Although the crisis has vituperated its economy, The US has been recovering during the last period and it is bound to improve in its performances during next years. Despite this, the Tobacco industry is not living its best existence now and figures suggest that it is in a declining phase.

The very first reason why this happens seems to be the decreasing rate in smoking people nowadays: according to a survey of the Centre of Disease Control and Prevention the share of the American population smoking today rounds up to 18%, a figure that goes against any trend in the past and which is the lowest from the 1960s. Further data say that the trend has been constantly negative during the last decades and against all odds. What’s more, not only did the amount of smoking people decrease, but also those who still smoke have definitely decreased the number of cigarettes per day per day, and such phenomenon regards especially adults, who are the main consumers in this sector.

The aforementioned trends reflect two important aspects. The first one is the fact that the sensibilisation campaigns against smoke undertaken by many institutions over the last years, among which CDC itself, are gaining the upper hand and people are understanding how harmful such habit is for all of us. Second, the tobacco industry in becoming more and more volatile during this period, it is not as safe as once and its stocks are suffering from this situation.

However, is such condition a mean for changing our consideration on such industry? Should investors avoid placing their money on it? Actually, if we considered broader horizons, in terms of global economy, we would easily understand how big its potential is.

The potentiality of such industry is definitely due to the capability its main actor, Phillip Morris International, of making it still lively and attractive in the eyes of investors. PM is the leader in the sector, for it is present in almost all countries with its sales and consolidated brand. The diversification of Philip Morris’ brand is finding fertile ground thanks to the fact that it is able to understand the main features of the different countries and exploit their potentialities, in what ends up being a smart outsourcing. Especially the most developing countries, such as India and China, are proving to be very profitable for the firm, for the middle class is increasing and the higher the income the higher the possibility to spend on non-necessary goods, such as cigarettes. Among the many luxuries that one could afford, indeed, cigarettes turn out to be the one people want to part with least.

Together with PM, many are the firms if the sector exploiting such situation, despite the persistence of a controversial point: some countries, indeed, are undertaking and hindering such industry both because authorities consider their product harmful for the society and because, being a non-necessary good, they are increasing taxes on it in a period of economic difficulty. Additional significant problems might be the existence of the black market and of the state-owned firms in many countries. Thus, if the tobacco market is not being drastically vituperated by such huge risks it is easy to understand how strong such market is.

Overall the advantages are perfectly able to outperform the downfalls and investors should still keep strong attention on such industry. Big multinationals are indeed able to adjust process according to necessities, taxes and factors of any specific countries; they are able to exploit the factors of growth of any area in the world; last but not least firms are offering very high returns on shares and free cash flows to investors.