Here's A Kick in the Teeth...

[cavendish]

I decided to give the tobacconist in Kitchener a call a few mins ago to inquire about prices and taxes that retailers have to pay in Ontario. He said he has to give the g'ment close to $72 for every $100 worth of tobacco he buys. He went on a little rant about it and said that the taxes are going to put him out of business and he doesn't understand why they keep raising them if the g'ment makes so much money from tobacco. We chit-chatted a bit more about taxes and politics surrounding tobaccoists and our everchanging economy. He invited me up to take a look around the store for a new pipe or something else I might be interested in. I politley declined and softly said he is too expensive and we ended the call. Great guy to talk to but I feel bad they aren't getting the business they should.

 

[brdavidson]

It is tough, but I feel that even with oppressive taxes there are businesses out there that are thriving. My local B&M has been voted the business of the year for 3 years running by the local Chamber of Commerce. They're customer service is second to none and they have created a very smart marketing profile that keeps them top of mind for their customers. They host events at their shop and do many things to keep people coming back to the store. I've never heard them once complain on the taxes and their business is growing. I think it takes a special kind of commitment to running a business like this in these interesting times.

 

[yazamitaz]

Well from a business standpoint you need to be creative so people think you are the "go to" place. Not sure how things work in Canada but is it just the tobacco that is taxed out the wazzoo or is it all things related as well, such as pipes?
I am not sure how your locals even stay in business up there. I used to have a tobacco license and tax cert and would buy 10-20 boxes of cigars and set up a table with a tent and sell stogies, ashtrays, shirts, and other cigar related stuff at big flea markets on the weekends. It was a pretty good business for a college student and an easy biz. While the wives shopped I would get the men to come over and buy a stick or two. In 18 months the People's Republik of NJ changed the tax rate from 6-12-24-48%. I had to almost double my prices to just break even and you can figure out what happened there.
I have no idea how your guys have to pay 75% and maintain any level of profitability. I assume the service has to be nothing less than outstanding to attract and keep business. I feel bad for you guys. It almost takes away the free market concept. In time only one or two stores will make it and then they can dictate prices and product if other dealers don't ship up north.

 

[brdavidson]

Roth the prices for anything other than tobacco products are comparable, but they are a bit more. For example the Brigham I just ordered was $93 after the 15% discount offered by the shop. Online the same pipe generally goes for around $85 out of the States, so the regular price is about $20 more expensive. It used to be the weak Canadian dollar that made things more expensive up here, but now even though the Cdn $ is on par essentially with the green back, our prices haven't improved. The kicker is that in Ontario there is still a 13% Harmonized Sales Tax on absolutely anything you buy so even when comparable to US online prices we still have to deal with taxes.
Dan, in Canada everything is taxed out the wazzoo! Its a way of life for us, often lead by the battle cry of "yes but we have universal health care"! So that's often what gets cited for the crazy taxes we pay. I can't complain, my family is receiving the benefits of the taxes we pay to health care right now as my wife has been in the hospital for over a year. Her health bills would have been pushing $3-5 million right now so I for one am understanding of our tax system. It's something we just get used to, I sort of feel like its all relative. I pay way more for tobacco but I don't pay anything to get my appendix out. One isn't more right than the other.
I also agree that the only way to survive in the business is to provide absolutely top notch service, and that's what my local guys do. So I don't mind occasionally spending $25 for a tin to keep them in business and I buy most of my pipes and all of my accessories from them.

 

[alancairns]

I too buy an occasional tin at my B&M, just to encourage them. Bit it is hard - a tin of Solani VA/PER costs $32 plus 12% sales tax. I can get the same tin online for $11. On the other hand, the costs of pipes and accessories is comparable to online prices, so I prefer to buy pipes there. I feel it is important to see the actual pipe before buying, and to feel it in the hand.
Alan

 

[brdavidson]

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It appears I scared everyone off with my comments, not my intent. Just as an example of supporting my local shop, I stopped in to get a few supplies and ended up walking out with a cob and a pouch of PA that is about 20 years old. The guys ended going to they're mainsupplier and scored 10 pouches of PA that they hadnt seen before. The duty stickers are a mini um of 20 yrs old. This is why you need to support local, you never know what you're going to find at your local shop!

