In most Western countries, smokers think that cigarettes have become expensive because of higher taxes. In reality, according to the World Health Organization at least, though the price of cigarettes has seen a constant increase in the past years, the percentage of their cost that goes to the State has decreased and is today less than half of its value
in 1965. Meanwhile, the price of cigarettes is at its all-time high. The money smokers and their families are forced to spend on cigarettes could otherwise be used on food, clothing or family holidays. Having no other option rather than to pay Big Tobacco’s exuberant prices, in the absence of competition, is downright robbery.
“There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” – Henry Ford
It is not difficult to calculate the earnings of a cigarette manufacturer. Even without having the recipe, all we need to do is examine a cigarette to determine the tobaccos used, the amount of reconstituted tobacco and other materials and the paper and filter. Knowing the labor cost of a country, having market quotes and prices, it is very easy to calculate the costs of production, and then relate these to the market price. The margin of error is minimum. Our calculation for the production costs of a carton of Marlboro in the United States is $1.20. Considering that this carton is sold to the wholesaler at $7.00, cigarette manufacturing must
be one of the most profitable businesses in the world! The Racketeer-Influenced and Corrupt Organizations Act (RICO) devised to combat organized crime is the lawsuit of the century, aimed directly at Big Tobacco. It failed however to handle their monopolistic control of the market, with which organized crime can increase prices without having to worry about any form of competition. The scenario that is opening will give the giants even better prospects for stealing from their consumers. With the prohibition of tobacco advertising, they got rid of another big expenditure without needing to reduce their prices.