Altria: Investors Need To Take Regulation Plans Seriously
Apr. 24, 2021 1:45 AM ETAltria Group, Inc. (MO)BUDBUDFFPM94 Comments39 Likes
Stefan Redlich profile picture.
Stefan Redlich
22.34K Followers
Growth, Dividend Investing, Long-Term Horizon, Value
Contributor Since 2015
I am working as a Business Analyst and Data Engineer in Germany and have started to build up a portfolio focused on Dividend Growth, both on the high and low-end yield spectrum. Primary focus is on Blue Chips with long-reaching dividend track records. I have been investing for 2 years and have been standing on the sidelines for way too long before.
I love developing spreadsheets in Google and Excel to analyze financial performance and integrate these two sources with each other!
Happy to connect on the various channels!
Summary
Tobacco stocks have recently come under fire amid renewed fears about tougher regulation in the shape of reduced nicotine levels and higher cigarette taxes.
Investors need to take regulation plans seriously.
Looking at current research on tobacco regulation and lower nicotine levels helps understand what possible directions regulators may take.
A brief digression to New Zealand provides an idea about what potential regulatory measures could be taken in the not so near future.
Ultimately, Altria is a healthy business with an attractive dividend that is permanently confronted with regulatory risk and sudden stock price declines.
Philip Morris Changes Name To Altria
Photo by Mario Tama/Getty Images News via Getty Images
Ever since the U.S. tobacco industry was shocked by the famous FDA announcement in August 2017, tobacco stocks have struggled.
After a massive COVID-19 crash which has brought the stock price of America's largest cigarette manufacturer Altria (NYSE:MO) to a multi-decade low, stocks have recovered tremendously.
Chart
Data by YCharts
Altria was recently hitting fresh 52-week highs, and its last three earnings releases have all shown promising revenue growth and consistently strong earnings. This strong rally was suddenly interrupted when news emerged that the Biden Administration is picking up on the FDA announcement more than 3 years ago and potentially moving forward with so-called nicotine reduction plans.
Altria's stock alone shed over $10B in market cap, and while there is no confirmation nor denial of any such plans, investors should take that opportunity to truly understand how quickly their investment could go up in peril.
There is nothing new about reducing nicotine in cigarettes, but it is still a key risk to the tobacco industry. I want to shed some light on the reasoning for such a move, its potential impact on smoking and what drastic measures other countries are taking to combat smoking by using New Zealand as an example. Additionally, we will comment on how the tobacco industry might respond to that and how the long-term vision towards risk-reduced products can come into play. Ultimately, investors will then need to weigh the pros and cons to decide if the level of risk is deemed acceptable.
Nicotine is the key addictive in tobacco
This is nothing new. As early as 1988, the U.S. Department of Health and Human Services concluded:
Nicotine is the drug in tobacco that causes addiction
This conclusion was even reached earlier implicitly by the tobacco industry on its own when in 1972 a Philip Morris (NYSE:PM) researcher found:
No one has ever become a cigarette smoker by smoking cigarettes without nicotine.
Source: Industry Documents Library - Motives and Incentives in Cigarette Smoking
As a result, it is only logical to assume that by reducing nicotine levels in tobacco, it can result in the following:
Reduction in smoking acquisition and progression to addiction
Increase cessation and reduce relapse
Reduction in smoking prevalence
A large-scale clinical trial with 840 participants (see New England Journal of Medicine: "Randomized trial of reduced-nicotine standards for cigarettes") which was conducted in the US between 2013 to 2014 featured very low nicotine content (VLNC) cigarettes and found that those smoking cigarettes with less nicotine overall smoked less, reduced cravings and reduced exposure and dependence to nicotine:
In this 6-week study, participants assigned to cigarettes with 2.4 mg of nicotine or less per gram smoked 23 to 30% fewer cigarettes per day at week 6 than did participants assigned to cigarettes with 15.8 mg per gram. Reduced-nicotine cigarettes led to a reduction in nicotine exposure.
