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Tobacco industry

The tobacco industry comprises those persons and companies engaged in the growth, preparation for sale, shipment, advertisement, and distribution of tobacco and tobacco-related products. It is a global industry; tobacco can grow in any warm, moist environment, which means it can be farmed on all continents except Antarctica.

Tobacco is a commodity product similar in economic terms to foodstuffs in that the price is set by the fact that crop yields vary depending on local weather conditions. The price varies by specific species grown, the total quantity on the market ready for sale, the area where it was grown, the health of the plants, and other characteristics individual to product quality. Laws around the world now often have some restrictions on smoking but, still 5.5 trillion cigarettes are smoked each year. Taxes are often heavily imposed on tobacco.

History

For a history of how tobacco has been grown and marketed, see tobacco, smoking and articles on similar topics.

Current state of affairs

The tobacco industry generally refers to the companies involved in the manufacture of cigarettes, cigars, snuff, chewing and pipe tobacco. This industry is heavily dominated by giant firms. Due to historical growing areas, many of these companies are concentrated in the southern United States (particularly Raleigh-Durham, North Carolina; Winston-Salem, North Carolina; and Richmond, Virginia). Other companies are based around the world.

Tobacco advertising is becoming increasingly restricted around the world.

Industry outlook in the United States

The tobacco industry in the United States has suffered greatly since the mid-1990s, when it was successfully sued by several U.S. states. The suits claimed that tobacco causes cancer, that companies in the industry knew this, and that they deliberately understated the significance of their findings, contributing to the illness and death of many citizens in those states.

The industry was found to have decades of internal memos confirming in detail that tobacco (which contains nicotine) is both addictive and carcinogenic (cancer-causing).

The suit resulted in a large cash settlement being paid by a group of tobacco companies to the states that sued. Further, since the suit was settled, other individuals have come forth, in class action lawsuits, claiming individual damages. New suits of this type will probably continue indefinitely.

Since the settlement is a heavy tax on the profits of the tobacco industry in the US, and further settlements being made only add to the financial burden of these companies, it is debatable if the industry has a money-producing long term outlook.

The tobacco industry has been largely successful in this litigation process, with the majority of cases being won by the industry. During the first 42 years of tobacco litigation (between 1954 and 1996) the industry maintained a clean record in litigation thanks to tactics described in a R J Reynolds Tobacco Company internal memo as "the way we won these cases, to paraphrase Gen. Patton, is not by spending all of Reynolds' money, but by making the other son of a bitch spend all of his.. Between 1995 and 2005 59% of cases were won by the tobacco industry either outright or on appeal in the US, but the continued success of the industry's efforts to win these cases is questionable.

Lawsuits against the tobacco industry are primarily restricted to the United States due to differences in legal systems in other countries. Many businesses class ongoing lawsuits as a cost of doing business in the US and feel their revenue will be only marginally affected by the activities

Smuggling has emerged in some states where cigarette taxes are high.

Conflicting points of view

There are two entrenched interests that have opinions about the tobacco industry: (a) participants in the industry, and (b) people affected by the deaths attributable to tobacco use. These interests conflict as they involve large amounts of money, long-held (historically) belief systems, and the premature deaths of loved family members.

Participants in the industry argue that commercial tobacco production is a vital part of the American and world economy. They state that thousands of farmers in the United States, alone, make their living from raising tobacco leaves for use by the industry. They estimate that the tobacco industry contributes billions of dollars in tax revenue to the federal government every year.

People affected by or sympathetic to the large death rate attributable to active and/or passive tobacco use cite the fact that half of all tobacco users die from tobacco-related causes worldwide. According to the World Health Organization, that means that about 650 million current smokers will die from a preventable cause. They also indicate that smoking-related health problems contribute to rising health care costs.

Tobacco control

On May 11th, 2004, the U.S. became the 108th country to sign the World Health Organization's Global Treaty on Tobacco Control. This treaty places broad restrictions on the sale, advertising, shipment, and taxation of tobacco products. The U.S. has not yet ratified this treaty in its senate and does not yet have a schedule for doing so.

Most recently, there has been discussion within the tobacco control community of transforming the tobacco industry through the replacement of tobacco corporations by other types of business organizations that can be established to provide tobacco to the market while not attempting to increase market demand.

