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Tobacco industry

From Academic Kids

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 is 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.

Contents

History

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

Current state of affairs

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

Industry outlook

The tobacco industry in the United States has suffered greatly since the mid-1990's, when it was successfully sued by several US 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.

Illicit cigarette smuggling has emerged in some states where smoking bans and 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, and since 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. Thousands of farmers in the United States, alone, make their living from raising tobacco leaves for use by the industry. It is estimated that the tobacco industry contributes billions of dollars in tax revenue to the federal government every year.

Recent developments

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.

Tobacco companies

Largest Tobacco Companies
COMPANYGLOBAL MARKET SHARE (%)1999 TOBACCO SALES ($BIL)
China National Tobacco Co. (CNTC)32.7$0.023
Philip Morris Cos. (USA)17.3$47
British American Tobacco PLC (BAT, UK)16.0$30.4
Japan Tobacco9.0$29.9
R.J. Reynolds Tobacco (USA)2.0$7.6
Reemtsma (Germany)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.8
Lorillard Tobacco Co. (USA).7
(2000, Euromonitor, Tara Parker-Pope)
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