Source: New England Journal of Medicine
This is a strong finding, but it needs to be interpreted with caution given the setup of the study. Participants were allowed to use nonstudy cigarettes, they were provided free cigarettes and the duration was only 6 weeks. As a result, there was a call for a longer trial, but based on my research, I couldn't verify if the study was really completed by now and if so what findings there were.
Regardless of that, the academic research and studies on reducing nicotine content in cigarettes is very broad and all reaches similar conclusions.
For instance, a comprehensive report from the World Organization titled "Global Nicotine Reduction Strategy" concludes that by setting maximum allowable nicotine content levels for all cigarettes it could have the following effects:
Reduce acquisition of smoking and progression to addiction
Reduce the prevalence of smoking in a proportion of addicted smokers as a result of behavioral extinction
Increase the rate of quitting and reduce the number of smokers who relapse
Increase the development, availability and use of alternative forms of nicotine, e.g. smokeless tobacco product
On top of that, there is broad consensus across several studies which counters the argument that reduced nicotine levels will lead to undesired behavioral changes such as compensation via increasing smoking consumption or deeper inhaling. This is known as "compensatory smoking," which is more theoretical in nature as the data does not suggest it is there. However, studies are only as good as they are set up and results are debatable. For instance, a very broad research document from Berman and Glasser conducted a systematic review of 78 research articles that relate to nicotine reduction. They found that generally "compensatory smoking" is not of statistical significance but they annotate this finding as follows:
For example, given the prevalence of dual use of e-cigarettes and cigarettes, it is important to explore whether a nicotine product standard would promote complete transitions to e-cigarette use (or the use of other alternative nicotine products) or instead lead to prolonged dual use alongside VLNC.
Source: Nicotine & Tobacco Research Volume 21, Micah L Berman, Allison M Glasser
They go even further and conclude:
...our gap analysis suggests that there is a need for studies that better reflect the use and availability of a wide range of tobacco/nicotine products and the potential for dual- or multi-product use.
Source: Nicotine & Tobacco Research Volume 21, Micah L Berman, Allison M Glasser
Overall, what it shows is that although we know that the FDA is keen on reducing nicotine levels in cigarettes at this stage there are crucial research gaps and the FDA "must determine when the available research is sufficient to support moving forward."
That said it does not mean that we cannot get an idea of what measures the FDA might take. A comprehensive paper from the American Medical Association from the summer of 2018 on the subject of a low nicotine product standard addresses a long list of key topics that are likely to be considered:
Public Health Impact of Reducing Nicotine in Combustible Tobacco Products
Implementation Considerations
Technical Availability
Possible Countervailing Effects
This type of research is very likely to inform FDA decision making and goes into great detail regarding maximum nicotine levels as well as how to implement it (a sudden reduction in nicotine levels vs. a step approach). Back then that paper was directly submitted to the FDA and its former Commissioner Scott Gottlieb on July 16, 2018 just a year after news about the famous FDA announcement broke.
Naturally, all that research and recommendations is just one side of the argument and the tobacco industry is expected to lobby as much as possible to prevent any drastic short-term changes particularly when important research gaps remain. All this comes at a time when overall smoking consumption is trending down and big tobacco is primarily investing into its reduced risk products which for Altria is primarily iQOS.
The tobacco industry has been fighting with regulation and litigation for decades and despite much tougher regulation, higher taxes, higher prices, less advertisement and less smokers Altria has continued to deliver great returns and continued its very long streak of consecutive dividend increases (51 years and counting). Altria's response to that recent rumor was as follows:
Any action that the FDA takes must be based on science and evidence and must consider the real-world consequences of such actions, including the growth of an illicit market and the impact on hundreds of thousands of jobs from the farm to local stores across the country.
Source: cnbc.com
While the Biden Administration may soon announce any more concrete plans on reducing nicotine levels than the very broad announcement by the FDA back in 2017, I do not expect any imminent threat to Altria's business and instead anticipate a long-term roadmap, extensive lobbying and long-lasting legal battles before any such standard will be implemented. Still, it is not a question if that happens but rather when.
The Tobacco Endgame
While investors are already and understandably concerned about reduced nicotine levels there are ideas swirling around which are significantly more dramatic. This type of thinking is envisioning a completely tobacco-free future and can commonly be grouped together into what is known as the tobacco "endgame" concept.
