Tobacco Sales Strong in Shaky Economy

Tobacco Sales Strong in Shaky Economy
October 23, 2008

News Summary

Global stock markets may be tanking, but Philip Morris International's profits are up 20 percent and company officials are boasting that the results show the industry can weather even the most brutal economic storm, the Associated Press reported Oct. 22.

"No business in the world is actually recession-proof, but I am convinced that our business is very recession-resilient," said Philip Morris chief financial officer Hermann Waldemer as the company unveiled its third-quarter results.

At Reynolds American, profits fell but still beat expectations as the company raised prices to counter declines in consumption, which company CEO Susan Ivey said "speaks to the resilience of the tobacco business, even in tough economic times."

Analysts said that industry pricing remains "healthy" even as cigarette consumption declines, and major tobacco companies like Reynolds and Philip Morris are seeking to diversify by increasing their stakes in the smokeless-tobacco market.

COMMENTS ON THIS ARTICLE:

Posted by Pete on 24 Oct 08 09:18 AM EDT

How sad. If there's one legal industry that truly deserves to go bankrupt, it must be tobacco. Having witnessed a relative die of lung cancer, it's hard for me to accept that the makers of such an addictive and destructive product continue to thrive -- legally.

Posted by Nikkole on 24 Oct 08 09:42 AM EDT

The really sad thing is that the poorer families are more likely to suffer tobacco addiction and also not have as many resources to access resources for quitting. So, they will make sacrifices in their strained personal household budget to continue to buy their tobacco. As the economy worsens and worsens, tobacco companies continue to make their profits at the expense of struggling families. How sad is that? How sad is it that they boast about their "resilience" during times of recession?

Posted by John French on 24 Oct 08 09:52 AM EDT

Does drug abuse in general increase in economic depression? Will the alcohol, marijuana, heroin, and cocaine industries remain, like tobacco, "healthy" in a world gone broke? I think so.

Posted by Bill Godshall on 24 Oct 08 11:24 AM EDT

Cigarette sales have declined by 4% in the US this year (compared to 2% annual declines since 2000), and cigarette sales will probably decline even more next year if Obama wins (as that will ensure passage of SCHIP legislation that includes a $.69/pack cigarette tax increase).

Posted by Bill Godshall on 24 Oct 08 11:31 AM EDT

Correction to my last posting, as the SCHIP legislation would increase the federal cigarette excise tax by $.61/pack (from $.39 to $1). This will likely result in a retail cigarette price hike of $.80 - $1/pack, which will reduce cigarette consumption by about 8%).

Posted by Jana on 09 Nov 08 04:43 PM EST

Phillip Morris knows how to prey on Americans in bad times. . . stress. Day in and day out the smokers I speak to on the street as a public health practitioner the number one reason will always be stress. With this economy. . . its a wonder their sales aren't up even more.

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