 

[cavendish]

He's a 45min drive away. I'd rather save the gas $ for online shipping fees :D

 

[derrickyoung]

I too am in Ontario. Yes we have our 13% sales tax. But with shipping from the USA to Canada that can be a wash. A 50.00 order of from one online retailer is 15.00 shipping from another it is 30.00 both being more than sales tax. Yes the tobacco tax is extortion and I tend to order my tobacco out of the USA but I try and hit my local B&M (1.5 hour drive each way)and buy something. A few accessories, a pipe or a few bundles of pipe cleaners. We are the first to complain about our B&Ms closing at a alarming rate yet we all try to do anything and everything to make sure that do not succeed.
EDIT: Oh an you never what you are going to see while there. I found Tins of 2006 Dunhill Light Flake sitting on the self collecting Dust. He cut me a break on the price as he has been sitting on them so long. Still more than buying a new tin of Dunhill Flake but I looked at it as paying for age.

 

[lazybugger]

Guys i feel your pain , the taxes here on tobacco are super high and almost every single B&M in NZ has closed ...there are a few around but the price of tobacco is so high i cannot blame people for not buying here from them. There was once a stunning Cigar shop in Auckland that was amazing to walk into ... huge walk in humidors and smaller display ones everywhere and thousands of cigars ..... the sights and smells were amazing , now when you walk in there are a few "display" humidors all covered in cloths ... u cannot see a single cigar and you can hardly detect that fantastic tobacco smell . All that you can really see are the pipes and smoking accesories. The pipe tobacco is found in ONE drawer and as you i have said many times currently costs $90 for a 50g tin. We go to this place and look over the pipes buy some supplies like cleaners and have a chat maybe even a nice bottle of whiskey ( which is all on display)but who can afford tobacco at those prices. I feel sorry for buisness owners but even they understand and have had to adapt , this one has been rather successfull on going for the upper market twist selling quality over quantity but they will happily admit they understand people ordering online as cigars and pipe tobacco are simple to expensive for most of us here to enjoy otherwise. They are concerned with the lack of quality and scams that are happening to people tho and i think we are very lucky to have such good sponsors and an open community here .

At the end of the day tho the taxes are not going to go down or go away no matter where in the world you are ... they are just going to keep going up , even if you are paying heaps now its only going to get alot worse in the next few years. I read a post a couple weeks ago here about tobacco being an investment and i could not agree more ... stock up now ... ensure you have an awesome supply , and even if you end up quitting the hobby you will make your money back and could even gain a wee bit

 

[ugh457]

I think the principle that could be applied here is support your local vendor...of anything. Sometimes the extra is for the service or friendship.

 

[pruss]

