Menthol Additive: A Threat To The Tobacco Industry

1564 Words 6 Pages
• Efforts to ban additives, like menthol – Weight 2%
A threat to the tobacco industry is government restrictions on flavor additives to cigarettes. Like many consumer products, the tobacco product industry differentiates brands based on differences in taste. The menthol additive is especially important because it reduces the harshness of tobacco smoke. Tobacco product companies have long used menthol as a way to reduce the negative sensations of tobacco use in new smokers as well as creating product lines for experienced smokers. The relatively low weight assigned to this threat is mostly a function of the industry’s current ability to stay ahead of regulators. For instance, even though kreteks (cigarettes with clove additives) are illegal
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Like many consumer products, the tobacco product industry differentiates brands based on differences in taste. The menthol additive is especially important because it reduces the harshness of tobacco smoke. Tobacco product companies have long used menthol as a way to reduce the negative sensations of tobacco use in new smokers as well as creating product lines for experienced smokers. The relatively low weight assigned to this threat is mostly a function of the industry’s current ability to stay ahead of regulators. For instance, even though kreteks (cigarettes with clove additives) are illegal in the U.S., tobacco companies still sell these products. The cigarette has simply been turned into a cigar with the addition of reconstituted tobacco based rolling …show more content…
This has been weighted as the most significant threat facing the industry as many of the top tier firms rely on these markets for large amounts of their revenue, and all of the top tier firms have a selling presence in at least some of these markets. The top tier firms face significant questions in how they approach their operations in markets that produce profits, but where consumers are in decline.

• Buyers and Seller gaining bargaining power as globalization expands – Weight 3%
As globalization expands, buyers of finished tobacco products and sellers of agricultural goods could gain more bargaining power with the top tier firms. For buyers, there are many options available for purchase. For sellers, there are still consumers in the few markets that are not dominated by the top tier firms. A relatively low weight has been assigned to this factor as the threat is more theoretical at this point. Entry into a highly regulated market is difficult, and the scale of the top tier still means that buyers and sellers have little choice but to conduct business with

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