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Smoking May Be Hazardous To Your Health

SAN FRANCISCO, CA – NOVEMBER 05: Pedestrians walk by a CVS store on November 5, 2013 in San Francisco, California. CVS Caremark reported a 25 percent surge in third-quarter earnings with profits of $1.25 billion, or $1.02 per share, compared to $1.01 billion, or 79 cents a share one year ago. (Photo by Justin Sullivan/Getty Images)

At the beginning of March, CVS Caremark announced that it would stop selling cigarettes at its 7,600 locations around the nation. Will other big name retailers like Walmart follow suit? CVS could lose as much as $2 billion in annual sales. Will their stock tank? Only time will tell if this trend continues with other retailers.

Smoking Could Be Hazardous To Your Health

That warning appears on every pack of cigarettes due to a March 20, 1997 court decision. Twenty-two states brought suit against the Liggett Group for intentionally marketing cigarettes to teens. Many more judgments would be found in favor of those plaintiffs bringing actions against various tobacco giants in the years to come.

The Liggett Group

The Liggett Group is the fourth largest supplier of tobacco products in the US. Their history is a convoluted, roller coaster, of acquisitions and mergers.  In 1908, the Supreme Court declared that the American Tobacco Company was a monopoly in violation of the Sherman Anti-Trust Act. It and Standard Oil Trust were ordered to dissolve on the same day in 1911.

Four companies were created from American Tobacco assets: The American Tobacco Company, R.J. Reynolds, Liggett & Meyers, and Lorillard. The result was an oligopoly that took the place of a monopoly. Over time 54 companies were created within the group from that court decision.

Today the Liggett Group companies consist of:

  • R.J. Reynolds Tobacco, Most popular brands are Camel, Kool, Winston, Salem, Doral, Eclipse, and Pall Mall. They also produce lesser knows brands that include Barclay, Belair, Capri, Carlton, GPC, Lucky Strike, Misty, Monarch, More, Now, Tareyton, Vantage and Viceroy.
  • Lorillard, Inc. is the oldest continuously operating cigarette manufacturer in the US. Newport is the top selling menthol and second largest selling cigarette in the US. They also make Kent, True, Maverick, and Old Gold brands. In 2012 they acquired Blu-Ecigs, the leading electronic cigarette company.
  • The American Tobacco Company still exists within the group just in a smaller version of it’s former greatness.
  • Brown & Williamson is best known for a whistleblower expose on 60 Minutes. Jeffery Wigand, revealed the dangerous substances that were in cigarettes that manufacturers had always denied. It eventually became a movie called, “The Insider.”
  • Phillip Morris, USA is the largest cigarette company with brands consisting of Marlboro, Virginia Slims, Benson & Hedges, Merit, Parliament, Alpine, Basic, Cambridge, Bucks, Dave’s, Chesterfield, Collector’s Choice, Commander, English Ovals, Lark, L&M, and Players. The name was officially changed to Altria Group, Inc. in 2003 probably to distance itself from the former brand name’s negative publicity and lawsuits.

Some Final Thoughts

The most interesting part of this history of tobacco brands is the sheer number of brands that find a market. Over 40 brand name cigarettes are named in this post. With TV and radio advertising being prohibited it’s amazing to me that all these brands somehow find their way into your pocket or purse in enough quantity to stay in business.

While numbers of smokers have come down in recent years none of these companies seem to be worried about maintaining their market share. While smoking may indeed be hazardous to your health their stocks might be very healthy for your investment portfolio. Stop smoking and invest your money instead. Don’t take my word for that. Check with your broker or money manager for the best investment advice for your individual situation.

Is it time for major retailers to call it quits when it comes to cigarette sales? Will that create a flourishing black market? What’s your opinion?

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