The tobacco endgame concept suggests moving beyond tobacco control (which assumes the continued presence of tobacco as a common, widely-available, ordinary consumer product) toward a tobacco-free future wherein commercial tobacco products would be phased out or their use and availability significantly restricted
Source: BMJ Journals - Tobacco Control: "The tobacco endgame: a qualitative review and synthesis"
Altria Can Handle Changing Nicotine Levels, It Could Be A Growth Play
4 Reasons Altria Is A 7.3% Yield Retirees Can Trust
Proposed Nicotine Reduction Creates Dire Risk For Altria
Without going into any further detail as the next step in the U.S. tobacco industry is unlikely to come even close to that, I want to list a few key points from that concept to illustrate how such a direction could look like and subsequently outline how far New Zealand already is on its journey towards that vision.
Generally, the end game concept can be clustered into 4 different parts:
Product-focused endgame proposals
User-focused endgame proposals
Market/supply-focused endgame proposals
Institutional structure-focused endgame proposals
As regards #1 this basically comprises strict regulation of nicotine levels to make cigarettes less addictive or non-addictive over a longer time frame of 10-15 years or significantly more abruptly. It also explores the idea to make cigarettes less appealing in terms of taste (e.g. banning menthol cigarettes) as well as usability meaning changing the composition so that they are harder to inhale.
While these product-focused proposals are more or less in line with proposed legislation by the FDA some years ago, user-focused endgame proposals go far beyond that. This includes regulation like a smoker's license whereby only those with a license, that is renewable annually, will be legally allowed to purchase tobacco from licensed retailers. At the same time the legal smoking age could be raised incrementally year after year. Furthermore, as already proposed by an Oregon lawmaker in 2013, tobacco could be classified as a controlled substance and thereby only available by prescription. Even more drastic than this would be to restrict sales based on the year of birth. That means that all citizens born after a certain cut-off year would be completely banned from legally purchasing tobacco ever and thereby ultimately creating forced "tobacco free generations".
The other two pillars of that endgame concept feature proposals ranging from display bans, price controls, banning combustibles entirely to even a government takeover of tobacco companies. I am not going to dive deeper into any of these as it calls for a large extent of speculation compared to the current situation in the US tobacco industry. And obviously by banning tobacco or only selectively allowing it, it could likely lead to a giant black market similar to opioids and other drugs. Thus, before such drastic steps are taken in a country like the US a lot would have to happen which is unlikely to get even remotely priced into current stock prices.
That said, while it may not be realistic for the US anytime soon, there is one developed nation in the world which is leading the race towards a smokefree future - New Zealand. New Zealand, which already has the second highest cigarette prices in the world, recently proposed an Action Plan for the Smokefree Aotearoa 2025 goal whereby Aotearoa simply is the Maori name for New Zealand.
Smokefree Aotearoa New Zealand 2025 logo.Source: New Zealand Ministry of Health
That plan includes three main ideas:
Reduce retail availability
Reduce nicotine in smoked tobacco products to very low levels
Introduce a smoke-free generation policy
Under the first main theme the ubiquitous availability of an addictive substance like tobacco would be greatly reduced by for instance only selling tobacco products in specialist R18 stores and pharmacies. New Zealand has around 6,000 retail stores where tobacco is sold and under that proposal the number could be slashed by up to 95% down to just 300 stores. Similar initiatives are already underway e.g. in the Netherlands where tobacco sales in supermarkets and gas stations will end by 2022.
As far as the reduction of nicotine levels is concerned this is essentially in-line with what has been outlined above and it even references the FDA's announcement of 2018 as setting a strong international precedent for such a measure.
