Smokes down, profits up

[Uma]

Reynolds American 4Q profit more than doubles - Yahoo Finance

the less cigs sold, the more profit the BT makes, due to not having to pay the legal fees. One commenter discussed the Master Settlement agreement, which sheds more light. Gotta love it.
The article also mentions vaping, btw.

Oh, I found the wiki, and yes, it does state that BT shells out to the msa for every cigarette sold, not for the amount of money they rake in. .
Tobacco Master Settlement Agreement - Wikipedia, the free encyclopedia

This means, that soon, those who live off the interest of their TSET payments will soon be having to dive into the principle ... Hence the panic, even from those hoarders.

What are your thoughts?

 

[rothenbj]

I think a lot of governments are going to be scrambling to make up the lost revenue.

 

[NorthOfAtlanta]

I think a lot of governments are going to be scrambling to make up the lost revenue.

From the pockets of those who choose a healthier alternative.

If they had not used the money for everything but helping smokers quit they wouldn't need to replace it.

 

[Katya]

Hmmm... Time to tax e-cigs????

 

[WarHawk-AVG]

What was the saying again? Oh yeah...follow the money

 

[Bill Godshall]

Seems like posters on this thread don't want cigarette volumes to continue declining, don't want more smokers to switch to vaping, and are spinning excellent public health news from Reynolds as an impending e-cig taxation conspiracy.

Everyone should be pleased that Reynolds reported a 8.6% cigarette volume decline in 4Q13, and a 6.8% decline in 2013, while
turning a profit (and beginning to market e-cigs).
http://files.shareholder.com/downlo...owth_as_key_brands_gain_market_share_4Q13.pdf

 

[Ohms Lawbreaker]

Law departments of giant corporations must be huge money pits I would guess. Costs a lot to buy them shiny new laws, I mean politicians, I mean getting what you want is expensive. How much of a pack of smokes is built-in lawyer fees? No offense to Saul Goodman.

When I was a little kid I heard an adult smoker say, "They always tax the vices." Now, a million years later, I begin to understand the implications of what he meant, and that they are far-reaching. Behavior modification, social engineering, kind of spooky, maybe off topic.

Frank Zappa said, "Tax the Churches. Tax the Businesses that the Churches own." Well, ya gotta hand it to Frank, Frank was frank. Would not Frank have written a great song about vaping?

 

[Uma]

Bill, we're happy that smoke sales are down. We are upset, however, by the stubborn & frantic push of the AG's, ALA, ACA, TFK, etc to ban eCigs and recommend smoking again. Remember when WHO suggested we all go back to smokes, and TFK (Slantzz) is telling smokers that smoking just one is as bad as smoking as a pack & is therefore ridiculous to cut down on smoking.
The ALA (etc) have footSoldiers in every town, handing out propaganda. Slantzz is emailing towns, etc, spreading the lies and propaganda.
The less cigs sold, the harder these weirdos push.

 

[Uma]

