10/25-10/31

NY has recently filed a dispute against Native Americans claiming that the Native Americans should have to pay taxes on their cigarettes just like everyone else. The Native Americans are sticking to a legislation made in 1794, which keeps them immune from having to pay taxes. The state, cigarette companies, and anti-smoking agencies are all standing behind this dispute for many reasons. First, the state would earn approximately $400 million or more per year, which would make up the difference in the $3 billion budget deficit towards schooling. The cigarette companies find it unfair, especially when there are people out there counterfeiting their brand name and selling it tax-free over the internet. Lastly, the anti-smoking agencies believe that thousands of people would stop smoking if they actually had to pay full price for a pack of cigarettes. The average additional cost of a pack of cigarettes for taxes is $2.75 for the state of New York, and its believed that there are millions of cartons per year being sold but not taxed. If the taxation were to take effect, the industry as a whole could potentially see an increase in sales. Those people who don't buy cigarettes locally would most likely do so if they realize that they are no longer saving money by buying these cigarettes online or under-the-counter. I agree with the state of New York that a taxation should be put on all cigarette sales and not only some of the them. If cigarettes are being sold and consumed in a specific state, then that state has the right to recieve some type of benefit from it.

10/18-10/24

A case was brought up in the Massachusetts court on Monday claiming that three smokers have the right to have their medical bills paid by Phillip Morris to have tests done that can show if the smokers have a future risk of lung cancer. The case passed the state court and will now be tried on the national level. The attorneys compared it to a pedestrian getting hit by a car: even if there are no external injuries, the person who may have caused the damage should pay for an inspection to see if there may be internal injuries. This could be bad news for the cigarette industry because if this case is won by the prosecutors, then smokers around the world could possibly get the same treatment, causing the cigarette industries to fork out a lot of money for all of the medical expenses. That would make a very big hit on every manufacturer.

With all of the bans and steady fall in the economy, the demand for cigarettes is dropping greatly. It was estimated on Thursday that the demand has fallen 10% since last year, making the profit margin for the cigarette industry a little thin. The raise in the federal tax price on cigarettes extremely affected the sales of cigarettes in April when the first raise was put into place, but the second raise in price didn't do as much damage. This tells me that those that are planning to be loyal to the cigarette industry are still going to be consumers no matter what the price is. So to make up for the loss in demands, I say that the cigarette companies slowly raise their prices for personal profit, which in turn would make up the difference, if not boosting profit past that of previous years.

10/11-10/17

The Institute of Medicine of the National Academies has released results claiming that smoking bans are effective in reducing the risk of heart attacks. The bans against smoking in public places as well as more health-safe cigarettes are leading to a decline in secondhand smoke related heart attacks. As long as they continue to see a decline, more and more states I'm sure will adopt these bans against smoking cigarettes. These bans are why the prices of cigarettes keep going up, causing less people to buy cigarettes. The government is slowly weening people off of the need for cigarettes, which is hurting the stocks of the cigarette industry very much. As long as the industry doesn't have to increase the price of cigarettes too high, they may not notice a difference. Let's hope for that.

10/4-10/10

Not much has happened as a cigarette industry as a whole, but the big talk of the stock market world is Reynolds American's big cash dividend. The company has raised its dividend 5 cents to now make it 90 cents per share. This dividend is showing the company's loyalty to its shareholders by giving them approximately 2/3 of their net income. This is showing a good choice on my part to make Reynolds American one of my top stocks to invest in. They are known to be one of the more concrete stocks to invest in, seeing as the cigarette industry can never go down too far as long as people still need to smoke. This is some very happy news for me as well as many other stock marketers in the cigarette industry.

9/27-10/3

Reynolds and many other cigarette companies have asked the Supreme Court to hear a ruling made on May 22 that cigarette companies can no longer put "light" and "low-tar" on the names of their cigarettes. The cigarette companies are claiming that it would take millions of dollars and completely change their business tactics if this law were to be put in effect. I agree with both sides of this argument. Putting the word "light" on a pack of cigarettes makes the consumer think that the cigarettes are better for you, which isn't true at all. However, switching the names of cigarettes would not only cost a lot of money, but also make the consumer switch the name of the cigarettes that he or she has been smoking, causing confusion. I don't like this law and I hope that the cigarette companies can win this fight to overturn it.

On Thursday, the FDA began collecting millions of dollars in fees from the cigarette tobacco companies. These fees will go to the new Center for Tobacco Products, a part of the FDA that will be overlooking the cigarette industry. This industry is what has been in charge of stopping the selling of flavored cigarettes and putting restrictions on the term "light" used in cigarettes. These millions of dollars in fees are affecting many cigarette companies, but Altria, who owns Phillip Morris USA, most of all. Altria will be responsible for paying over half of the fees to the government. These fees are starting out at around $23 million, but will grow to $712 million by 2019. These fees are going to kill the growth of the cigarette industry. The only hope we have are that the changes that the FDA makes will cause more people to begin smoking, but most likely that isn't going to happen. I can't see how anything good can come from this in terms of a marketing aspect.

9/20-9/26

On monday, an analyst studied the cigarette industry as a whole, to see what brands and factories are up, and which are down. His conclusions were that Marlboro along with Phillip Morris is in a decline right now. The only way that they will keep their market price high is to drop the price of the tobacco due to the fall in employment in the U.S. Marlboro seems to be the only company experiencing this need to drop prices, as Reynolds America, along with many other lower-priced tobacco producers, seem to be catching the eye of many more people trying to save a couple bucks.

A ban was put in effect on Tuesday completely stopping the selling of fruit, candy, and clove flavored cigarettes in the U.S. The FDA says that the flavored cigarettes are more appealing to young adults, making it more likely for them to become regular cigarette smokers. It is said that 90% of adults started smoking before the age of 18, which is why the government is enforcing this ban. This ban will not turn out well for the stock market industry, due to a drop in cigarette purchases with the absence of more appealing cigarette flavors. We can only hope that the kids that were normally buying the flavored cigarettes will make the switch to menthol and regular cigarettes.

The cigarette industry is becoming known as "Armageddon Stock." Reason being, if another financial crisis ever broke out again, cigarettes would be one of the things that people would start trading above money. This is a good thing when it comes to stocks, because even if the market goes down, it's safe to know that the cigarette industry won't take as big of a hit as some of the other industries would. Many of the cigarette companies are starting to bounce back early in the stock market because they never really lost too much when the economy went down.

Phillip Morris has also just upped its cash dividend again from 54 to 58 cents per share, showing that they have extreme confidence in the ability for the cigarette market to put out. The fact that population is expected to grow in the future, cigarette companies have a good chance of getting a lot of new smokers to add to the market.