Finally, the introduction of a smokefree generation policy comes closest to what was described under the endgame concept. In the document itself it says:
A smokefree generation policy would prohibit the sale, and the supply in a public place, of smoked tobacco products to new cohorts from a specified date. For example, if legislation commenced on 1 January 2022, then people younger than 18 years at that time or those born after 1 January 2004 would never be able to lawfully be sold smoked tobacco products
Source: Smokefree Aoetearoa 2015 Action Plan
At this stage this is just a proposal brought forward by the New Zealand Ministry of Health which is open for a discussion and accepting submissions until May 31, 2021. So even if it may not have such an imminent timeline as regards the idea of a smokefree generation, it appears very likely that New Zealand will be the first country to turn such a measure into law. Also, it provides a glimpse of what could be in store for the rest of the world as I fully expect other countries to follow in the future, just as they have done with raising cigarette prices even though New Zealand and its neighbor Australia still have by far the highest cigarette prices in the world.
Source: statista.com
What does all this mean for Altria's investors?
The short answer is: It depends. The long answer is: It depends.
Today, Altria's business is doing fine and the last couple of earnings reports have mostly featured solid revenue growth and stable earnings. Altria's last earnings report was a bit soft on profits, but cigarette product volumes showed steady growth of 3.1%, and Altria expects another solid year as it works towards its long-term 10-year vision.
Tobacco Space Estimated Volumes
Source: Altria Q4/2020 Earnings Slides
It is actually quite impressive that given the heat the tobacco sector is feeling both in terms of regulation as well as public sentiment overall tobacco volumes have only declined by a CAGR of -1% over the last 6 years. One main reason for that somewhat tepid decline is certainly the rise of E-Vapor which helped cushion the declines in traditional combustible volumes. The other main reason is simply the fact cigarettes are a highly inelastic product and Altria with its Marlboro flagship brand continues to dominate with its retail share of around 43%.
This reliable cash cow is essential for Altria in order to transition adult smoker to a non-combustible future which is the core of its 10-year vision.
Source: Altria 10-Year Vision
Altria is making big investments into this vision by growing its non-combustible portfolio and the current expansion plans for on! and iQOS. As far as on! is concerned, Altria has increased the retail store count by around nine times over the last 1.5 years from 9,000 in Q3 2019 to 56,000 in Q3 2020 and 78,000 in Q4 2020. At the same time the cumulative retail share of on! has increased from 1.5% to 2.4%.
Moving on to IQOS, there were some important developments in the quarter as well. After many years, the FDA has now finally granted permission to market iQOS as a modified risk tobacco product and the company launched in select stores in Charlotte in North Carolina beginning in November. Management is very excited about this, and if iQOS gets adopted in a similar way as iQOS worldwide as marketed by Philip Morris, then investors should get excited as well:
Source: Philip Morris Q1/2021 Earnings Slides
PM has shown that there is huge demand for reduced-risk products like iQOS and its user base has now reached almost 20M users with the next generation of iQOS, named ILUMA, launching in the second half of 2021. It will be very telling to monitor how Altria's iQOS acquisition path will turn out but investors should take confidence in the fact that with iQOS being a success story internationally, the chances are high that it can emulate that success domestically in the U.S. as well.
Overall, the tobacco industry has shown time and time again how it can adapt to an ever-changing regulatory landscape and unless the tobacco endgame as mentioned above will also fully apply to these reduced-risk products in the future there will always be demand for such products.
Still, that does not mean that tougher regulation in the US won't hit Altria but the impact over both the short-term and long-term on its business is basically unknown. However, Altria's stock price is very susceptible to any news regarding tougher regulation and just today when news broke that Democrats are considering to introduce a bill to further hike cigarette taxes the stock instantly dropped 2%.
What's in it for dividend investors?
With the fundamentals intact and actually growing thanks to pandemic tailwinds and Altria's pricing power, Altria's stock remains relatively cheap following the latest sell-off. It is trading at roughly 10-times 2021 earnings and its dividend is currently standing at 7.4%.
Based on Altria's 2021 full-year guidance, the current EPS payout ratio is 80% and right on target with its 80% target payout ratio.
Over the last couple of years, the company's payout ratio has always been hovering in that range, as the dividend pretty much advances in sync with its earnings growth. Altria's all important FCF payout ratio is in that range as well for full-year 2020 due to some special earnings losses from equity investments in Cronos (NASDAQ:CRON) and Anheuser-Busch InBev (BUD).
