Altria's Smoke Screen
Will somebody tell us who exactly Altria (Stock Quote: MO) thinks it's fooling by supporting the nation's strongest-ever anti-smoking bill?
Cigarette-maker Altria Group released a statement Monday praising President Obama's signing of legislation giving the Food and Drug Administration regulatory authority over tobacco products as "an important and historic achievement." The Family Smoking Prevention and Tobacco Control Act allows the FDA to reduce the amount of addiction-causing nicotine in tobacco products and block often deceptive labels such "low tar" and "light." Tobacco companies also will be required to cover their cartons with large graphic warnings.
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"The decades-long effort to protect our children from the harmful effects of tobacco has emerged victorious," Obama said at a signing ceremony in the White House Rose Garden. The president, a smoker himself, later said he protects his immediate family from the sin sticks by not lighting up "in front of my kids."
No problem Mr. President, your secret from Sasha and Malia is safe with us and your other 300 million constituents. Just don't hide your smokes in Bo's doghouse and they'll never know.
Pointing out hypocrisy in the White House is not our mission, however. It's our job to uncover insincerity on Wall Street, and in this case it's Altria holding the proverbial smoking gun. There's a reason why the maker of Marlboro, Parliament and Virginia Slims backed the legislation while its much smaller competitors Reynolds Tobacco and Lorillard Tobacco sensibly lined up against the restrictions.
Why would Altria support a law antithetical to its own interests, you ask? Easy, because it increases the advantage of the industry's Goliaths over its Davids.
By placing fees on tobacco makers, the legislation cuts into profits of smaller sellers much more than a behemoth like Philip Morris, Altria's domestic cigarette manufacturing company, which, by the way, controls more than 50% of the U.S. cigarette market. Sterner advertising rules would also prevent lesser-known brands from gaining market share by curtailing marketing campaigns.
"We believe a comprehensive regulatory framework, implemented thoughtfully, can provide significant benefits to adult consumers," said Michael E. Szymanczyk, Altria's chairman and CEO on Monday.
No need for the smoke screen, Mike. We know it benefits Altria too.
Dumb-o-meter score: 85 -- Luckily we don't suffer from second-hand stupidity. .
