Tobacco shrinkage or economic symptom?

Big tobacco took a┬áhit last month when RJR laid-off 570 white collar employees, many of them experienced industry veterans. They’ve not all gone yet, but the indications are clear – cigarette volumes are shrinking and right now there is a significant amount of cigarette down-trading.

The industry supply side, which typically lags the industry, is playing catch-up and following right along.

Molins Richmond laid off 8 last week.

Filtrona USA announced a resructuring – effectively removing the Americas executive / global quality management team;┬áleaving plant managers to run the business.

Maglio ceased trading somewhere around April / May and has not re-opened. nobody knows when or if it will.

There have of course been others and there will be more.

Do you have a comment on the state of the economy?

Is the tobacco industry down-turn independent of the economy or directly related?

Previously the industry has weathered economic down-turns well – but this appears not to be the case.

Let us know what you think?

6 comments ↓

#1 CIG GUY on 10.20.08 at 9:52 AM

Rumor has it that PM due to very soft volumes is laying folks off. Will be interesting to see if this is mentioned in their qrtly.

#2 VEEE CIGS on 10.21.08 at 9:01 AM

I agree I believe there is alot of downtrading to 4th tier products as consumers tighten up.

#3 Smoker Babe on 10.29.08 at 1:30 PM

I would lean towards cosumption declines being the culprit as folks just can’t smoke everywhere like they could before.

#4 EX WS on 11.08.08 at 2:12 PM

I believe that there is some downtrading as Commonwealth had sizeable share & volume growth during the 3rd quarter.

#5 Smoker Babe on 11.15.08 at 5:00 PM

Imagine the losses of people if the major tobacco companies didn’t partner with the government to get rid of all the 4th tier companies that were not MSA compliant. What a business!

#6 EX WS on 11.18.08 at 8:26 AM

We know one thing for sure the tobacco industry won’t be getting a stimulus package. They will without a doubt be a source of funding for the many socialist programs the new administration will give away to the people.

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