Are Tobacco's Days Numbered?

Peru recently made a decision that appears destined to result in the equivalent of a global "no smoking" sign, a development that spells yet more trouble for tobacco companies.

On Tuesday, Peru became the 40th country to sign the World Health Organization's Framework Convention on Tobacco Control, ensuring that the legally binding treaty will go into effect in 90 days. The treaty calls for tax or pricing rules aimed at cutting tobacco consumption, regulations that limit tobacco smoke exposure at work and in public, and large warning labels on tobacco products. Further, participating nations must "undertake a comprehensive ban of all tobacco advertising, promotion and sponsorship."

It's fairly obvious that this treaty spells trouble for tobacco companies such as Altria Group (NYSE: MO  ) , Reynolds American (NYSE: RAI  ) , and Imperial Tobacco (NYSE: ITY  ) . Of course, tobacco concerns are used to being viewed as public enemies in the U.S. And this isn't the first time that tobacco firms have felt the effect of global trends, as Bill Mann noted earlier this year that an Israeli health-care provider filed suit against tobacco companies.

However, the treaty seems to signal a new phase of antagonism. As a result of the agreement, governments around the world will soon introduce regulatory regimes hostile to tobacco use, and it seems reasonable to assume that rules will get only tougher over time. Furthermore, the global market represents a huge, and until now relatively reliable, source of revenue for tobacco outfits. For example, international tobacco consumption accounted for 45% of Altria's revenue for the first nine months of this year.

Even with all the cards stacked against them, tobacco stocks remain by some measures attractive investments. Nevertheless, the global regulatory environment may be getting just too hot to handle.

Brush up on your knowledge of the tobacco industry with these stories:

• Cigarette Profits at Risk
• Unlocking Value at Altria
• Reynolds' Smokin' Results
• The Cigarette Mafia
• Foreign Threats to U.S. Profits

To participate in a related discussion board, check out Altria .

Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.