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Big Tobacco is About to Get Even Bigger

Big Tobacco is About to Get Even Bigger

Written by Tara Culp-Ressler

Big Tobacco companies, which are attempting to hang onto American consumers even as smoking rates continue to decline in this country, are now looking to consolidate their efforts. A major deal announced this week will allow one cigarette maker to corner about a third of the U.S. market.

Reynolds American Inc. — the company that sells Camel and Pall Mall cigarettes — will pay about $27.4 billion to acquire its rival Lorillard, which manufactures Newport cigarettes. That will put some of the country’s most popular cigarette brands under one roof, and merge the second- and third-biggest tobacco companies in the United States. As the New York Times notes, the acquisition will essentially create “a $56 billion cigarette colossus.”

Now that the two tobacco giants have combined their business, they’ll also have greater geographic diversity. Reynolds’ sales have been strong in the Western portion of the country, while Lorillard has sold more in the Eastern half.

Over the past couple decades, after facing more scrutiny from public health advocates who eventually ended up passing tighter regulations on the tobacco industry, cigarette makers have attempted to reposition themselves through mergers and acquisitions. This particular deal will likely give Reynolds an edge in the e-cigarette industry, which is shaping up to represent the future of tobacco.

“This transaction in our view will be very positive for the global tobacco industry and could be just the beginning of future transactions with e-cigs/vapor being the underlying catalyst,” Wells Fargo analysts told the New York Times.

About 42 million Americans are regular smokers, defined as people who report they smoke every day or some days. But smoking rates in the U.S. remain stratified by class, education level, and age. According to the Centers for Disease Control and Prevention, about 30 percent of the adults living below the poverty line are smokers, compared to just 17 percent of those living above it. Cigarettes are most popular among adults between 25 and 44 years old. The Washington Post argues that tobacco companies are essentially relying on business from the young and the poor in order to stay profitable.

And according to a recent report from the Campaign for Tobacco-Free Kids, cigarette makers have already carefully marketed their products to appeal to those demographics. They’ve essentially made it easier to get hooked on cigarettes by increasing their levels of nicotine, as well as using new additives to help enhance nicotine’s impact. They’ve also tried to make smoking more pleasurable for young people by adding flavoring, sugars, and menthol to mask the effect of inhaling smoke. That means that today’s cigarettes are actually more dangerous than they were 50 years ago — and a smoker today now has more than twice the risk of lung cancer than a smoker five decades ago.

The head of the CDC believes that tobacco remains the greatest public health challenge of our time. Smoking is still the leading cause of preventable death in the U.S., accounting for about one of every five deaths every year.

This post originally appeared on ThinkProgress.

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Photo Credit: Thinkstock

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92 comments

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2:23PM PDT on Jul 22, 2014

"...today’s cigarettes are actually more dangerous than they were 50 years ago — and a smoker today now has more than twice the risk of lung cancer than a smoker five decades ago." WOW! I still have acquaintances, one who just ended chemo etc, who STILL smoke! I smoked for many years and cold-turkeyed it 25+ years ago. Best decision I ever made!

10:01AM PDT on Jul 22, 2014

I have never smoked. But my parents were 3-pack-a-day chain smokers for many years while I was growing up, and I've no doubts that I inhaled lots of second-hand smoke during that time. It came down to them either quitting, or them dying. Thankfully they both quit smoking.

I find the concept of casual smoking totally disgusting. Yes, there are some ritual smoking practices that I have no issues with, but those rituals are not performed every day, let alone once or twice an hour.

Now let me point out another thing about smokers - how many fires are started by them every year. I wish that I did not have to wait for the day when DNA testing will be utilized to find a smoker that casually threw a lit cigarette out of a vehicle's window as they traveled down a road. Newsflash, everyone - whether or not that action starts a fire, it is still a felony offence. Throwing burning material from a vehicle is either arson, or attempted arson. Mandatory prison sentence. Hey, instead of sending all these non-violent drug offenders to keep up the private prisons, why not replace them with smokers that try to start fires (even un-intentionally)?

Personally, I was once trapped between two branches of a wildfire that was started, guess how? By a tossed out cigarette along a highway. I'm glad that my mother and I escaped that situation - yes, scared out of our wits, but thankfully unharmed.

Oh, and now some companies are trying to say e-cigs are worse than cigarettes. Must not l

8:14AM PDT on Jul 21, 2014

Congrats AMY! Hope you can keep it up & even get rid of the E cigarettes.

12:18AM PDT on Jul 21, 2014

Smoking is so ridiculous. I was a smoker for 20 years. I haven't had a cigarette since the New Year. Yes, I have been using e-cigs... and my recommendation to someone who wants to quit is finding a local e-shop and testing out some e-juice.
Even if you you keep smoking with e-juice, the majority of the carcinogens are gone and you (and your home) won't smell like a nasty mess.

1:11PM PDT on Jul 20, 2014

You have to blame all governments: they should be bankrupting the tobacco companies, making their poison illegal and then suing them for the health care costs they have inflicted on society ever since the link between smoking and its related diseases was first proposed.

The trouble is that they are as addicted to the tax revenue as the smokers are to their poison.

3:59AM PDT on Jul 20, 2014

Thank you.

1:38PM PDT on Jul 19, 2014

Glad I don't throw money at this...

12:17PM PDT on Jul 19, 2014

So glad to no longer be a smoker...

11:18AM PDT on Jul 19, 2014

Thanks.

11:17AM PDT on Jul 19, 2014

Noted

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