Source: Altria SEC Filings, author's visuals
Over the last couple of years Altria has been growing its dividend basically in line with its earnings but following the COVID-19 pandemic and a potential corporate tax hike under the Biden administration as well as Altria's aggressive and expense 10-year vision the latest dividend hike in the summer of 2020 only came in at 2.4%.
At the same time Altria still keeps its long-term objective with a dividend payout ratio target of 80% of adjusted diluted EPS. Given Altria's high yield right now in excess of 7% combined with the regulatory risk, I do welcome that the pace of dividend growth has declined and want management to be prudent and keep that growth as low as possible at least for this year, and until we have some clarity on what type of corporate tax hikes we could expect.
Investor Takeaway
At the end of the day, investing into the tobacco business entails risk just as investing into any other sector does. What is rather unique about the tobacco industry though is that it has been facing tougher and tougher regulation for decades, and while it has so far always managed to adapt to these changes, the overall regulatory sentiment clearly is not in favor of that industry. Altria is rapidly expanding into reduced risk products like on! and iQOS whereas regulators like the FDA are busy to combat the smoking pandemic.
Investors need take regulation plans seriously given that just the mere mention of lower nicotine levels can already lead to a sector-wide sell-off. Other countries like New Zealand are proposing significantly tougher regulation and spillover risk to other countries is real although not in the short-term.
I remain very long Altria, but always keep an eye on how the regulatory environment is developing and especially what plans the FDA has regarding reduced-risk products.
This article was written by
Stefan Redlich profile picture.
Stefan Redlich
22.34K Followers
I am working as a Business Analyst and Data Engineer in Germany and have started to build up a portfolio fo...
Growth, Dividend Investing, Long-Term Horizon, Value
Contributor Since 2015
I am working as a Business Analyst and Data Engineer in Germany and have started to build up a portfolio focused on Dividend Growth, both on the high and low-end yield spectrum. Primary focus is on Blue Chips with long-reaching dividend track records. I have been investing for 2 years and have been standing on the sidelines for way too long before.
I love developing spreadsheets in Google and Excel to analyze financial performance and integrate these two sources with each other!
Happy to connect on the various channels!
Disclosure: I am/we are long MO, PM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am not offering financial advice but only my personal opinion. Investors may take further aspects and their own due diligence into consideration before making a decision.
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Tommyboy918
Today, 6:41 PM
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Let them lower the nicotine. People will buy more.
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Veritas1010
Today, 11:18 AM
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@Stefan Redlich,
Excellent article really. Thoughtful commentary too not just US centric.
I think your argument for wary caution is very well advised. After all, look at what has been engineered against the oil & gas industry? For example Shell (RDS) is a classic example of a massacre unleashed in similar fashion on investors. Same scenario, we are moving to a “carbon neutral” future we are embracing “going green”. Then we are cutting your dividend 2/3rds and selling viable sound assets so we may embrace the nihilism of a “better tomorrow”. It is not just Shell, look at Exxon’s struggles and its embrace of carbon capture.
These new technologies will not have the ROI and earnings of their former expertise to be sure. Can cigarettes be far behind this ESG “wokeness” too? Embracing oral tobacco, vaping, heat sticks, etc?
You know if it “walks like a duck and sounds like duck it probably is a duck”. That’s what analogies are for.
That said, I am still accumulating $MO and $BTI. But, when the secular winds are very strong no matter how illogical it May seem to you I have learned from the energy industry therefore that it behooves you to follow your investments in that area very, very judiciously in such an irrational environment.
A past based on reasonable expectations and investment risks are no longer applicable per se in our “Brave New World”.
disc.: long $MO, $BTI.
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earlvv
Today, 9:46 AM
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There is no way any state will give up their share of $63 Billion in annual cigarette taxes. Tobacco is the only thing taxed at an 80% rate with public consent.
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Triton240
Today, 10:01 AM
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@earlvv
and don't forget all the money flowing from lobbyists into your congressmen/women's and senators pockets to get watered down legislation that might actually benefit tobacco companies. As someone else mentioned the tax dollars collected off tobacco is addictive to a spend-a-holic congress.
