Post of the Day
May 14, 1998

From our
Philip Morris Board


Subject: perspective on MO
Author: gmuller

I would like to add some unemotional non-US perspective to the MO debate (just using approx. figures):

U.S.A.
------

  • 250 million people
  • love Kraft foods
  • drink Miller beer
  • maybe 15% smoke = 37 million (I am one of them)
  • Government unfriendly to smokers and lots of tort lawyers

Singapore
---------

  • 3 million people
  • eat some Kraft
  • don't drink Miller
  • many years ago the government banned any tobacco advertising, and vending machines prohibited
  • in-store cig advertising prohibited
  • teenage smoking and cig sales to under 18 year old prohibited
  • smoking in airconditioned places prohibited
  • cigarettes cost S$5.20 (US$3.50) pack
  • no duty free allowance for visitors (this is a duty-free country)
  • continuous anti smoking government campaigns, but 15% still smoke = 0.45 million (with rising teenage smoking) and cigarette smuggling is a real problem!

China
-----

  • 1,500 million people
  • don't eat much Kraft
  • don't drink Miller
  • but 30% love the Marlboro man = 450 million
  • Government collects taxes, no lawyers

Indonesia
---------

  • 300 million people
  • don't eat much Kraft
  • don't drink Miller
  • but 30% love the Marlboro man = 100 million
  • Government collects taxes, no lawyers

Malaysia, Thailand, Philippines, Vietnam, etc...
------------------------------------------------

  • 150 million people
  • similar to Indonesia

and so the list goes on....

IMHO, even if the US is as successful as Singapore (a very small and tightly controlled country), there will still be a lot of customers left for MO! Eventually, politicians will have other things to do, and lawyers will get diminishing returns at some point in the future.

In the meantime, I will be unemotional, continue to buy a lot more MO stock, and collect my fat dividents until sanity will finally set in a couple of years from now, and that's when I take my capital gains... With sound financials and at 4+% yield MO is like a bond with huge upside potential.

just my 2c worth...

gert, LOOOONG on MO :-))


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