Counting the Cost - Big tobacco's big profits - Counting the Cost

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Smoking kills. So if you're in an industry where your product is damaging the health of people who buy it and they know it, then you should in theory go out of business. But shares in companies listed in the Bloomberg tobacco producers index have risen 351% since 2009, making it one of the best investments of the past decade.

Graphic warning labels and taxes seem to have some impact on reducing the number of smokers but less so on industry profits which keep rising. And investors can't quit buying the stocks because operating profits continue to go up.

Different tax regimes around the world mostly account for the difference in price. But governments are not as hooked as the consumers who buy cigarettes. Consumers cough up for higher prices becuase they crave the drug in tobacco - nicotine. Without nicotine, addiction there would be no tobacco industry.

The tobacco industry knows this and has diversified to develop other nicotine products like E-cigarettes. A "starter kit" - which includes an e-cigarette device, batteries, nicotine cartridges and other accessories — can cost upwards of $100.

The electronic cigarette market has grown from just $50m in 2005 to an estimated $7.5bn last year, according to Euromonitor. It's all part of the unique economy of addiction.

More from Counting the Cost on:

YouTube - http://aje.io/countingthecostYT
Website - http://aljazeera.com/countingthecost/

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News & Politics
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