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September 11th, 2016:

Philip Morris: 5 Secrets You Didn’t Know (PM)

Global cigarette manufacturer Philip Morris International Inc. (NYSE: PM), best known for its iconic Marlboro brand, had its genesis in a cigarette and tobacco shop opened in London by Mr. Philip Morris in 1847. Although you might think that all the secrets of the major tobacco companies have long been exposed, the following are five interesting and surprising facts about Philip Morris and its Marlboro cigarettes.

1. High Annual Taxes

Most people are aware that cigarette taxes are among the most severe sin taxes levied anywhere on anything, but it is doubtful if many people really understand the heavy tax burden faced by tobacco companies. In fact, major cigarette manufacturers such as Philip Morris have to hand over more than half of their annual revenues to the taxman. In 2013, Philip Morris paid taxing authorities $48.8 billion of its $80 billion in total revenues, roughly 60%. Basically, the government is getting paid for 12 cigarettes out of every pack of 20 sold by Philip Morris.

2. Marlboro Originally Marketed as Cigarette for Women

Although the Marlboro Man is one of the most widely recognized advertising images in history, a little known fact is that the Marlboro brand was originally marketed, in the 1920s, as a cigarette for women using the ad slogan “Mild as May.” The cigarettes even featured a red band around the filter to hide lipstick stains. Famed advertising executive, Leo Burnett, was the man charged with transforming the brand into a cigarette for men, and came up with the iconic cowboy figure that came to be known as simply “the Marlboro Man.”

Another little-known fact is that the company’s move to reposition Marlboro as a cigarette for men was spurred by a study in the early 1950s that linked smoking to lung cancer. Filtered cigarettes were seen as safer than unfiltered cigarettes, but prior to the 1950s, filtered cigarettes were almost exclusively marketed to women. Because of this, men were reluctant to smoke filtered cigarettes until the advent of the ultra-macho Marlboro Man cowboy.

3. Philip Morris Paying Big on a Settlement Reached in 1998

To avoid a potential avalanche of thousands of individual or class action lawsuits related to health risks from smoking, in 1998, the largest U.S. tobacco firms, including Philip Morris, reached the Master Settlement Agreement (MSA) with the Attorney Generals of 46 states and the District of Columbia. While it is widely known that the MSA was incredibly costly for the tobacco companies, most people are not aware that Philip Morris and the other cigarette manufacturers are still, nearly 20 years later, paying out billions annually per the terms of the settlement.

The MSA ensured that the tobacco companies paid the states an approximate total of $10 billion every year for an indefinite period of time, at least through 2025. The principal lawyers for the states also continue to receive annual payments in the millions. Although the yearly payments were supposed to be used to fund public health projects, states have largely used the money for whatever pet projects that they decide deserve a windfall, such as a sprinkler system for a public golf course or the construction of a government office building.

4. Philip Morris Is a Good Investment

Given the fact that tobacco companies have to operate under such onerous marketing restrictions, with expensive settlement fees and such a huge tax burden, it is reasonable to conclude that firms such as Philip Morris offer little, if any, profit potential. However, surprisingly enough, Philip Morris has continued to manage net and operating margins in the 20 to 40% range, and to consistently show investors solid returns on investment. As of August 2016, the company’s stock offered a generous dividend yield of 4.09%, and the company has increased its dividend every year for the past eight years. Philip Morris’ earnings have doubled approximately every 10 years since as far back as 1985, and the company’s stock has more than doubled in price since its 2008 spinoff from parent Altria Group Inc. (NYSE: MO).

5. Rights to the Entire E-cigarette Technology

In 2000, Philip Morris considered buying the rights to the technology behind electronic cigarettes, but company executives eventually decided that the price was too high. The company has, however, entered the e-cigarette marketplace with its MarkTen and iQOS brands.

NZ Plain tobacco packaging bill passes third reading

Timaru North Street Dairy owner Jay Tailor does not think the Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill will make a positive long term impact on smokers.

Plain tobacco product packaging will not help a Timaru smoker who spends $70 every five days on his habit quit, he says.

The Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill passed its third and final reading in Parliament on Thursday to address the 4500 to 5000 premature deaths caused by smoking every year in New Zealand.

