By Bob Ashley

Nashville tobacco wholesaler Music City Marketing Inc., which began in 1975 as a distributor of incense and small gift items, reached near the pinnacle of the tobacco industry earlier this year when it was named exclusive distributor of Dunhill pipes and tobacco accessories.

"Dunhill is the most respected name in the smoking world when it comes to pipes," said Music City president J.T. Thompson. "There's nothing finer. People judge everything else against a Dunhill."

London-based Alfred Dunhill Pipes Ltd. in April named Music City the exclusive distributor in the United States of Dunhill pipes, lighters, and smokers' accessories after Alfred Dunhill Americas LLC closed all but one of its 10 stores in North America. Dunhill's flagship store in New York City remained open.

"With the demise of their stores, there was no need for them to have their own distribution," J.T. Thompson said.

The acquisition of the Dunhill account continues a strategic trend by Music City to offer exclusive high-end pipe brands to smoke shops throughout the country. Music City also is the exclusive U.S. distributor of other pipes lines that include Stanwell, Butz-Choquin, Charatan, Winslow, Falcon, and Servie Meerschaum.

Additionally, Music City will preview Dutch-made, normal bore Big Ben pipes that will retail for between $70 and $300 for the first time at the 2003 Retail Tobacco Dealers Association (RTDA) trade show in Nashville, where Music City has doubled its booth space and where Dunhill will be represented with a wholesale presence for the first time in several years.

"The focus since I've been here has been to promote exclusives," said J.T. Thompson, the former news director of Nashville NBC affiliate WSMU who owner Bill Nunnelly appointed president of Music City and UPtown's Smoke Shop Inc., Music City's sister retail shop in Nashville, in June 2002.

"When you look at the marketing or promotion dollar, it doesn't do any good for you to market things that other people are distributing," explains Thompson. "Our focus has been to acquire as many exclusive pipe brands as possible. Promoting and marketing something that is exclusive will let us make the biggest impact."

Varied Merchandise Line

In addition of Dunhill pipes, the Alfred Duhnill range includes humidors, cutters, leather accessories, lighters, and supplies.

While Music City is known for its exclusive wholesale pipe selection, the company also distributes other pipe and accessory lines and C.A.O, AVO, and Davidoff's Griffins and Private Stock cigars in addition to non-branded machine made cigars - including the icon "It's A Boy" and "It's a Girl" cigars - produced by Finck Cigar Co. Inc., San Antonio, Texas.

"There are two very separate departments - tobacco and gifts," said Thompson.

On the gift side, Music city also distributes full lines of smoking accessories from Dunhill, Klaus Ueberholz Leather, Yellow-Bole, Calabresi, and Zippo, as well as incense and burners and medium-priced novelties such as lava lamps, puzzles, leopard-design wheel covers, and temporary tattoos.

Among Music City's more popular pipes is the so-called "Missouri Meerschaum" - more commonly known as a corn cob pipe. "It's disposable," Thompson said. "You smoke it three or four times and get a new one. It's more mass market than most of our pipe products."

Thompson came to Music City as a satisfied retail customer at UPtown's. "I purchased a Dunhill lighter in Hong Kong and it needed repair, so I took it into the shop," he recalls. "I was producing the 10 p.m. newscast at that time and had the mornings free. I was interested in learning so they hired me to work part time." That was in 1998. He joined Music City full time as executive vice president in February 2001 and 17 months later became president of both Market City and UPtown's, which employ 37 people between them.

Dunhill's standard line consists of 22 models in eight different finishes with an average retail price point of about $600. Thompson is particularly intrigued by Dunhill's 500-piece Thames, a limited edition released recently that contains a small piece of wood in the band and is accompanied by a special tamper. The wood is from the London remnants of an oak pier on the Thames River built by the Romans and carbon dated to sometime between 186 B.C. and 63 A.D.

Music City recently published its first catalog of pipes, cigars, tobacco, and accessories - a 184-page book that, with a separate wholesale price sheet, is meant to be shared with retail customers. "It becomes a selling tool for a retailer, and that way the catalog also is not dated," Thompson said.

Since acquiring the Dunhill account, Music City also produced an 18-page catalog of Dunhill products - the first wholesale Dunhill catalog in the U.S. - and shipped it to Music City's 59 Dunhill accounts. "Our short term goal is to service Dunhill's existing accounts like they've never been serviced before," Thompson says.

Thompson said it has been agreed between Music City and Alfred Dunhill Pipes Ltd., that the Dunhill pipe retail roster will not exceed 100 smoke shops. Retailers will be selected, he said, on the basis of their retail profile with the concurrence of Dunhill executives in London. "It remains in Dunhill's interest to see who sells Dunhill pipes," Thompson says. "That's the way they protect the brand."

