A little story about Big Tobacco

In 1997, U.S. states sued the pants off the four biggest cigarette manufacturers in the country. The size of the settlement was $368.5 billion. It was called the Master Settlement Agreement, punishing the industry for marketing harmful products for decades.

Big Tobacco was also hit with massive regulations and tax hikes as the West fought against the most popular human addiction. At the time the MSA was sealed, I had just switched from Marlboro to Silk Cut because their packs looked very stylish and the advertisements were Something Else.

Public space smoking bans followed, prices soared, and smoker numbers took a plunge although anecdotal evidence had it that smokers from ban-happy countries enjoyed something like cigarette tourism, travelling to ban-free countries and making up for nicotine lost by smoking their heads off.

Like many at the time, I thought Big Tobacco was basically finished. They would never make billions again. People were just not smoking as much and a new generation of healthier individuals was growing up, never to touch the stuff, and good for them and their hearts and lungs. Boy, was I wrong.

This Tuesday, Philip Morris International reported a 23% increase in first-quarter earnings per share, on revenues that beat analyst expectations. The company shipped 33.1 billion heated tobacco devices globally in the period, boasting that Iqos device and, I presume, stick sales now account for over 50% of its net revenues, surpassing the flagship Marlboro brand.

Philip Morris expects further growth in these sales. And it’s not the only one. Big Tobacco is going smokeless and it’s going to make them billions. As I write this, I occasionally pull on my own heated tobacco device and ponder the irony that has certain U.S. states and other jurisdictions frothing at the mouth with the prospect of giving Big Oil the Big Tobacco treatment. Go on, punks, I say to myself. Make them stronger.