From ‘Call for Phillip Morris’ to ‘Winston tastes good like a Cigarette should’ – we really have ‘Come a long way Baby.’ In the 1950s tobacco farming was the cash crop for the deep South. With changes in laws plus the huge increase in federal and state taxes on a pack of cigarettes, the economy of the tobacco states and the industry has changed. There are now online tobacco merchant accounts that lawmakers feel may be abusing the tax laws so the credit card associations have labeled them high risk.
However, the tobacco companies are not dead. They are like chameleons. They have been smart enough to keep up with the changing mores, diversify and thrive. According to the CDC, in 2011, the tobacco industry spent $8.4 billion on cigarette advertising and promotional expenses in the United States alone, and 83.6% ($7.0 billion) of this expenditure was spent on price discounts. Smokeless tobacco advertising and promotion rose to $451.7 million in 2011–up from $444.2 million in 2010. Approximately 124.6 million pounds of smokeless tobacco were purchased in the United States in 2011 (up from 122.6 million pounds in 2010), with three companies selling nearly 90% of this form of tobacco. Online tobacco merchant accounts sell an abundance of e-cigarettes.
Not only are the major players diversifying into smokeless e-cigarettes, but they are also buying companies that sell smoking cessation products. It almost seems like a dichotomy. But remember, the tobacco industry is not all about cigarettes – there are cigars, pipe tobacco, humidors, and other accessories.
IBISWorld says that ‘the industry is heading into a growth phase, with exports on the rise. Higher cigarette consumption rates and fewer tobacco product regulations in major export markets such as China will drive demand. Furthermore, US prices of tobacco leaf will remain competitive, supporting growth in the industry.’
Fox News reported that yearly sales of pipe tobacco rose more than eight-fold from fiscal 2008 to 2013, while sales of roll-your-own tobacco declined almost six-fold. Over the same period, large cigar sales doubled, while small cigar sales dropped to just 700 million from 5.7 billion.
In an article on the American Lung Association website, they say that as cigarette sales in the United States decline, the three largest tobacco companies – Altria (Philip Morris), R.J. Reynolds, and Lorillard are expanding beyond cigarettes. All three Big Tobacco companies are selling e-cigarette products and Altria is selling smokeless tobacco and cigars, while R.J. Reynolds is selling smokeless tobacco, including new dissolvable products.
The latest ASH report has a quote from Warren Buffet: “I’ll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It’s addictive. And there is fantastic brand loyalty. According to the recently release Tobacco Atlas, tobacco industry profits are greater than ever and estimates of revenues from the global tobacco industry are likely to approach half-trillion U.S. dollars annually.
For the online tobacco seller, this means that there are bright years ahead. Do not let conservative credit card processors block you from an affordable online tobacco merchant account. If you have less than 3% chargebacks and have not broken any laws, eMerchantBroker can have you on your way to accepting credit cards and checks with a new online tobacco merchant account.
Get approved for an online tobacco merchant account in 48 hours, contact us today at 818-621-4893.