>>What damage will the tobacco companies undergo as a result of increased axes on cigarettes? Will growth subside? I think not.">
Are you serious ?? Look at the 10-K where management makes the following remark:
"Any future increases [in excise taxes], the extent of which can not be predicted, could result in volume declines for the industry . . . and might cause sales to shift from the premium segment to the discount segment".
Most analysts who attempt to quantify elasticity of demand conclude that a $1.10 excise tax would reduce industry volume {SALES) by 28% over the 5 years. Industry sales have been decling at a 2% annual rate and MO has gained market share to mitigate this adverse trend. However, since their awesome pricing power of the past is now being usurped, the gains in pricing are going to the governements via taxes instead of the shareholders and volumes are declining. That's my whole point.
>"I'm saying is that IF there is a settlement, it will require strong liability protection orthe tobacco industry will fight all the unconstional provisions in court; that is tosay, there will be no settlement. "<
And if they fail to reach a settlement you can count of punative excise taxes which require no industry support and enjoy massive public support. (REad todays WSJ, p A24 today. Reiterates my point . about how the industry blew it's critical poilital clout).
>"Kessler is needed more than industry support" is the farthest thing from the Truth here: MONEY to support the liberal and political agenda. "<
You again, missed my point. Of course it's all about money. But the pols need cover otherwise they stanbd before the country as tax-hungy socialists . (Truth) So with the Kessler & Koop endorsements, they seal their "health" concern COVER .
>"If there is one thing that the vast majority of Americans hate more than big tobacco it is BIG BROTHERGOVERNMENT! If Big Brother wins here, then next year they will go after another industry for their programs.<"
Tell that to Dow-Corning and the defendands in breast implant litigation. You are dreaming. Don't confuse your love of democracy with support for an industry under siege which owes it's current problems to its own miscalculations and, frankly, errors in judgement due to a burning desire to get ou og the "litigation" .
The documents pouring out in the Minn trial are gonna make the industry's current weak position even weaker.I hope they walk away and go back to court, starting in Fla to overturn the sleazy legislation which stripped them of their traditional defenses--as Maryland just copied. I will root for them if they return to a fight over principal. As I recently wrote to a friend re MO:
"What's changed? Well, primarily the company abandoned their decades-long and hugely successful strategy of fighting for their rights as legal company, in a legal industry in a free society. The tobacco companies signed on to a complete reversal of their proven policy and, in essence, tried to pay-off all of the states, trial-attorneys and others attempting to cash-in on their lucrative businesses."
Now they stand naked and back to square one before the settlement talks except they owe a few billion to states, flight attendandts, etc.
RW |
