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Big tobacco still sees big business in America’s poor
The US is pegged as an exciting market, but this growth disproportionately affects the poor including the industrys growers and laborers
Wheeling his oxygen tank in behind him, Leslie E Adams shuffled into the lung doctors exam room, and let out a long string of rattling coughs. He tried to catch his breath, and coughed some more. He is 63, but looks a decade older.
I got stage three black lung. There aint no stage four. Im on my way out, said Adams. Now, I am slowly going down the mountain.
The American smoking rate has plummeted since the mid-20th century. Yet somehow the US remains a growth market. That is partly because the proportion of smokers has fallen, but the population is rising.
Add a nation bedeviled by inequality and those public health gains, while significant, have simply not reached every corner of the country.
West Virginia arguablyhas the highest smoking rate in the nation. In places such as Logan County, where retired coal miner Adams is from, the smoking rate was 37% in 2015. The last time the national average matched that was 1974.
I smoked Winston, I smoked Viceroy. I dont know what I was smoking last, I couldnt tell you, said Adams, about brands that once belonged to Reynolds and British American Tobacco (BAT). I just smoked anything. If it blowed smoke, I smoked it. Adams is disabled with stage three pneumoconiosis, better known as black lung.
Adams will tell you he quit, but the truth is, after seven days in the hospital on a ventilator, he still tried smoke three times. I smoked about a half a one, and it just I mean your lungs it just takes all the oxygen out of them.
Despite smoking bans, hundred-billion-dollar settlements and a smaller proportion of the American public smoking, Reynolds longtime ally BAT sees the US as an exciting opportunity for long-term growth.
Through the years, as the population rose, the proportion of Americans who smoke shrank, but their raw numbers stayed the same at around 45 million smokers. Further, since the 1990s, the threat of tobacco litigation diminished and regulations proved less costly than feared, leaving tobacco companies room to increase the price of a pack. In America, where cigarettes are still relatively cheap, BAT will only need to sell two packs of cigarettes to make the same profit as selling six in other markets.
America is highly attractive and the worlds largest tobacco profit pool outside of China, BAT chief executive Nicandro Durante said, as he described a $49bn deal to buy Reynolds American in January. The deal will make BAT the largest listed tobacco company in the world.
It also means revenue from eight out of 10 cigarettes sold in the US will be pocketed by BAT and a rival group of companies Altria Group, a US Philip Morris company. Not since Theodore Roosevelts presidency in the first decade of the 20th century has tobacco been so consolidated.
Mergers and acquisitions have allowed tobacco companies to squeeze profits from customers and the supply chain. Companies charge more for cigarettes, while union organizers say poverty wages keep families on the ropes. Both are trends seen worldwide.
At the same time, the typical profile of smokers has changed radically. In 50 years, smoking moved from glamorous to common. Wealthy Americans have the lowest smoking rates, and the middle class has increasingly quit; instead smoking became a burden of the poor, less educated and marginalized.
The $49bn merger between BAT and Reynolds, expected within weeks, is the most recent act of faith by tobacco companies that selling cigarettes to Americans will remain profitable long into the future, even if the Americans who buy them cant afford it.
As a young man, Adams worked in mines so tight he laid on his belly to dig. He dug his own hole to piss in. When he learned mine owners handed out dust masks that didnt work, he sued.
Adams lives in the Appalachian mountains, in a valley between two green hills affectionately called a holler. He and his wife had two daughters and a son, and those children had eight of their own.
He started smoking at eight, sneaking beside the creek to puff corn silk. He smoked cigarettes for 40 years. Now, after one son died of a drug overdose, unable to chase after his grandkids and still craving cigarettes, Adams questioned whether cigarettes should be legal at all.