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Truth in Tension
Today, 8:46 AM
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The U.S. communist / fascist government despise all freedoms - whether it be the freedom to smoke, have a soft drink, have the pleasure of a good cigar, or enjoy shooting sports, however, the same government is absolutely giddy about people taking as many pharmaceutical drugs as possible.
All governments limit person choice and freedom - of course they do this by saying it is for your safety, security, social justice, the greater good, blah, blah .......... These parasites are just rebranding the same failed Mark's, Engels, Mao ideology that has bought death and destruction to the world.
In short the government parasites (both democrat and republican) believe their ends justify the taking of my means.
Who is John Galt?
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Veritas1010
Today, 10:42 AM
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@Truth in Tension,
Well said.
Ayn Rand was truly a visionary. Having emigrated from the U.S.S.R. was a good primer.
Hope you also read “The Epoch Times” and “American Free Press” (former “Spotlight” and “National Spotlight”). The 1st Amendment has become an inconvenient truth to anti-intellectuals who now have a “clear vision” of what our truth should be as well as our history.
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Stranger in Town
Today, 12:16 PM
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@Veritas1010 I remember the " Spotlight " that paper was about 10,000 miles to the right of " IL Duce ", but boy could they dig up the dirt on DC. I also remember they said there was going to be a war in the Falkland Islands 1 year before it happen.
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rhurry
Yesterday, 9:35 PM
Comments (188)
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No need to worry. In November of '22 sanity will prevail. Unless the same voting machines, democrat hacks, and their big tech supporters are allowed to control the vote. Before you ask, YES I believe this. Let's see if SA has the stones to allow this to post. Maybe because I've dared them they will.
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G. Blair Bauer
Today, 1:43 AM
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@rhurry ,Not so sure you are right here. It was Trump's Gottlieb that made the first attacks.
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ALLDAY1
Today, 9:25 AM
Comments (2.76K)
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@G. Blair Bauer
While you may be correct , I personally do not understand your statement as Gottlieb
Scott Gottlieb was FDA commissioner who worked for Trump Administration and had nothing to do with voting.
Stephen Gottlieb Did not work for the Trump administration but appeared to be a supporter and this is all I have been able to find out about him.
Steve Gottlieb’s latest book is Unfit for Democracy: The Roberts Court and The Breakdown of American Politics. He is the Jay and Ruth Caplan Distinguished Professor Emeritus at Albany Law School, served on the New York Civil Liberties Union board, on the New York Advisory Committee to the U.S. Civil Rights Commission, and as a US Peace Corps Volunteer in Iran.
That being said I do not understand the correlation about Trump's Gottlieb
or if he and President Trump even knew each other. There were of course many that still support Ex-President Trump so the relationship could be anything.
Allday
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Steve971
Today, 10:02 AM
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@rhurry I am sure the moderators let the comment stand so we could have a good laugh:)
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Gillnose
Yesterday, 6:33 PM
Comments (193)
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Look this is a drug. So what we need is two long term double blind studies with the same significant conclusions before any action is taken.
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amwarner4u
Yesterday, 5:34 PM
Comments (114)
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Revenue and taxes...there's too much of a need. Talk about handicapping state budgets even more. Soon grow and roll your own will become a cottage industry if the Feds don't watch it...no more cash cow/taxes!
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mherold1
Yesterday, 5:20 PM
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The idea that reduced nicotine would actually reduce smoking is plain silly. Anyone who has been anywhere remotely near addiction knows that will never work. Just go ask all the methadone addicts. The study referenced above is not statistically significant and it doesn't allow for what happens when people have alternatives.
The other issue is all the revenue the States receive from the settlements. Let the Feds propose to reduce nicotine and watch the lawsuits fly. And not just the tobacco industry. I bet nearly all 50 States would sign as co defendants.
This is just like every other time, a buying opertunity.