On February 20, 2007, the US Supreme Court ruled that the Altria Group (formerly Phillip Morris) did not have to pay $79.5 million in punitive damages awarded to Mayola Williams in a 1999 Oregon court ruling, when she sued Phillip Morris for responsibility in the cancer death of her husband, Jesse Williams The Supreme Court's decision overturns a ruling made by the Oregon Supreme Court that upheld the award

On April 3, 2008, The U.S. Court of Appeals for the Second Circuit threw out a $800 billion class-action lawsuit filed on behalf of a group or class of people who smoked light cigarettes. The plaintiffs' lawyers were confident that they would be able to win this suit due to the success of the Schwab case wherein tobacco companies were found guilty of fraud-like charges because they were selling the idea that light cigarettes were safer than regular cigarettes. The ruling by the three-judge panel will not allow the suit to be pursued as a class, but instead need proof for why individual smokers chose light cigarettes over regular cigarettes.

Working to change smokeless tobacco control

As of 2007, British American Tobacco, Reynolds American, Imperial Tobacco and Philip Morris are lobbying the European Union to lift a ban on smokeless alternatives to cigarettes. This was imposed in Britain in 1990 after the US Smokeless Tobacco company attempted to bring pouches of snuff (i.e. ground tobacco) for oral use, called Skoal Bandits, to market. The move to lift the ban is supported by antismoking groups and the Royal College of Physicians, as the oral snuff which the industry is attempting to introduce only verifiably increases the user's risk of pancreatic cancer, but not of oral or lung cancer. Indications of an increase in oral cancer are present in some studies, but have only very rarely been statistically significant.

Different types of smokeless tobacco carry different risk profiles. All have negative health effects, but appear to be safer than cigarettes. There is some concern that smokeless tobacco will be used as a "gateway" product to make marketing of cigarettes more effective. One example cited by opponents of this theory is snus. Sweden has the lowest level of tobacco related illness in Europe, is the only country which has reduced its smoking below the WHO's target level, and is the only EU country in which snus (a Swedish smokeless tobacco cured in such a way as to minimize the most important classes of carcinogens) is legal. Studies in Sweden indicate that people tend to switch from smoking to snus, rather than the other way around.)

Tobacco companies

Largest Tobacco companies (2000, Euromonitor, Tara Parker-Pope)

Company Country Global market share (%) 1999 Tobacco sales in USD billions
China National Tobacco Co. (CNTC) China 32.7 $645.3
Altria Group, Inc. USA 17.3 $47
British American Tobacco PLC BAT, UK 16.0 $30.4
Japan Tobacco Japan 9.0 $29.9
R.J. Reynolds Tobacco USA 2.0 $7.6
Imperial Tobacco UK 2.0
Altadis France and Spain 2.0
PT Gudang Garam Indonesia 1.4
TEKEL Turkey 1.3
ITC India 1.0
Fortune Tobacco Co. Philippines .9
Eastern Company Egypt .8
Thailand Tobacco monopoly Thailand .8
Lorillard Tobacco Co. USA .7
Iranian Tobacco Company Iran .5
LCWGS Australia .2

Production by country

The United Nations Foreign Agricultural Office estimates the following production by country in 2000. (Figures are in thousands of tonnes.)

Country Production in thousands of tonnes
The People's Republic of China 2,298.8
India 595.4
Brazil 520.7
United States 408.2
European Union 314.5
Zimbabwe 204.9
Turkey 193.9
Indonesia 166.6
Former Soviet Union 116.8
Malawi 108.0

See also

References

Notes

Bibliography

Further reading

  • Glantz SA, Slade J, Bero LA, Hanauer P, Barnes, DE., The Cigarette Papers. Berkeley: University of California Press, 1996
  • Judith MacKay, The Tobacco Atlas, World Health Organization, 2002, ISBN 92-4-156209-9
  • Mike A. Males, Smoked: Why Joe Camel Is Still Smiling, Common Courage Press, 1999, ISBN 1-56751-172-4
  • Dorie Apollonio and Ruth E. Malone, "Marketing to the marginalised: tobacco industry targeting of the homeless and mentally ill" (2005). Tobacco Control. 14 (6), pp. 409-415

External links

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