The Rise and Fall of Industries - Credit Suisse
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The tobacco industry sells about six trillion cigarettes each year. The industry is highly concentrated with a handful of firms controlling the majority of the global tobacco market.
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China is the biggest market based on total cigarettes consumed. However the industry in China is state-owned by the monopolistic China National Tobacco Company. Philip Morris International is US-based and BAT and Imperial Tobacco are based in the UK.
The major American players in the U. After China, the ten countries that consume the largest number of cigarettes are Russia, the U. The relationship between volume of cigarettes sold and volume of profits shipped are not consistent across markets.
Altria sells its products in the US market while PHI sells them overseas. With 75, employees Philip Morris owns seven of the leading 15 global brands.
British American Tobacco BTI is the second largest tobacco company in the world based on unit volume. Some of the top brands owned by BAT include Dunhill, Pall Mall, Lucky Strike, Viceroy and Vogue.
BAT also holds substantial stakes in Reynolds American RAI and Indian Tobacco Company ITC of India. In terms of ownership, more than two-fifth of the shares are held by just shareholders including the Canada Pension Plan Investment board. UK-based Imperial Tobacco ITYBY also sells the majority of cigarettes outside of UK. Altria MO , formerly known as Philip Morris, is the largest cigarette maker in the US.
Reynolds America RAI ranks the second followed by Lorriard LO. Stockholm, Sweden-based Swedish Match SMWAY is involved in the production and sales of snuff and snus, chewing tobacco, cigars and pipe tobacco. In addition to shareholders, one of the biggest beneficiaries of sales of tobacco are the governments of various countries. Cigarette smoking is declining in the developed world due to unprecedented bans on cigarette usage in public places, restrictions on advertising, extremely high taxes, health warnings, limitations on retail display and other factors.
In addition, the percentage of population who are smokers is reducing. As a result consumers in developed countries are switching to lower-priced offerings and alternatives to cigarettes such as smokeless tobacco, snus, etc. While sales is declining in developed countries it is booming in emerging markets. Tobacco makers are aggressively marketing in those markets in order to compensate for the declining sales in rich countries.
However even in emerging markets governments are proposing tougher regulations governing the sales and marketing of tobacco products. From an article in the New York Times:. This year, Philip Morris International sued the government of Uruguay, saying its tobacco regulations were excessive. World Health Organization officials say the suit represents an effort by the industry to intimidate the country, as well as other nations attending the conference, that are considering strict marketing requirements for tobacco.
The lawsuit against Uruguay, filed at a World Bank affiliate in Washington, seeks unspecified damages for lost profits.
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Douglas Bettcher, head of the W. Cigarette companies are aggressively recruiting new customers in developing nations, Dr. Bettcher said, to replace those who are quitting or dying in the United States and Europe, where smoking rates have fallen precipitously.
Worldwide cigarette sales are rising 2 percent a year. But the number of countries adopting tougher rules, as well as the global treaty, underscore the breadth of the battleground between tobacco and public health interests in legal and political arenas from Latin America to Africa to Asia. The cigarette companies work together to fight some strict policies and go their separate ways on others.
For instance, Philip Morris USA, a division of Altria Group , helped negotiate and supported the anti-smoking legislation passed by Congress last year and did not join a lawsuit filed by R.
Reynolds, Lorillard and other tobacco companies against the Food and Drug Administration. The pictures depict more grotesque health effects than the smaller labels recommended in the United States, including one showing a fetus with the warning that smoking can cause spontaneous abortion. In Australia, where the government announced a plan that would require cigarettes to be in plain brown or white packaging to make them less attractive to buyers, a Philip Morris official directed an opposition media campaign during the federal elections last summer, according to documents obtained by an Australian television program , and later obtained by The New York Times.
Hence similar to other sectors tobacco multinationals are increasingly dependent on emerging markets to maintain earnings.
As income levels and standard of living increases in EM countries, sales of tobacco products may increase further. In some ways a bet on tobacco stocks can be considered as a bet on emerging markets. Euromonitor International, The New York Times, The Wall Street Journal, Company sites, WHO, The Global Tobacco Economy by Physicians for a Smoke-Free Canada. Tobacco Industry Set to Grow In Emerging Markets , Credit Suisse.
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Subscribe in a reader. Home Foreign ADRs List Downloads Indices ETF Lists About Us Education Stock Lists Dividend History — US Stocks. A Review of the Global Tobacco Industry Posted by David on 14 November , 8: The Top tobacco growing countries are shown in the graphic below: Current and Future State of the industry: From an article in the New York Times: In Ireland and Norway, Philip Morris subsidiaries are suing over prohibitions on store displays.
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November 17, at 9: February 22, at 1: July 24, at 8: Interesting overview of the industry. Where can I fins full references? July 25, at 4: Emelie You can check on the links within the article for reference. April 9, at 7: April 22, at 6: Leave a Reply Cancel reply Your email address will not be published.
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