The Smoking Industry Today

Smoking is a major cause of health problems worldwide, and though the Western world is becoming wiser to the dangers of smoking cigarettes and cigars. Smoking bans are becoming more common in public places, particularly where food is served, and in the UK the government are planning to increase the minimum legal age for smokers from 16 to 18 years old.

Historically smoking has contributed massively to the tax revenues of governments worldwide, and even in the face of glaring evidence of the dangers to public health, governments have been reluctant to force measures restricting peoples ability to smoke due to fears of reduced revenue. Even when banning smoking in public places, stark criticism has often been faced for fears that smokers will become more reclusive and the revenues of landlords would decrease. In reality figures show that stopping smoking in public places has helped increase revenues as non-smokers flock back to the places that they had previously avoided, now that they are not surrounded by smokers, smoking.

So with evidence that smoking is on the decrease, smoking is being banned in public places, the legal age for smoking is being reviewed and smoking ages are set to increase, why are the share values of Tobacco companies on the increase? The tobacco industry, has since 1994 been operating under the threat of a legal action suit where lawyers representing smokers had successfully won a $145 bn class action claiming that the tobacco industry had deliberately mislead smokers as to the health risks associated with smoking, a ruling that has recently been overturned in the USA as being excessive. This latest development effectively saves the tobacco firms billions of dollars, and though individual smokers can still sue, the financial impact will be negligible.

This set-back is just one of many the American anti-smoking lobby have faced, with other claims of racketeering being thrown out, helping to bolster their share prices. The UK Smoking industry, in light of the developments in the USA is also avoiding potential massive compensation claims from smokers, so despite all of the anti-smoking lobbies efforts, the situation does not look too grim for the tobacco companies, particularly with high growth areas including India and China where smoking rates are on the increase.

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