Wednesday, January 31, 2007

Smoking is as healthy as ever.

Yesterday was a large rally at the State Capitol for Smoke Free Minnesota. The name of the bill that citizens were asking their legislators to support is titled Freedom to Breathe and has the audacity to assert that even workers in bars and restaurants have a right to breathe clean air. Other states have passed similar legislation. Minnesota, once the leader in public health issues, has been too "MN nice" to get legilsation like this passed...until this year!

My state Senator whose partisan caucus approaches this issue as something that the "free market needs to take care" and that government should not interve, recognizes that when 74% of those who identify with his political party support government intervention on this serious public health issue HIS "free market" is speaking loud and clear! This was a stastic that even surprised me! Surprisingly he reluctantly said, "you do know this bill will pass and it will be signed". This was the first time this early in a session that I've heard an legislator make such a remark in my 10 years as a citizen lobbyist. One of our group asked him to share this thoughts and he gave them honestly. He has a brother who smokes and he calls him "idiot"--no recognition or compassion for the deep addiction smoking causes. He also is a member of the local American Legion but won't go to it because it is so unhealthy and calls the attempts that are coming to exclude these places "hypocritical". Interestingly the Commander in Chief of the American Legion National Organization wants to make all posts smoke-free. His comment when hearing this news was "I guess the free market is speaking here too. That's good to know."

So I was feeling like yesteday was a very great day. So much progress is being made in this important area--until I read the news this morning...Here's an excerpt from an article from the N. Y. Times about how tobacco stock is doing better than ever. As in so many other areas of our lives, there is still so much more work for us to be done.

Tobacco’s Stigma Aside, Wall Street Finds a Lot to Like
Published: January 31, 2007

...Still, on Wall Street, analysts are much less enthusiastic about the future of an independent Kraft Foods — which makes a wide range of well-known food products — compared with Altria’s prospects.

Kraft has struggled for several years to find its way in a rapidly changing marketplace, and Irene B. Rosenfeld, the chief executive, is expected to lay out her plans for a turnaround next month.

While many analysts say that Kraft is better off without the taint of tobacco, it still faces formidable challenges in repositioning its products at a time when consumers are less loyal to brands and more attracted to natural products, analysts said.

Investors in Altria are expected to get 0.695 share of Kraft for every share of Altria they own, said Ms. Herzog, who predicted that Altria would distribute the shares early in a 120-day period between the announcement and the distribution.

There is, however, a possibility that the distribution could be delayed by a legal challenge.
Michael D. Hausfeld, a lawyer in a pending class-action lawsuit against tobacco companies, said he might file an injunction to stop a spinoff of Kraft. The lawsuit, first filed in 2004 and known as the Schwab case after the lead plaintiff, Barbara Schwab, contends that cigarette manufacturers defrauded consumers by marketing light cigarettes as safer than regular cigarettes.

The idea behind seeking an injunction is that a judgment could be so enormous that Altria might need Kraft — with a market capitalization of $57.25 billion — to pay off the damages.
“Apparently at this point they have decided to spin Kraft off because they believe there’s a diminishment in their legal exposure,” Mr. Hausfeld said. “We disagree. If anything, the light’s fraud presents the strongest legal merit claims against the industry and Philip Morris.”

He estimated that a judgment in the case could be “several hundreds of billions of dollars” because 30 million to 50 million people who smoked light cigarettes made by several different tobacco companies were affected over more than 30 years. Asked to comment on Wall Street’s affection for tobacco stocks, Mr. Hausfeld said: “Wall Street loves money. And cigarettes are money. You are clearly earning huge returns at the expense of people’s lives.”

Several analysts who track Altria have dismissed the chances of an injunction’s success, and in an October conference call with investors, Mr. Camilleri, the Altria chief executive, said, “We believe that such an action would not have merit and that we would ultimately prevail.”
Altria’s plan to spin off Kraft is part of a long-term revamping plan that may ultimately split the domestic and international tobacco businesses into two companies because Altria thinks they would have more value as independent companies.

For example, Philip Morris International would no longer be dragged down by problems associated with smoking in the United States, like diminished demand and government intervention.

“At times, as a tobacco investor or a tobacco analyst, it seems like an unending stream of negative news,” Mr. Adelman of Morgan Stanley said. “You hear about smoking bans, a new piece of legislation. You hear about criticism from the World Health Organization.
“And then lo and behold, manufacturers release their results,” he said. “And they are good.”

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Tobacco companies have identified those most vulunerable to succumb to this extremely addictive behavior and it is working for them around the world. I'm reminded that I need to watch the movie "Thank you for Smoking" which I've not yet seen. Has anyone else seen it? People who went to the rally yesterday are the voices necessary to counteract the strong tobacco lobby and marketing industry. Apparently smoking is as healthy as ever--what a sad oxymoron.

1 comment:

American Lung Association of Minnesota said...

BTW: It was the National Commandant of the Veterans of Foriegn Wars (VFW), not the American Legion. But you captured his views quite well.

Thanks for joining us at the Capitol. It was a good event.