Tobacco company profits rising

  • 31/05/2016

Today is world smokefree day.

Governments around the world are raising tobacco taxes and introducing plain packaging. So what has this done to tobacco company profits?

The six tobacco giants collectively made US$44 billion in global profits in 2013. That was the most recent year for which full figures are available.

In New Zealand, British American tobacco has the largest market share.

It made a profit of $126 million last year, down from $131 million a year earlier.

But the trend in New Zealand and globally has been for rising profits in recent years.

Cost-cutting has helped.

The companies have also managed a clever combination of price rises and price cuts.  Prices have risen for some "premium" brands.

In some cases those price rises have been by larger amounts than the increase in excise taxes.

Sales volumes have also lifted for some cheaper brands.

The tobacco giants are also enjoying rising sales in Asia and other developing markets.

Research costs are rising however, as the tobacco companies invest in electronic cigarettes.