One of the largest tobacco companies nationwide is attempting to save $300 million per year. Their first step in this feat is to lay off employees. In an article on Gizmodo Matt Novak explains the company’s objective is to invest the money into electronic cigarettes. Altria Group is starting the lay-offs to initiate funding to pull themselves out of the tobacco industry downfall.
Altria Group was once known by the more notorious former name of the Philip Morris Co. Their most well-known product was their Marlboro brand of cigarettes. Even in the decline of the industry Altria Group dominates more than half the cigarette market. Due to the reduction in tobacco cigarette smokers and the soaring popularity of e-cigarettes the tobacco industry has seen a major decline in profits. The lay-offs are Atria Groups proactive response to a tough situation regarding the tobacco industry.
The industries downfall began with the key findings of medical studies regarding the major health risks associated with tobacco, nicotine and other chemicals found in traditional cigarettes. Also, Laws restricting public smoking meant smokers were no longer able to enjoy a cigarette anywhere except in the privacy of their homes. Due to these problems and the soaring cost of a pack of cigarettes, many tobacco smokers were either forced to find other methods of smoking or to quit. Vaping became the viable alternative.
Mr. Novak explains in his article, with smokers spiraling away from tobacco cigarettes, tobacco companies quickly started to see a relentless drop in their profits. To counterbalance the damage they found other means to create cash-flow. Taking their businesses over-seas to developing countries such as Asia became a key investment option. In these countries laws regarding cigarettes were more tolerant. Without the tobacco industry breathing down their neck, and with little regulatory issues, the vaping industry prospered. The tobacco industry found a loophole and now wants their customers back. By using the new constrictive regulations holding the vaping industry down, they are buying up their competitors and manufacturing better products.
The tobacco industry appears to have discovered its new niche, e-cigarettes. Due to the choking regulations and high taxes smaller vape companies are being manhandled out. The newest FDA regulations are snuffing out the entire vaping industry. With the regulations, and a large number of states levying heavy taxes on vaping products, the only businesses that will be fiscally capable of remaining in the industry are large establishments, and big tobacco conglomerates.
The tobacco industry appears to be retaking its position in the battle between tobacco products and e-cigarettes. They have the financial ability to withstand the onslaught of the new regulations and taxes hitting the vapor industry. If the vaping industry slips away due to the ever tightening regulations and taxes, many have the confidence that smokers will maneuver their way back to tobacco cigarettes. Tobacco companies would be all for this. In regards to the general public, especially smokers, this would be a relapse back to the many health risks that we now know are caused by smoking the tobacco cigarettes.
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- “Makers of Marlboro Laying Off Workers to Invest in More Vaping”
20 June 2016