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Radcon3
Today, 12:41 PM
Comments (406)
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@mherold1
I somewhat agree with your first two sentences as many but not all smokers will find a way to supplement their nicotine addiction. However, in regards to the young people who start to smoke, it seems logical to me that if the only cigarettes available are the none addictive type, then doesn’t smoking just become more a fad? Why do kids start to smoke in the first place? Peer pressure, to be cool, to fit in? As you grow and mature and your lifestyle changes you can quit any time you want without any physical addictive withdraws. Manufacturers would not have the steady revenue stream of the constant new groups of addictive smokers. Add that to the already decreasing number of smokers, I believe smoking will be eradicated much much sooner. I do believe that the government will have a tough time passing the legislation.
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Retired Securities Attorney
Today, 1:39 PM
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@mherold1
As a former nicotine addict, I completely agree with you.
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ALLDAY1
Yesterday, 4:21 PM
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For all those worried about the Tobacco industry and supposed low nicotine levels they need to read the following link
www.fastcompany.com/...
They may in fact change their minds and greet this as a buying opportunity.
However remember investing is a personal choice.
MO share price April 16 $51.31
MO share price April 24 $47.39
Allday
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secorewb
Yesterday, 4:00 PM
Comments (616)
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BTW
I smokers buy double the cigarettes because they are addicted, Joe doubles the tax intake. They are not stupid.
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secorewb
Yesterday, 3:53 PM
Comments (616)
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Advice
Sell MO
But PM
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Incomeiam
Yesterday, 4:00 PM
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@secorewb , do you mean butt PM? Lol!
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secorewb
Yesterday, 6:41 PM
Comments (616)
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@Incomeiam no
Butt would be logical
But I have a wide thumb - y and t are next to each other.
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Retired Securities Attorney
Yesterday, 12:56 PM
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I smoked for 40 years. If the cigarette companies had reduced the nicotine to which I was addicted, I know what I would have done. I would have smoked more cigarettes -- enough to get my fix. I don't see that as being bad for the cigarette manufactures.
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Radcon3
Yesterday, 1:47 PM
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@Retired Securities Attorney
Ok, maybe for you but with the majority? Without addiction why would young people continue smoking if they started. Maybe it would be cool at first, but once they outgrew it and moved on in life why continue? It smells, it’s very expensive especially for younger people, most of the young is much more health conscious now, smoking would still be banned in public, it would still be seen as a dirty habit.
Why did you quit?
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Retired Securities Attorney
Yesterday, 1:57 PM
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@Radcon3
Every day I read more about how cigarettes were killing me. I thought, "So what. We all have to die." Then I started reading about how cigarettes were hurting my ability to taste food. Again, "So what."
But the killer was when I read reputable study about how nicotine was my sex drive and my ability to enjoy sex. That did it.
I quit six times in the next six months. I finally got it done the seventh time.
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Radcon3
Yesterday, 4:19 PM
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@Retired Securities Attorney
Good for you. But why you quit is another argument that it would greatly effect cigarette manufacturers on top of the legislations proposed. You were a addictive customer for 40 years. I’ve never been a smoker so I’d like to know, without the nicotine addiction, if when you started smoking and all the cigarettes were the extremely low nicotine level proposed, do you think you would still have smoked 40 years before quitting since it was the nicotine that was making you want to quit. Would you start to smoke again with the new cigarettes proposed? As a previous smoker, any desire to try the alternatives MO is betting on, like JUUL or IQOS?
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abcde1
Yesterday, 12:38 PM
Comments (495)
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One key point that I took away from this article....buy your smokes in nigeria! More seriously though, it will be interesting to see whether government really does want to kill the golden goose of taxes from smoking. Government is more addicted to nicotine, alcohol, and THC than any human being who will ever live.
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Stranger in Town
Yesterday, 1:31 PM
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@abcde1 Government is evil and corrupt, it attracts the worst of humanity.
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secorewb
Yesterday, 3:59 PM
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@Stranger in Town
I love when someone says a life long politicians has their values.
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On The Lake
Yesterday, 9:51 PM
Comments (162)
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@abcde1 " State and local governments collected $19 billion in revenue from tobacco taxes in 2017, which was less than 1 percent of state and local general revenue" www.urban.org/...
