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Strategies & Market Trends : Value Investing

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To: Harshu Vyas who wrote (73840)	10/4/2023 4:00:33 PM
From: Spekulatius	Read Replies (1) of 78666

I don't smoke either. My parents did but both gave it up when they got older. However I love the cig / nicotine business economics. It's amazing that cig consumption has been declining for decades (since the 1950's) and yet tobacco has been one of the best business of all time, due to high FCF, low valuation (helps with buybacks) and virtually zero tangible capital required to run the business. All this due to pricing power offsetting volume declines. I think PM with their substitutes has probably the best path to create a very durable business that will throw of cash decades from now. BTI is second with their vapes and the lozenges (big in Scandinavia). They also a 29% stake in ITC which is basically the Indian tobacco monopoly (not quite a monopoly but very close). They have some work to do get the vape business profitable (there is regulatory nonsense going on the US where every dinky vape shop sells unapproved cheap vapes from China, but a high bar is set to get nicotine products from legit companies approved by the FDA at the same time with a tremendous backlog for approvals). Over time, I think these things will get resolved

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