From Wikipedia

States were to receive over $206 billion over 25 years:
Up-front payments - $12.742 billion.
Annual Payments, beginning April 15, 2000 - $183.177 billion through 2025.
Strategic Contribution Fund, 2008-2017 - $8.61 billion.
National Foundation ($250 million over 10 years).
Public Education Fund (at least $1.45 billion 2000-2003).
State Enforcement Fund ($50 million, one-time payment).
National Association of Attorneys General ($1.5 billion over next 10 years).
Payments by the Participating Manufacturers (PMs)[edit]
The amount of money that the PMs are required to annually contribute to the states varies according to several factors. All payments are based primarily on the number of cigarettes sold.
For the OPMs (Original Participating Manufacturers), the payments are determined in accordance with their relative market share as of 1997. The payment amount of a particular OPM is also dictated by the "Volume Adjustment," which compares the number of cigarettes sold in each payment year to the number of cigarettes sold in 1997. If the number of cigarettes sold by an OPM in a given year is less than the number it sold in 1997, the Volume Adjustment allows that OPM to reduce its payment to the settling states. In other words, a reduction in the amount of cigarettes sold by the OPMs results in the settling states receiving less money.
The MSA sets forth specific amounts that the OPMs have agreed to pay the settling states each year. Those annual amounts are subject to a number of adjustments. The OPMs each pay a portion of the total annual payment according to each OPM's "Relative Market Share" for the preceding year.[18][19]
For the SPMs (Subsequent Participating Manufacturers), the payments are determined by their relative market share as compared to other SPMs. For the SPMs that joined the MSA within 90 days of its execution, the annual payments are determined by the number of cigarettes an SPM sells beyond the "grandfathered" volume—calculated as the higher of either the individual SPM's market share in 1998 (the year the MSA was executed) or 125% of the SPM's market share in 1997. If an SPM's sales volume or market share declines below the grandfathered amount, then it is not required to make any payments to the settling states. SPMs that failed to join the MSA within 90 days of its execution do not receive the benefit of any grandfathered amount.
Both exempt and non-exempt SPMs' annual payment obligations under the MSA are "calculated on the basis of the percentage of the four original participating manufacturers' total domestic market share represented by the SPM[s'] domestic market share . . . . In other words, the denominator in the calculation is the total OPM market share, not the total OPM and SPM market share."[20] Furthermore, the parties agree that the amount the SPMs pay per cigarette is roughly the same as the per-cigarette amount that the OPMs pay under the MSA. To the extent the amount differs, the OPMs pay slightly more than the SPMs on a per cigarette basis.[17]

 

[low_tar_neil]

That is amazing, can only imagine Altria see something similar and that's why they rushed to buy Greensmoke.

 

[LDS714]

Frank Zappa said, "Tax the Churches. Tax the Businesses that the Churches own." Well, ya gotta hand it to Frank, Frank was frank. Would not Frank have written a great song about vaping?

Gregory Peccary part 2?

 

[twgbonehead]

Would not Frank have written a great song about vaping?

You sure "Give me dichromium Cob" wasn't a reference to a Provari?

 

[LDS714]

From Wikipedia

States were to receive over $206 billion over 25 years:
Up-front payments - $12.742 billion.
Annual Payments, beginning April 15, 2000 - $183.177 billion through 2025.
Strategic Contribution Fund, 2008-2017 - $8.61 billion.
National Foundation ($250 million over 10 years).
Public Education Fund (at least $1.45 billion 2000-2003).
State Enforcement Fund ($50 million, one-time payment).
National Association of Attorneys General ($1.5 billion over next 10 years).
Payments by the Participating Manufacturers (PMs)[edit]
The amount of money that the PMs are required to annually contribute to the states varies according to several factors. All payments are based primarily on the number of cigarettes sold.
For the OPMs (Original Participating Manufacturers), the payments are determined in accordance with their relative market share as of 1997. The payment amount of a particular OPM is also dictated by the "Volume Adjustment," which compares the number of cigarettes sold in each payment year to the number of cigarettes sold in 1997. If the number of cigarettes sold by an OPM in a given year is less than the number it sold in 1997, the Volume Adjustment allows that OPM to reduce its payment to the settling states. In other words, a reduction in the amount of cigarettes sold by the OPMs results in the settling states receiving less money.
The MSA sets forth specific amounts that the OPMs have agreed to pay the settling states each year. Those annual amounts are subject to a number of adjustments. The OPMs each pay a portion of the total annual payment according to each OPM's "Relative Market Share" for the preceding year.[18][19]
For the SPMs (Subsequent Participating Manufacturers), the payments are determined by their relative market share as compared to other SPMs. For the SPMs that joined the MSA within 90 days of its execution, the annual payments are determined by the number of cigarettes an SPM sells beyond the "grandfathered" volume—calculated as the higher of either the individual SPM's market share in 1998 (the year the MSA was executed) or 125% of the SPM's market share in 1997. If an SPM's sales volume or market share declines below the grandfathered amount, then it is not required to make any payments to the settling states. SPMs that failed to join the MSA within 90 days of its execution do not receive the benefit of any grandfathered amount.
Both exempt and non-exempt SPMs' annual payment obligations under the MSA are "calculated on the basis of the percentage of the four original participating manufacturers' total domestic market share represented by the SPM[s'] domestic market share . . . . In other words, the denominator in the calculation is the total OPM market share, not the total OPM and SPM market share."[20] Furthermore, the parties agree that the amount the SPMs pay per cigarette is roughly the same as the per-cigarette amount that the OPMs pay under the MSA. To the extent the amount differs, the OPMs pay slightly more than the SPMs on a per cigarette basis.[17]

That really explains a lot.

