Future of tobacco industry post tobacco ban

Type :

Research papers

Pages :

40 pages

Format :

.doc

Published date :

05/28/2009

Category :

Political science

Sub category :

Social sciences

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Summary :

Introduction: Big tobacco's global expansion
Global tobacco players
1. Philip Morris, Bat and RJ Reynolds
Factors responsible for overseas expansion
Indicators of cigarette industry performance
1. U.S. markets
2. World markets
Leading world cigarette markets on a country-by-country basis
The cigar industry
1. Players in the cigar industry
2. The big four cigar players
Findings about the US cigar industry
Advertising ill health
Legal position of smoking in various countries of the world
Future of the tobacco industry
The tobacco market
Sports and entertainment sponsorship
The free tobacco trade
The network threats: NAFTA, WTO, and the MAI
Framework convention on tobacco control - FCTC
Conclusion

Abstract

Americans spend an estimated $51.9 billion on tobacco products in 1997, or just under 1% of their disposable income. Of this amount, $48.7 billion (or 94%) was spent on cigarettes, $2.2 billion on smokeless and smoking tobacco, and $0.9 billion on cigars.

Cigarette production in the United States is largely concentrated in the hands of three firms: Philip Morris, RJR Nabisco, and Brown & Williamson. These firms accounted for about 90% of total production in 1996. Domestic sales of major U.S. firms (namely, Philip Morris and RJR Nabisco) grew very little over the period 1992-1996. International sales, on the other hand, increased more rapidly during this period, indicating that these firms are giving high priority to increasing cigarette sales abroad, given the diminished growth potential of the U.S. market in recent years. Cigarette production in the United States registered only a slight gain (0.2%) over 1992-1997. However, cigarette consumption on a per capita basis declined by about 9%. The U.S. share of world production of cigarettes declined from 13.4% to 12.6% over the period 1992-1997. The U.S. share of world exports also declined from 26% to 21% in the same period.

China is by far the largest producer of cigarettes in the world; the second largest producer is the United States. In 1997 China produced an estimated 1.7 trillion pieces, almost two and one half times the 720 billion pieces produced in the United States. The United States is by far the largest cigarette exporting nation in the world, with exports in 1997 estimated about 217 billion pieces, or 21% of the world total. China is the largest consumer market in the world, with over 300 million smokers consuming 1.7 trillion cigarettes in 1997. Its market, however, is basically closed to foreign exporters. China's desire to become a member of the World Trade Organization, eventually could lead to an opening of its market to cigarette imports.
Like the cigarette industry, the smokeless tobacco industry (including the production of snuff and chewing tobacco) is highly concentrated among a few firms: U.S. tobacco Company, Conwood Company, and Pinkerton tobacco Company. In 1996 the companies accounted for abut 83% of total industry sales. The production of chewing tobacco declined by 16% over the 1992-1997 period while the output of snuff products increased by 11%. This rise was due entirely to the increase in the output of moist snuff products.