Love the discussion here. Brian and others have done a better job than I could sharing our tobacco tax burden and the relative pain threshold/social benefits of the same; so I won't go there. Instead, I thought it might be interesting to discuss the retail side of this equation.
There are many retail sectors which have become margin challenged due to taxes on their core products. Tobacco retail and gas retail are the two that most obviously come to mind. In any retail environment the store owner/manager has to make a decision around what they are going to sell, and how they are going to sell it, to make whatever revenue and return they'll need to stay in business.
In the retail gas sector, gas stations converted from garage/filling stations --> gas stations/convenience stores --> convenience stores/gas stations/coffee shops --> convenience stores/coffee shops/car washes/gas bars... you get the drift. Why the change in focus? Because the retailer's return on gas sales dropped; dropped to such a degree where the only way for a retailer to grow return and grow sales was to diversify the product offering.
What does this mean to the B&M tobacconist? They need to specialize and/or diversify within their specialty.
Brian hit the nail on the head with our local B&M located East of Toronto. These folks are growing their foot traffic through a strong marketing and outreach program through social media, strong local presence, word of mouth and through the hosting of special events.
They've also diversified their product offering, they don't just sell tobacco, they do sell a wide variety of products designed to support pipe and cigar smoking: ashtrays, lighters, lampes, shaving kits, walking sticks, pipes, pipe cleaning equipment, humidors... the margins on these products aren't impacted by prohibitive taxes on tobacco. They're able to generate returns on these products that they can't on tobacco.
Not every tobacco retailer can do this... some specialize like the folks at Peretti's in Boston. This place is truly _still_ a tobacconist first. Do they sell other items designed to support tobacco consumers? Yes. But not nearly to the same degree as folks like our B&M here. Why? Because they have an established clientele that is driving enough volume in tobacco and cigar sales to make their margins, or, because the margins are still healthy on these products.
What's the answer for the B&M in Kitchener? Diversify, and make larger margins on related products. Market better, and re-engage a broader community. Specialize, although it sounds like this may be the route that they've gone down... with a declining population of smokers, and increasing pressure on margins I'm afraid the day of a true specialist tobacconist in Ontario is done.
-- Pat

 

[captainpeg]

Though this approach isn't appropriate or accessible for all B&M's, I do know of one tobacconist here in Ct. that has survived by the "expansion" principle, moving the character of the shop to something that will allow it to survive. This shop is the "Owl Shop" tobacconist in New Haven, Ct.

The Owl has been in business for many, many years. First started by the St. John family I believe. The sister shop to the one in Mass. at one time, they are separate entities and have been for years. The Owl was one of the "Mecca's" of smoking for a long time. Their clientele was treated to a shop with thousands of pipes and cigars, and a list of house blends that was a mile long. Celebrities and stars, along with people from every walk of life frequented the shop, and the Owl mailed tons of tobacco to it's regular customers all over the world.

Times changed, ownership has changed (maybe 10-12 years ago), and the income from what was a thriving business declined with fewer pipe and cigar smokers. The new owners had a vision of what they wanted to do.

Today the Owl Shop is no longer the home of thousands of pipes. There are the house brand pipes, no longer made by the once prestigious brands that once manufactured them, but decent pipes. There are a few cursory Jacopo's, maybe a Mastro or 2. The dozens of tobacco brands that once lined countless shelves are gone, and now you can find only Dunhill tinned, and some McClelland. The house blends that once numbered in the range of 60 or so is now down to about 12. There are plenty of cigars still, and they do a good business in them, too.

BUT...

They scaled down their tobacco business and slowly expanded their side businesses. They now offer a full coffee bar with full size, hand drawn espresso, cappucino, and other coffee/teas. They have attractive "snacks" available, such as biscotti. They have cafe tables on the sidewalk, a TV over the new bar (full liquor license now), lots of seating at the bar and at a few tables. A lounge area set off from the bar area where one can sit in a comfortable chair and smoke one's pipe or cigar, or enjoy their drink. They are thriving!

I do miss the old "Owl Shop" and talking with Mrs. St.John, and the staff are all gone except Joe, who is a great fella and a source of knowledge regarding pipes, tobaccos, and cigars. He's been there since the 60's, and I will hate to see him retire. I miss the character of the old shop, but now accept the new one, and I understand that without the changes they most likely would not have endured. As I sit there now I find myself feeling not only the melancholy of the loss, but also some bit of pleasure that the shop is still alive, and looking like it will serve up pipes, tobacco, cigars, drinks, coffee, and a good time to folks for many years to come. A trade off, sure, but one that has given the shop a new lease on life and kept it viable in the era of the war on tobacco...

Hopefully the B&M's can survive by diversifying and other strategies so that the new generation will still have the opportunity to experience what a real tobacconist visit can be, and have memories that will last a lifetime.

Randy