Why in news?
Philip Morris International - the global tobacco giant is backing the Foundation for a Smoke Free World by committing $1 billion.
How is the market presently?
- Smoking culture is declining globally.
- China, which accounts for 43% of the world’s cigarette consumption, has seen a particularly big fall.
- Tobacco industry has also been suffering serious regulatory backlash of late.
- In the US, the Food Drug Authority - FDA ruled that cigarettes would only be allowed to contain non-addictive levels of nicotine.
- Newer recreational modes like vaping, e-cigarettes, smoke-free tobacco are getting increasingly getting popular.
Why such a move?
- Every disruption causes traditional businesses to either perish or refigure themselves to survive.
- Anti-smoking campaigns have been a major disruption to the cigarette businesses.
- This thereby requiring course correction for survival and Philips Morris seems to have realised this.
- Big tobacco’s future rests on quickly switching over to alternatives.
- Hence, there is value in hedging against the fallout of anti-smoking advocacy.
- Big cigar manufacturers having already lost out on the first-mover’s advantage to much smaller e-cigarette makers.
- By supporting anti-smoking drive, the hope now is to capitalise from the next major shift in consumption patterns – the movement of chronic smokers towards smokeless alternatives.
Source: Financial Express