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Stranger in Town
Yesterday, 12:26 PM
Comments (86)
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With New Zealand & Australia as the model, I fear one day I'm going to wake up & find I'm in the world of Logan's Run. What a goofy new world we are heading into.
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hehren
Yesterday, 3:51 PM
Comments (12)
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@Stranger in Town overtax/try to outlaw cigarettes in new zealand, and you get more organized crime:
Annual consumption of illicit tobacco at 230,100 kg. Sales of legal tobacco declined 5.2%.
If all illicit tobacco had been consumed legally, it would have represented an estimated excise value of $287.4 million.
Illicit tobacco totals 11.5% of all tobacco consumption in 2019, a 1.3 percentage point increase from 2018.
Illicit tobacco market comprised of unbranded / roll your own tobacco (57.7%), illicit manufactured cigarettes (41.5%), and counterfeit product (0.8%)
China (2.7%) and South Korea (2.5%) the largest sources of flows for illicit manufactured cigarettes into New Zealand.
Customs interceptions of illicit tobacco increased by 76% between 2018 and 2019.
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Sunshine123
Yesterday, 10:40 AM
Comments (2.65K)
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I have owned MO and PM for many years and now BTI. They always come out
ahead despite strong tailwinds.
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JackCr
Yesterday, 10:40 AM
Comments (1.6K)
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LNMMS - Less Nicotine Means More Smoking
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DRE Retired
Yesterday, 10:38 AM
Comments (10)
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The US and New Zealand... the only two countries that allow drug companies to advertise direct to consumer.
These socialists love to make tobacco (and oil) their whipping boy in order to look more "woke" for their polling data.
The ace in the hole is the fact that congress is so dysfunctional they can't agree on anything right now.
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Vandooman
Yesterday, 10:08 AM
Comments (8.06K)
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Smoking has dropped like a stone without all of this and the average age of smokers has increased dramatically. When Canada tried to wipe out smoking with taxes it led to billions of dollars in smuggled cigarettes. It was like prohibition and a total failure, with the only winners being organized criminals. But never imagine that the US will pay attention to what happened elsewhere. We are great at reinventing the wheel. Perception of action may trump experience.
Many years ago I decided to hedge against the American tort bar by buying PM instead of MA. No US operations. I have doubled my money over time and my yield on book is now 10.6%. It was only a matter of time before someone new attacked MO. Maybe we should invest in the foreign producers who will supply American tobacco junkies. Not to make light of what tobacco can do. I grew up with a chain smoker. Yuck.
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Mcgyver
Yesterday, 9:41 AM
Comments (8)
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There is an agenda here that is very concerning. The woke movement is attacking nicotine but yet promoting the use marijuana products with high THC content with no concern of addiction or health consequences to smoking these products. The producers and sellers of Marijuana products are largely unregulated in the states that have legalized these products. The FDA has has basically refrained from any regulation of these marijuana producers. The result are THC content higher than was ever available in illegal marijuana. There is no oversight that is in even comparable to the tobacco industry. The Government is increasing control of nicotine products and reducing control of THC products. The reason given is decriminalization but the fact is Government revenue. There is also the fact that a pot addicted population is a very controllable population.
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wokingfoo
Yesterday, 10:21 AM
Comments (266)
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@Mcgyver Since marijuana is only legal in certain states, it is not a Federal issue currently, hence non FDA oversight. But once it is legal on a Federal level, I think M will be regulated just like tobacco.
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dwcummings
Yesterday, 1:48 PM
Comments (29)
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@wokingfoo and federal taxes too
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Veritas1010
Today, 10:54 AM
Comments (6.8K)
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@Mcgyver,
And that is the reason in a nut shell: “...a pot addicted population is a controllable population”.
Now couple that with Virginia banning the teaching of higher math in HS and NYC now using a “lottery” for its historic high performance science and engineering HS are you beginning to see a completed puzzle here?
A “woke” and dumbed-down America (and Western world) stoned and re-education to the new culture of inanity we must embrace or else.
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ButscherDoug
Yesterday, 9:11 AM
Marketplace
Comments (1.36K)
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So where in the US can you find IQOS? Localized in 3 states. So much for helping people get off cigarettes.
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