Smoking down as tobacco profits soar
Gallup released a report Wednesday afternoon showing a decline in American cigarette smoking. At the same time, tobacco companies are reporting great profits and trading stocks at all-time highs.
“Tobacco Companies …have provided investors good returns over the last couple of years,” says financial blog Seeking Alpha, adding, “Over the last 2 years, the shares of all these tobacco companies have rallied over more than 50 percent.”
Meanwhile, the Gallup indicates a slow decline in the number of smokers, starting in the 1970s. About one in five adults currently smoke, tied with 2009 as an all-time low. At one time, nearly half of all American adults smoked.
The stock of one major tobacco company, Altria, has risen 18.77 percent in the last year, and more than doubled in the last five years. In their most recent quarter, they reported profits up 26.5 percent to $2.5 billion.
All three big tobacco companies — Altria, Reynolds American and Lorillard Tobacco Company — have shown impressive yields over the past few years.
One explanation for this trend has to do with popularity of cigarettes in emerging markets. “China is the largest cigarette market in the world, representing over 40% of the total global cigarettes consumed annually,” reports Seeking Alpha.
The rise in electronic cigarettes and the increase in usage of smokeless, or chewing, tobacco may have also contributed to the decline in American cigarette smoking.
Since 2001, smoking has dropped most sharply among young adults. Gallup also found that low-educated and coastal adults are lighting up less.
Though, the Minnesota Posts adds, “Rural Americans — including those living in rural Minnesota — are more likely to use tobacco than their urban counterparts, especially smokeless tobacco.”
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