According to the sales figures of tobacco companies including Philip Morris International (NYSE:PM), the consumption of cigarettes around the world is declining. However, according to the World Health Organization, the consumption of tobacco products is actually increasing globally. This is why I believe that Universal Corporation (NYSE:UVV) could now be the best tobacco investment on the market.

A contrarian company
Unlike other tobacco companies, Universal does not manufacture cigarettes. The company actually grows the tobacco used by cigarette producers. What's more, unlike Philip Morris' management, which is pessimistic about the global cigarette market outlook, Universal's management is priming itself for growth.

In particular, Universal has recently embarked on a program to increase the company's tobacco leaf and production capacity within Mozambique. Similarly, other smaller-scale projects are currently in development in several other countries to enhance local processing and leaf services. All in all, the company plans to spend $50 million increasing its processing capacity this year.

Meanwhile, Philip Morris International's management recently came out and said that investors might have to get used to lower returns from the company.

Lower returns
Philip Morris' management made this announcement at the Morgan Stanley Global Consumer Conference last week. In particular, the company revealed that 2014 was going to be a tough year of low growth and high investment, with the number of cigarettes shipped by Philip Morris expected to continue declining through 2014 but recover slightly during 2015.

However, with Philip Morris' volume of cigarettes shipped down 5.7% during the third quarter alone, led by a 2.5% decline in the total volume of Marlboro cigarettes shipped, another year of declining cigarette sales will put the company in a tough position for recovery.

These revelations by Philip Morris' management come just after the company's international peer, Japan Tobacco, announced plans to ax 15% of its domestic work force and close four factories as the demand for cigarettes wanes. The company also plans to close 15 of its 25 sales offices within Japan.

Philip Morris and British American Tobacco fight but Universal wins
However, there is also an interesting trend emerging here. You see, while Philip Morris is reporting lower sales, its Anglo-American peer, British American Tobacco (ADR) (NYSE:BTI), has been busy driving sales growth. This is where Universal starts to look more appealing when compared to Philip Morris.

British American Tobacco has been driving sales of its 'global drive brands' priced lower than Philip Morris' iconic Marlboro brand and designed to steal market share.

British American's four global drive brands are Dunhill, Kent, Lucky Strike, and Pall Mall, and together their sales have expanded 62% since 2002. These four brands represent 24% of the company's total volume. Unlike Philip Morris, which is highly dependent on Marlboro, British American is diversified.

These 'tobacco wars' between British American and Philip Morris do not affect Universal. As long as tobacco is being sold, Universal is going to make a profit and this is why the company now looks to be one of the market's best tobacco plays.

 

Fool contributor Rupert Hargreaves owns shares of Universal. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.