The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world.
Tobacco is a sector loved for its massive dividends, but makes many investors nervous because of the triple threat of litigation, taxation, and regulation. The last of these three is playing out in a major way in Australia, where a law has passed which mandates all cigarettes must be sold in the same olive drab packaging. Legislation like this has a dramatic impact on the dynamics of the tobacco industry. A recent Financial Times study hypothesized that legislation like this could depress cigarette prices by 19%, greatly impacting those companies which rely on strong brands to move goods.