The Fall of Tobacco is Inevitable
Philip Morris, the largest tobacco company in the United States, has cut its earnings forecast for 2014 from $5.09-$5.19 per share to $4.87-$4.97 per share. The maker of Marlboro cigarettes said it is proving to be a “complex and truly atypical” year for the company. But Philip Morris isn’t the only major tobacco company to grapple with declining sales as its rivals like Imperial Tobacco Group and British American Tobacco are also experiencing the similar declines as well.
The increase of government regulation and health-aware consumers are said to be the main factors to the tobacco companies’ profit downfall. And they certainly are. Health-aware consumers are looking for smarter alternatives to tobacco cigarettes. Traditional cigarettes pose great health risks, but an old habit is probably the hardest thing to break and very few truly succeed in quitting cigarettes. Instead of the daily struggle to break an old habit, many smokers have turned to electronic cigarettes. E-cigarettes has prompted many smokers to quit the smoke and tar and to start vaping as e-cigs pose a much lesser risk than its combustible opponent. The habit does not need to be broken and many smokers or rather former smokers can feel some peace knowing that e-cigs pose a lesser risk.
And Philip Morris is acknowledging the rise of electronic cigarettes as well as the downfall of traditional tobacco cigarettes as the US tobacco company has acquired Nicocigs Ltd, a United Kingdom based electronic cigarette maker. The purchase of Nicocigs Ltd will allow the US company to enter the growing e-cig market in the U.K. However, the company will not be selling e-cigs until its official launch in 2016.
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