 150 on Ebay. 20 years from now who knows how much they will bring, 400? If you buy the right tins or bulk, a huge profit can be made.
I believe that pipe tobacco will be priced like the rest of the world sooner than later. A tin that goes for 9 today will be 25-30. In Florida where I live there is an 85% wholesale tax on pipe tobacco. A 9 tin of SG Best Brown goes for 23 right now at my local guy. I believe internet sales of tobacco will end and we will be subjected to only buying in our states. Look at Wisconsin and Washington states, they don't allow internet sales and the people there are stuck with buying locally. If you have the means, you should stock up now as it will never be cheaper. I have seen price increases from the dealers in the last 2 years. A tin of Mac Baren ODF goes for over 13 right now and I was buying them for 9.95 in December of 2012.

 
Dec 24, 2012
7,195
456
I respectfully disagree with my learned brother cmdrmcbragg. Taxes don't have to go up a penny for most of my southern brothers to feel the pain - rather, that pain could be caused simply by the enforcement of existing taxes.
Imagine if you live in Florida. Assume an internet commerce bill passes that require online vendors to collect state taxes. If SP ships to a customer in Florida, they need to collect the 75% Florida tax. Some states are higher than Florida and some are lower, so the pain may differ, but don't tell me that a 75% price rise for the guy in Florida wouldn't be painful.

 

cmdrmcbragg

Lifer
Jul 29, 2013
1,739
3
Fair point, peck. Luckily we can move to and from states. Many have fled California to come to my state of Colorado because property is cheaper and so are the taxes. Colorado tried to pass an e-commerce tax which was soundly rejected (as it should be). Tax laws vary state to state, I paid more for cigarettes in Texas than I do in Colorado, but TX does not have an income tax, just higher sales tax. Things to consider when relocating or whether to relocate.

 
Dec 24, 2012
7,195
456
Tax on tobacco in CO is 40% of the manufacturer's invoiced price. Margins on tobacco are pretty thin at the online vendors, though I don't know how thin. Let's say on a $10 tin there is 10% profit, so the whole sale price is$9. If a federal internet commerce bill passes, SP will have to charge you $13.60 for that tin. Not outrageous, but still a 36% price increase.

 

cmdrmcbragg

Lifer
Jul 29, 2013
1,739
3
I pray a federal bill never passes. Luckily the last time they tried it failed. Leave the internet alone ya snakes!

 

conlejm

Lifer
Mar 22, 2014
1,433
8
Thanks everyone for your insights. This has given me some food for thought. I will continue to stockpile both tinned and bulk tobacco that I personally enjoy smoking. I just need to find some place to put it all. And not let my wife know. I'll have to put tablecloths over everything and make it look like furniture.

 

igloo

Lifer
Jan 17, 2010
4,083
5
woodlands tx
Back in the day there were these places called Pipe and Tobacco shops . All one had to do was stop by every so often on the way home and pick up a couple tins .But most of those are gone .Online free shipping is a hundred dollar purchase so you round out the order at first it was just a small box ,then two,three,four ...... .I have been cellaring for a few years now .Life has a way of sneaking up on you and it is nice to know I have tobacco to smoke no matter what happens .

 
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