Let me see if I understand...

By selling less product, BT will have a much higher profit margin and seemingly more profit overall.

States, attorneys general and anti-tobacco lobbying groups will receive less money.

Hmmmm...

So, some conjecture...

States have nothing to gain by the population becoming healthier by smoking less. So lumping vaping in with smoking (therefore discouraging it and making it less attractive) is done more for the bottom line than anything else. It looks like it could be a two-fisted whammy to them - less settlement money and less tax revenue.

Attoneys General, who recently started screaming loud and long for (IMHO) excessive regulation, are also safeguarding their income by doing so.

So like has been said over and over - follow the money. These self-serving, lying, pretentious, disingenuous politicians don't give two soggy cigarette butts about the public health - they're only concerned with the public wallet and how deeply they can reach into it.

 

[Uma]

Exactly!! And don't even get me started on the DAILY smoke tax we each paid on our 2pad habit over the years. That was another drop in their vault.

 

[Uma]

Cigs are down, profits up. Cigs are down eCigs are up. Guess what makes the headlines now?
This
Today, Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Rep. Henry A. Waxman (D-CA), and Rep. Peter Welch (D-VT) sent a letter to Iowa Attorney General Tom Miller, California Attorney General Kamala D. Harris, and Vermont Attorney General William H. Sorrell. The lawmakers urged them to classify electronic cigarettes as cigarettes under the Tobacco Master Settlement Agreement (MSA) to prevent e-cigarette companies from targeting youth and getting them addicted to their products.
http://www.e-cigarette-forum.com/fo...master-settlement-agreement.html#post12213090
US Senate Committee on Health, Education, Labor, & Pensions: Newsroom - Press Releases

Surprised? No.

 

[rothenbj]

Cigs are down, profits up. Cigs are down eCigs are up. Guess what makes the headlines now?
This
Today, Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Rep. Henry A. Waxman (D-CA), and Rep. Peter Welch (D-VT) sent a letter to Iowa Attorney General Tom Miller, California Attorney General Kamala D. Harris, and Vermont Attorney General William H. Sorrell. The lawmakers urged them to classify electronic cigarettes as cigarettes under the Tobacco Master Settlement Agreement (MSA) to prevent e-cigarette companies from targeting youth and getting them addicted to their products.
http://www.e-cigarette-forum.com/fo...master-settlement-agreement.html#post12213090
US Senate Committee on Health, Education, Labor, & Pensions: Newsroom - Press Releases

Surprised? No.

I liked you post, but not really. How stupid are these people? They can't have it both ways but with this administration, who knows.

 

[Katya]

I liked you post, but not really. How stupid are these people? They can't have it both ways but with this administration, who knows.

Sure they can. Those are the very same people who claim that unemployment and underemployment are good because people who have no jobs have more freedoms and more time to spend with their families.

 

[rothenbj]

Sure they can. Those are the very same people who claim that unemployment and underemployment are good because people who have no jobs have more freedoms and more time to spend with their families.

Right, like Obamacare will result in the equivalent of 2.5m lost jobs, but it's because people will chose to work less to get more government subsidies. Those 2.5m jobs wouldn't be lost if someone else was going to be hired to fill in those hours so there's be only a change in who was doing them. The actual quote from the CBO, "The ACA will reduce the total number of hours worked, on net, by about 1.5 to 2% … almost entirely because workers will choose to supply less labor." If those hours weren't lost they should have written, "The ACA will open up jobs for the unemployed when current employees decide to supply less hours worked, on a net, by about 1.5 to 2%"

 

[Uma]

I bet you'll like liking this post. I know I sure would if I could.
The State is a Parasite on Society - YouTube

 

[Uma]

Sure they can. Those are the very same people who claim that unemployment and underemployment are good because people who have no jobs have more freedoms and more time to spend with their families.

That's what's already been happening to 1/2 the workers, for too many years to count, but Obamacare will assure it will now be 9/10 of workers.
I can't resist posting this funny, I hope I don't get in trouble