Smoking cigarettes companies have produced great returns for shareholders.
Various investors dismiss tobacco companies as “boring”. Others disregard tobacco companies altogether on ethical grounds. However, by way of a very nature, tobacco businesses are huge producers of cash. https://slimsejuice.com/
Making a killing
Various investors refuse steadfast to invest in tobacco companies purely on ethical environment. It has been proven that their main products – cigarettes and pipes – harm the health of the vast bulk of its users. Smoking cigarettes regularly can take several years off an individual’s life expectancy.
Putting moral concerns aside for a flash, who wouldn’t want to be selling a product which is legal and that folks are actually hooked on, and for which there is no real substitute? Simply remember what multi-billionaire entrepreneur Warren Buffett once said about tobacco companies:
“I’ll tell you why We like the cigarette business. It costs a dime to make. Promote it for a dollar. It’s addicting. And there’s fantastic brand loyalty”.
The tobacco companies’ products is for large numbers of folks a ‘need to have’ product rather than a ‘nice to have’ product. They help keep coming back for more to feed their dependency. Sometimes they trade down to buy cheaper brands, which are often produced by the same company.
Some customers quit the smoking habit but most just continue buying, even when their income comes during a recession. Usually, people reach for ‘fags and booze’ when things turn grim economically.
No matter what the monetary situation, smoking cigarettes companies’ earnings remain strong due to the identified pricing power of their products which stems from the strength of their brands, and the variety with their product range on offer.
Smoking state policies earning big money
The biggest risk with cigarettes companies is political risk in developed countries. Smoking cigarettes related illnesses kill people and given its recognized cost to society, authorities need to be viewed as doing something to prevent people from (starting to) smoking, such as smoking bans in public places, limiting advertisements geared towards more youthful people, restricting the freedom of the tobacco industry to introduce new products, making tobacco products available in the same universal packaging, restrictions on point-of-sale advertising, etc.
However, authorities of further anti-smoking guidelines are quick to point out that the two US and UK governments are ‘addicted’ to tobacco duty revenues. For instance, the UK’s tax take via duty and VAT, amassing some 10bn in 2008/2009 alone and is believed to be substantial higher this season because of this of further tax hikes.