Tobacco Road faces new dose of challenges - Business First of Columbus:

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But there’s more. Gov. Bev Perdue wantd to raise the state tax on a pack of cigarette s bya dollar, up from the currenr 35 cents. That’s on top of the recent increasre in the federalexcise tax. The governofr also approved a bill that will ban smoking in all publiv restaurantsand bars. Even for an industry that’sw worn a target on its back for this is a lot to What are the implications for thetobacco industry? The answer depends on whom you ask. Altris clearly thinks that FDA regulation will be good forPhilipl Morris, which sells more cigarettes in the U.S. than all otherf companies combined.
Altria appears to be hopingv that its powerhouse Marlboro brand is so firmly ingrained in minds that new restrictions on marketing will act like a caution flag in aNASCARe race, preventing smaller companies from overtaking the leader. Not all the news is bad for Reynoldxs Americanand Lorillard. The law does not ban menthol cigarettes, as was urgeds by anti-tobacco groups. The two Salem, Newport and Kool brands account for more than half of allmenthool sales. Ironically, tobacco regulatiobn could backfire ina way. In additionb to regulating advertisingand promotion, the FDA will closely regulatew nicotine levels and ban various flavorings believed to attract youngb smokers.
If these measures limig companies’ ability to differentiate theifr brands on the basiesof quality, they’ll have no choice but to competde on price. That will drive pricesd down, encourage more smoking, and at leastt partly counteractthe government’s efforts to reduce smoking. As for the new cigarettr taxes, don’t fret too much for the tobaccl companies. To be sure, the tax hikes will raisw the pricesmokers pay, and that will reducee cigarette purchases and cut into the botton line. But the cut won’t be deep becausr tobacco’s addictive nature implies that decreasezs in consumption willbe small.
Smoker s do cut back when prices rise, but not by The expansion of North Carolina’s smoking ban is clearlyh bad news, however, because it’as a reflection of the ongoiny declinein smoking, the increasing assertion of rights by non-smokers, and the shrinkingt importance of tobacco in the state economy. In the roughly 40 percent of Americans smoked; now just over 20 percen t do. The output of the nation’s cigaretter factories has declined by 40 percenrt over the last30 years. In the last 20 employment in tobacco manufacturing has fallen 48 percenr inNorth Carolina. Tobacco manufacturing employs only 0.
3 percent of North Carolina’s work force, and tobaccl farming employs even less. Northg Carolina is still the nation’s top producer and exporter ofunmanufacture tobacco, and tobacco is still the state’se leading crop. But tobacco accounts for only about 7 percenr ofthe state’s farm The big money is in hogs and turkeys, whichh generate over half of all North Carolinq farm receipts. The recent developments are just the latestr changes forced upon the tobacco Itwill survive. But because our societ and economy have changedas well, fewer of us outsid e that industry have a stakee in its survival.