Thompson said more than a dozen current Music City customers have already inquired about becoming Dunhill retailers.

Built from Scratch

Music City Marketing officials pictured from left: J.T. Thompson, president; Aaron Sissom, vice president; Robert Doherty, purchasing manager.

For Music City Marketing owner Bob Nunnelly, the company's rise in prominence has spanned four decades.

The thought of a career as a U.S. Army Ranger ended for Nunnelly when he injured his knee amidst tours in Vietnam and Germany. "After the war stopped there was an overabundance of workers," he recalled. There weren't any jobs available so I tried my hand at building some houses, and got caught up with the high interest rates."

Nunnelly formed Music City in 1975, primarily to market incense under license to the Big K retail store chain which has since gone out of business.

"I had an interest in pipes all my life," Nunnelly says. "It was a natural for me. I started going to tobacco shows, and that's now become the focus."

Nunnelly began phasing in pipes and tobacco products in the early 1980s, and in 1985 opened Uptown's Smoke Shop.

Although also the owner of a retail store, Nunnelly says it an important business principal that the retail and wholesale sides of the business are separate from each other. "We aren't out to undercut anyone at UPtown's," he says. "We are very concerned about that. We will not step on our retailers' toes. We are not out to steal their customers."

Nunnelly's assessment of the tobacco industry is positive despite the irony that "there are people constantly trying to put us out of business."

"It's a healthy business," Nunnelly says. "There will always be smokers. A lot of drugstores are getting out of the business, and the discount cigarette stores that have popped up don't sell at the finer end. Those people are coming to us."

Thompson sees a relationship between the popularity of flavored cigars - Music City distributes C.A.O.'s flavored line - and aromatic pipe tobaccos. "Aromatic flavored pipe tobacco is in part driving the trend in flavored cigars," he says. "And over the last two and a half years we've sold more aromatic tobaccos than traditional pipe tobaccos. The aromatics have the benefit of a great smell, compared to a traditional cigar, and you have something that tastes much better."

Thompson says he also sees two different trends in the retail pipe market. "They are two trends that are working opposite of each other," said Thompson . "Many people who smoke pipes smoke them at home. They want a larger pipe - something they can take time and reflect with. For people in the workplace who have to go outside to smoke, they want a smaller vest pipe that they can carry with them."

Additionally, pipe collecting is on the increase, in part fueled by members of the Baby Boom and Gen X generations inheriting heirloom pipes from their fathers and grandfathers. "On the retail side, there is a huge business in estate pipes," said Thompson. "There is something nostalgic about smoking an aged pipe.

"A pipe smoker is a collector by nature. If he is a 'shape' person, he might want a bulldog from a number of manufacturers. If he is a Stanwell man, he'll want to get a variety of what they offer."

Among Music City exclusives:Big Ben #252 and and the Stanwell Zebrano Smooth.

While Music City and UPtown's are operated separately, Thompson said Music City takes note of what's going on in the retail marketplace. "The retail store is a great barometer for us," he adds. "It is a window into what is happening in the smoking world. The retail demographic is skewing much younger for pipe smokers than it has in years past. That plays, in many respects, to the economic situation our country is in. You can make a nominal investment in a $40 or $60 pipe, and when you smoke it you still have the pipe, as opposed to a cigar or cigarette. In addition, pipe tobacco is relatively inexpensive." Market City has exclusive distribution for Petersen-Sorensen, a German pipe-tobacco brand, and it also wholesales Peter Stokkebye, Orlik, Skandinavik; Bali Shag RYO, and other brands. Music City operates from a 46,000-square-foot headquarters and warehouse in an industrial park on Nashville west side. Distribution of product is primarily through UPS. "We are centrally located so we can have product in the 48 states within 48 hours," Thompson said. "Our goal is to be able to supply 95% of everything that a smoke shop needs. Instead of a distributor for that, and a distributor for something else, we will give them everything that they need."

Thompson said Music City is careful to hire sales people who know the retail smoke shop market. "The sales staff, without exception, has tobacco shop retail experience," said Thompson. "They understand when they are talking to a retailer what it's like working in a retail store. Our sales staff truly are tobacconists who use the products they sell - they smoke pipes and cigars and cigarettes. You can't sell if you don't know the product."

Music City Marketing, Inc., 477-B McNally Drive, Nashville, TN 37211, Toll-free: (800) 251-3016, Tel: (615) 331-8041, Fax: (615) 832-0785, Web: www.musiccitymarketing.com.