They're Baaaaccccckkkkk!
The pundits were wrong many felt with the number of smokers falling by as much as 2% a year and with the government outlawing smoking in more public places coupled with the raising of cigarettes taxes at the same time the tobacco industry had met its match. Wrong! Tobacco's future is better than ever as the Altria Group formally known as Phillip Morris splitting off it Kraft Foods division to shareholders and become a tobacco company again.
Wall Street has responded with a standing ovation but and the cheers are not for Kraft who has shed the taint of tobacco but for Altria who has rid itself of Kraft. Shares of Altria are up more than 10% since the split.
" People tend to forget people like to smoke and there is no alternative product. If frozen dinners become too expensive people will try something else, not true with cigarettes. You are not up at night worried about a product that is going to make cigarettes obsolete." Chime in a Morgan Stanley analyst.
In 5 1/2 years that Altria owned Kraft its shares only rose a little over $3 while Altria shares have risen more than 47% in that time. The Altria Group born in late 2001 as Phillip Morris change its name to reduce the drag on the company's rep.
Wall Street is on board with cigarettes because of the advantages it has over most products.
1. Its addictive
2. Inexpensive to make
3. Global Market
4. Raise in prices does not mean a drop in business
Last but not least the worst of the ligation suits against tobacco industry appear to be over.
By eliminating Kraft will allow Altria to use huge amounts of money generated by cigarettes to buy back stock and acquire other tobacco companies particularly overseas.
Wall Street has responded with a standing ovation but and the cheers are not for Kraft who has shed the taint of tobacco but for Altria who has rid itself of Kraft. Shares of Altria are up more than 10% since the split.
" People tend to forget people like to smoke and there is no alternative product. If frozen dinners become too expensive people will try something else, not true with cigarettes. You are not up at night worried about a product that is going to make cigarettes obsolete." Chime in a Morgan Stanley analyst.
In 5 1/2 years that Altria owned Kraft its shares only rose a little over $3 while Altria shares have risen more than 47% in that time. The Altria Group born in late 2001 as Phillip Morris change its name to reduce the drag on the company's rep.
Wall Street is on board with cigarettes because of the advantages it has over most products.
1. Its addictive
2. Inexpensive to make
3. Global Market
4. Raise in prices does not mean a drop in business
Last but not least the worst of the ligation suits against tobacco industry appear to be over.
By eliminating Kraft will allow Altria to use huge amounts of money generated by cigarettes to buy back stock and acquire other tobacco companies particularly overseas.
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