Smoking – and quitting smoking – is big business. According to the American Cancer Society, the average smoker spends $1,500 a year on tobacco products – representing at least 3% of the average American’s income. Of course, it’s not just an American habit. The major tobacco companies are reaping the benefits of smoking addictions worldwide too, making tens of billions of dollars in profit every year. The CEOs of these companies are, as you’d imagine, among the richest people in the world. Whatever your morals or ideas concerning tobacco, make no mistake – the business is extremely lucrative. Lobbying from the health services has ensured extreme measures have been taken to discourage the habit; those nasty pictures on the front of packets, the ban on advertising and most recently, in Australia, the removal of any and all branding from cigarette packets. The health initiatives have been minimally successful – numbers of smokers are on the decrease – but despite the fact that the tobacco industry is every marketer’s nightmare, the industry is still making unfathomable profit.
The tobacco business doesn’t just exploit addictive personalities; there are questionable practices within the industry itself. The top CEO of a tobacco company makes so much money that it would take a Brazilian tobacco farmer 6 years to earn what the company’s director makes in a single day. To make the CEO’s salary, he would have to farm tobacco for over 2 millenium – a wild income disparity.
The tobacco industry doesn’t make it easy for researchers to analyse; they typically drag their feet when releasing their financial data. The most recent data available in 2014 dates all the way back to 2010 and so many estimates of revenue from the global tobacco industry vary wildly. Most people believe that profits fall, stunningly, in the half-trillion dollar range – so while the tobacco industry is globally villainized, there’s no denying its power. If Big Tobacco was a country it would have the same GDP as Poland! It’s hard to dispute the overall economic impact of the tobacco industry, positive or negative. Governments, too, benefit from this lucrative industry with a comfortable tax revenue generated by cigarette sales. Overall, though, the negative effect on global economies may outweigh the positive due to tobacco’s negative impact on citizens’ health.
A contentious industry at best, tobacco companies are by turns vilified and glamourised – and we’ve selected the richest five of these controverisal international companies, sorted by total revenue reported at the turn of the decade.
5. Imperial Tobacco Group – $38.4 Billion
The UK-based Imperial Tobacco Group was founded in 1901 and produces a variety of tobacco products. They’re the world’s largest producer of cigars, fine-cut tobacco and tobacco papers and their brands are sold in 160 different countries. They hold about a 5% market share, and are globally headquartered in Bristol, England.
Through a series of clever acquisitions and mergers, Imperial Tobacco established itself as one of the world’s most prolific tobacco companies with an impressive portfolio of brands. They entered the US in 2007 when they acquired Commonwealth Brands – a surprisingly move, perhaps, considering the United States’ tobacco sales are on the decline.
Entering the American market was a huge step for Imperial. Though the average customer in America may not have heard of the Imperial group, they’re brands bring in tens of billions in revenue.
4. British American Tobacco $58.1 Billion
British American Tobacco, perhaps best known for the Lucky Strike brand, was formed in 1902 when American Tobacco and Imperial Tobacco decided to enter into a joint venture. Headquartered in London, England this company has a gross revenue of $58.1 billion.
Like many tobacco companies, BAT has been caught up in its fair share of scandal. In 2007, the government of Nigeria sued BAT for the billions of dollars it was costing the government in treating Nigerian citizens for tobacco related illnesses. African sales for the tobacco giant have been tarnished by other scandals, too, like when BAT was found to be breaking laws by sponsoring music festivals, selling individual cigarettes and advertising directly to children.
3. Japan Tobacco International $65.9 Billion
For nearly 88 years, the Japanese tobacco industry was monopolised by the government, ensuring that the Japanese government retained all of the cash flow from the sale of the tobacco leaf.
JTI has is another of the big five to be involved in a bit of scandal: In 1987, JT was sued to provide smoke-free cars on bullet trains, but the plaintiffs lost due to the fact that there limited research on second hand smoke at the time. That seemed to set a precedent, and so courts in Japan are reluctant to charge damages to the tobacco companies for the people suffering from the ill- effects of tobacco use.
The JTI has huge power, of course, that comes with the almost $66 billion profit.
2. Philip Morris International Inc $67.7 Billion
Philip Morris International was a division of Altria Group, a gigantic conglomerate of tobacco, foodstuffs and alcohol, until it struck out alone in 2008. It’s the biggest non-governmentally owned producer of cigarettes in the world and owns many of the most popular cigarette brands around the world – including Marlboro, Basic, Parliament, and Virginia Slims.
The group has also maintained a high profile by sponsoring some of the biggest sports in the world, especially racing. PMI was one of the largest sponsors of F1 racing in the world. The CEO of PMI certainly reaps the rewards of his company’s success, with a reported salary of $21.6 million annually.
1. China National Tobacco Co. $91.7 Billion
The largest tobacco company in the world is owned by the Chinese government. It enjoys a monopoly in one of the largest markets for cigarettes in the world – over 30% of the world’s cigarettes are consumed in China, and China National Tobacco Co. produces nearly all of them.
CNT makes most of its money from class D cigarettes, which are some of the lowest quality cigarettes in the world – although the company makes most profit from the C-class cigarettes. Foreign brands exist in China, but they only account for about 3% of sales. It’s worth noting that 3% of China’s total cigarette consumption is still, of course, over 50 billion cigarettes so it’s not a dry market by any stretch of the imagination.
Low production cost (and quality) combined with a huge population of enthusiastic smokers make CNT the richest tobacco company in the world with over $91 billion in revenue.
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