To prevent potential young smokers from starting through the attraction to branding and bright coloured labelling, it is hoped the plain standardised packaging, to be implemented by the end of next year, will deter them.

Though the planned plain packaging had not been finalised, it was likely to follow the Australian design of green-brown with 75 per cent of the front emblazoned with health warnings and the brand name in small plain font.

Jamie Robinson, a 28-year-old freezing worker, has smoked for 17 years. Robinson has used gum, patches and pills to give up smoking but still can’t kick the addiction.

He spends $70 on 50 grams of tobacco, filters and rolling papers which lasts him about five days.

He can recall the same amount of tobacco 10 years ago was about $35. His wages have not increased at the same rate.

“I get agitated if I run out. I’m not very fit … I cough a lot and get out of breath.”

Robinson’s late brother introduced him to his first cigarette at the age of 11.

He did not think packaging would make a difference to his habit or to young people as peer pressure to smoke was stronger.

“It’s not socially acceptable for adults to smoke anymore but kids don’t think ahead.”

Murray’s Barber Shop and Beauty Salon owner Geoff Gibson said he would rather see someone smoking while driving than drinking a bottle of liquor while driving.

He did not agree with the Government changing the packaging of “a legal product’ such as cigarettes when labelling on alcohol was remaining.

“The Government does not want to touch liquor and that causes social issues.”

Heather Sutcliffe has been the owner/operator of the Morgans Rd Four Square for 13 years. In that time, measures to curb smoking, such as graphic health warnings introduced in 2008 and hiding tobacco products in cabinets in 2012, had not stopped her regular smoking customers – or prevented new ones starting. She did not expect the new packaging to make an impact either.

“[Smokers are] addicted and try to stop but can’t manage it.”

At a cost of $25 on average for a packet of 20 cigarettes, people were still buying them, she said.

“We have parents come in with their kids and the kids are not allowed to have anything, but [the parents] still buy smokes. It puts families into hardship.”

Mountain View Dairy owner Kirtesh Shah did not think the bill would make a difference.

“People smoke anyway.”

And North Street Dairy owner Jay Tailor predicted once the bill was implemented, it may slow sales for the first six months but then it would return to pre-bill numbers.

A 24-year-old Timaru mother of two, who did not want her name to be published, admits she was attracted to smoking by the packaging at the age of 14.

“I used to buy a packet because of the colour [of the packaging] and buy a lighter the same colour to match it.”

She still smokes but said her children did not miss out on anything because what she spent would be money she spent on herself anyway.

“I buy smokes instead of getting my hair done.”

South Canterbury District Health Board smokefree facilitator Carmen Chamberlain said Australia had found the introduction, in 2012, of plain packaging, larger health warnings and new warnings, had reduced smoking prevalence beyond the pre-existing downward trend.

“It is estimated that plain packaging would have a similar overall effect as a five per cent price increase from a tobacco excise tax rise, without imposing an extra financial burden on low-income smokers,” she said.

“Overall, new evidence suggests that plain packaging will not only deter smoking initiation (its primary objective), but also stimulate cessation among smokers.

“Tobacco is a highly addictive product known to kill two out of three long-term users, and we welcome any steps that will support smokers to become smokefree.”

For face to face support to quit contact 0800 111 880 or check out the Facebook page Kick Ash South Canterbury.

Vaping is linked to deadly lung infections

Vaping may raise people’s risk of pneumonia and other deadly bacterial infections, a leading lung scientist has warned.

Professor Jonathan Grigg has found that the chemical propellants and nicotine used in ecigarettes both have a powerful effect on lung cells, effectively opening them up to infection by the bacteria that cause pneumonia.

“People who vape should consider vaccination against bacterial pneumonia,” said Grigg, professor of paediatric respiratory and environmental medicine at Queen Mary University of London.

Ecigarettes work by heating a mix of propylene glycol (the propellant), nicotine and various flavourings, creating a vapour that the user inhales.

Sex, Lies, and Cigarettes

In this Emmy-nominated documentary, Christof Putzel investigates Big Tobacco’s successful and deadly expansion into the developing world. From the smoking baby to the Marlboro Man, little is off limits in the “Wild West” of the world’s fastest growing smokers market.

-Overseas Press Club Award
-Prism Award

Sex, Lies, and Cigarettes from Christof Putzel on Vimeo.