"Although tobacco consumption is declining worldwide, tobacco companies have continued to grow profits during the past decade.
In the US and Europe, where public health programmes have reduced smoking rates, the fall in volume has been offset by price increases. Emerging markets, where tobacco use is still growing also countered the decline in developed countries.
The World Health Organisation estimates that the number of smokers will grow from 1.3bn in 2006 to 1.7bn by 2025, with the bulk of new smokers coming from Asia and eastern Europe".The world's largest carginogen producer, Altria, is ranked as a strong buy its share price falling from a peak of $75 to its current $15 over the past year. US cigarette taxes are due to increase from 39 cents per pack to $1 but Altria is well placed to shrug this off. Its earnings per share grew at 10% in 2008 as it initiates a move into ethyl alcohol sales.
I'll keep a watch on both BAT and Altria. BAT is making a huge effort to increase sales of smokeless tobaccos and to improve the public image of this less carcinogenic product. Altria bought the smokeless tobacco company UST (formerly the US Tobacco Company) for $10 billion last year. Smokeless tobacco sales have been growing at 7% in the US as cigarette sales fall.