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American Morning
Minding Your Business: Smoked Out
Aired October 25, 2002 - 08:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TUCKER CARLSON, CNN ANCHOR: Smoked out -- cigarette makers have been hiking the price of cigarettes so much, they're now feeling a pinch. It turns out people stopped buying them, at least from manufacturers.
Andy Serwer is here "Minding Your Business" -- Andy.
ANDY SERWER, "FORTUNE" MAGAZINE: Hey, Tucker, listen, for decades, this is the situation in the cigarette industry. People are quitting smoking, but cigarette makers were able to offset that by raising prices, and they said they would be able to do that year after year because it's an addictive product. I'm sorry cigarette makers, but it's an addictive product.
Anyway, they have finally hit the wall here in terms of being able to raise prices, because we are seeing a radical change in this business. What's happening are the discount cigarette makers are grabbing huge share of market.
Look at this. In 1998, only 3 percent of the U.S. share were these discount makers. These are these things called Rave, USA brand. Now it's up to 10 percent. That is huge if you're a company like Philip Morris, RJR, really eating into profits. And we want to take a look at the price of cigarettes, how they've risen, too, trying to offset that. You can see here, the average price of a pack of cigarettes has gone up. That's almost double, trying to offset that. People are saying, forget it, I can't afford to buy Marlboro's and Winstons.
CARLSON: Right, rather smoke a brand with a little sawdust in it?
SERWER: Yes, they mixed a little of this, a little bit of that. And it's also true that some of these small companies are impacting the business in terms of it use to be sort of an oligopoly with RJR and Philip Morris. Now these little companies are coming in here, and they're really making...
CARLSON: What does a pack of cigarettes cost here in New York, like 14 bucks or something?
SERWER: Almost, it's $7.50. And this brings up another point, which is the Internet, which has really taken huge -- look at this. This is what a pack of Marlboro costs in New York City, you buy them on the Internet. I mean, you have to be crazy not to buy it on the Internet, right?
CARLSON: If I can make a plug for my product, Nicorette.
SERWER: So you're a smoker?
CARLSON: Not anymore, thanks to Nicorette. It works wonderfully well, and it's cheaper and there is now sawdust in it, best of all.
SERWER: Yes, I mean, you know, you have to really wonder, we've done the math on this. If you smoke a pack of cigarettes a day for, you know, year after year after year, it's a thousand dollars a year and $50,000 over your life. That's crazy.
CARLSON: Plus, apparently, it's bad for you.
SERWER: Yes, I've heard about that.
CARLSON: Breaking news. Thank you, Andy. We appreciate it.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired October 25, 2002 - 08:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TUCKER CARLSON, CNN ANCHOR: Smoked out -- cigarette makers have been hiking the price of cigarettes so much, they're now feeling a pinch. It turns out people stopped buying them, at least from manufacturers.
Andy Serwer is here "Minding Your Business" -- Andy.
ANDY SERWER, "FORTUNE" MAGAZINE: Hey, Tucker, listen, for decades, this is the situation in the cigarette industry. People are quitting smoking, but cigarette makers were able to offset that by raising prices, and they said they would be able to do that year after year because it's an addictive product. I'm sorry cigarette makers, but it's an addictive product.
Anyway, they have finally hit the wall here in terms of being able to raise prices, because we are seeing a radical change in this business. What's happening are the discount cigarette makers are grabbing huge share of market.
Look at this. In 1998, only 3 percent of the U.S. share were these discount makers. These are these things called Rave, USA brand. Now it's up to 10 percent. That is huge if you're a company like Philip Morris, RJR, really eating into profits. And we want to take a look at the price of cigarettes, how they've risen, too, trying to offset that. You can see here, the average price of a pack of cigarettes has gone up. That's almost double, trying to offset that. People are saying, forget it, I can't afford to buy Marlboro's and Winstons.
CARLSON: Right, rather smoke a brand with a little sawdust in it?
SERWER: Yes, they mixed a little of this, a little bit of that. And it's also true that some of these small companies are impacting the business in terms of it use to be sort of an oligopoly with RJR and Philip Morris. Now these little companies are coming in here, and they're really making...
CARLSON: What does a pack of cigarettes cost here in New York, like 14 bucks or something?
SERWER: Almost, it's $7.50. And this brings up another point, which is the Internet, which has really taken huge -- look at this. This is what a pack of Marlboro costs in New York City, you buy them on the Internet. I mean, you have to be crazy not to buy it on the Internet, right?
CARLSON: If I can make a plug for my product, Nicorette.
SERWER: So you're a smoker?
CARLSON: Not anymore, thanks to Nicorette. It works wonderfully well, and it's cheaper and there is now sawdust in it, best of all.
SERWER: Yes, I mean, you know, you have to really wonder, we've done the math on this. If you smoke a pack of cigarettes a day for, you know, year after year after year, it's a thousand dollars a year and $50,000 over your life. That's crazy.
CARLSON: Plus, apparently, it's bad for you.
SERWER: Yes, I've heard about that.
CARLSON: Breaking news. Thank you, Andy. We appreciate it.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
