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MINDING YOUR
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| RUNNING
WITH THE PACK By Mike Ashley |
It's not easy being
the little guy in an industry dominated by Philip
Morris, RJR Nabisco, Brown & Williamson
Tobacco, Lorillard Tobacco and Liggett Group. But one small Keysville tobacco firm has taken on the big boys -- lock, stock and smoking barrel. |
| S&M Brands was formed in 1993 by Mac
Bailey -- a fourth generation Southside Virginia
tobacco grower -- and his son Steven. |
 artwork by Michael Goodman |
The duo
first marketed their cigarettes in July 1994.
Bailey's wife and sister-in-law began peddling
their wares to local stores from the back of a
car, but sales were not exactly setting fires.
The women sold "about a pickup truck
load" in the first year, according to the
younger Bailey. "It was very minimal. It
started as a hobby." That hobby began with Steven Bailey designing and blending the brand through "trial and error. ... We came up with a blend of tobacco that most people were somewhat happy with," he says. S&M Brands expects to sell about $8 million worth of "Baileys" in 1998. |
| Today, the company has 2,000
customer accounts, and 33 employees operating
from a 33,000-square-foot office, factory and
warehouse. "We need about twice that
size," says Bailey. "We're undergoing
some big-time growing pains." Size matters
in the cigarette industry. The Baileys brand has
10 different extensions -- from king-size and
100-millimeter menthols to light cigarettes. Baileys are found across 70 percent of the commonwealth, and they are also for sale in surrounding states. But you have to search to find them: The big tobacco companies have a financial bear hug on major grocery stores and chain outlets. Smaller companies like S&M Brands can huff and puff all they like, but they won't get in those markets. Bailey says S&M Brands targets small, independent retailers. "The mom-and-pop stores can relate to some of the problems we encounter as a small business," he explains. S&M Brands faces other problems unique to the tobacco industry. Federal laws restricting cigarette advertising on television and radio make market breakthroughs tough. "It's basically a fight ... every day to get into retail locations and to get the product visible to consumers."
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