The shops in New York will no longer be allowed to display
cigarettes on the shelves of their stores, per a plan by the
mayor of the city. The plan also compels shops which derive less
than 50% of their revenue from selling cigarettes to keep tobacco
products away from public view in cabinets, drawers, under the
counter, behind a curtain or in other concealed spots.
New York City, which has the reputation of levying the highest
cigarette taxes in the country, is also going to be the first
city in the U.S. where public display of cigarettes will be
banned. Such a ban, however, already exists in Iceland, Canada,
England and Ireland.
Anti smoking advocates like The American Cancer Society,
Cancer Action Network, the American Lung Association, other
anti-smoking groups and several City Council members hailed the
proposal, as the measure will dramatically reduce the growth rate
of the city's smoking population.
Anti smoking protagonists are of the opinion that seeing the
tobacco products shelved in the shops every time they visit would
only increase the desire to try the product.
However, this will pose a problem for shops and tobacco
Altria Group Inc.
), as keeping tobacco products under cover will inevitably reduce
the sale of cigarettes to a considerable extent. Adding to the
woes of the tobacco distributors, the price per pack of cigarette
is already the highest in the city. Altria raised its voice
against the decision of the mayor, saying that the law was
The tobacco industry is having a tough time as governments all
around the world are imposing restrictions on tobacco
consumption. While the Food and Drug Administration (FDA) has
passed a rule compelling tobacco companies to print
thought-provoking images on cigarette packs inducing smokers to
refrain from smoking, governments of Britain, Australia and New
Zealand have made plain packaging mandatory for cigarette
Moreover, weighted average state cigarette excise tax
increased at a compounded annual rate of about 10% between 2004
and 2010. The scenario has improved slightly due to mass protests
against proposals imposing tax burdens on smokers. The compound
tax growth rate has slowed down a little in the past two years,
following the protests. However, the cigarette industry continues
to carry a heavy tax burden. The industry has been seeing a
decline in shipment volume for the past several years due to
unfavorable excise taxes and growing awareness worldwide.
Tobacco companies are resorting to cigarette alternatives,
trying to reduce the harmful effects of tobacco. In May 2011,
Philip Morris International
) bought the patent and global rights to an aerosol
nicotine-delivery system for the delivery of nicotine to lungs
without cigarette smoking.
British American Tobacco plc.
) also created a subsidiary called Nicoventures focused on
nicotine alternatives. In 2009,
Reynolds American Inc.
) purchased Swedish company Niconovum, whose nicotine gum,
pouches and spray help people give up smoking.
While Altria currently carries a Zacks Rank #2 (Buy), Philip
Morris and Reynolds American carry a Zacks Rank #3 (Hold).
However, British American Tobacco holds a Zacks Rank #4
BRITISH AM TOB (BTI): Free Stock Analysis
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