Recently one of the largest tobacco companies in the United States began laying off workers to try to save money, approximately $300 million. The reason behind the massive layoffs, according to Matt Novak’s article on Gizmodo, is the vaping industry. As the article states Altria Group is laying off workers to save the money to invest in electronic cigarettes.
Altria Group was formerly known as the Philip Morris Co. A company well-known for its Marlboro brand of cigarettes. Currently they hold over half the market in traditional cigarettes. With the decline in traditional smoking and the lean towards electronic cigarettes the company is taking a proactive steps and switching gears.
Problems in the tobacco industry began when campaigns regarding the health risks of tobacco, nicotine and other chemicals found in traditional cigarettes became the norm. This led to new regulations limiting public smoking areas. Smokers could no longer light-up in traditional spots like bars, concerts, and restaurants. This coupled with the increased cost per pack due to massive taxation, pushed smokers to find alternative ways to get their smoking fix. Others were forced to find ways to quit. For the vaping industry this was the incentive they needed for major growth. Vaping became the less expensive, healthier alternative to traditional tobacco cigarettes. Tobacco companies were hurting.
According to the article, when smokers turned to other means and tobacco companies began losing profits they turned to other sources. The most popular was to expand their business into developing countries such as Asia. The laws pertaining to cigarettes were more lenient, especially regarding smoking in public and advertising. As the vaping industry grew tobacco companies began to see this as another viable option for making money. The vaping industry was putting the tobacco industry out of business. Tobacco companies decided buying out their competitors, and becoming the best in the business was the route to take.
The tobacco industry is winning again. This time in the vaping industry. With new stricter rules and regulations pertaining to the vaping industry, smaller companies are finding it difficult to stay in the market. The newest FDA deeming regulations has the vaping industry in a tight neck hold. To stay in the game companies have to submit Pre-Market Product applications for every product not manufactured before February 15, 2007. Also many states are now putting taxes on vaping products and e-cigarettes. The only companies that can afford any of this are the large companies, and the big conglomerate tobacco companies.
Once again the tobacco industry appears to be in place to win at the smoking game. Either way they seem to have the upper hand. If they can survive the new regulations and taxes on vaping products, where smaller companies can’t, they will have the revenue there. If the vaping industry falls apart due to these new regulations and taxes, many experts believe smokers will return to traditional tobacco products. For tobacco companies it appears to be a win-win situation. For the health of smokers it’s going to be a tough call. There are still plenty of Dallas Vape Stores that carry all of the safest e-cig equipment on market to date. The safety of the consumer is always most important.
- “Makers of Marlboro Laying Off Workers to Invest in More Vaping”
20 June 2016