Still, as part of the consumer staples sector, the tobacco industry won't suffer any lasting scars from the pandemic. Altria's 9.5% stake in Anheuser-Busch InBev ( BUD -1.48%) gave it additional exposure to the crisis alcohol contracted significantly when bars and restaurants around the world closed. The COVID-19 pandemic has had an impact on the industry, forcing plant shutdowns and slowdowns, and it even affected duty-free sales for Philip Morris. Most of the discussion around tobacco stocks focuses on traditional cigarettes and next-generation products, but it's worth noting that these tobacco companies also sell smokeless products such as chewing tobacco, as well as cigars, pipe tobacco, and accessories like rolling papers. After the big three, there are some smaller stocks investors may want to consider, including Imperial Brands ( OTC:IMBBY) and Vector Group ( VGR -4.32%). With few competitors, these companies have been able to raise prices to generate more profits, even as cigarette sales volumes have fallen. Investors are hopeful that next-generation products will eventually catalyze stronger growth.Ī wave of consolidation in the industry has left just three major players in tobacco: Altria, Philip Morris International ( PM -0.63%), and British American Tobacco ( BTI -1.41%). Revenue and profit growth have been slow across the industry, but these stocks still appeal to investors because their profits and dividends have been so reliable, and profit margins are still strong. Tobacco stocks come with a number of risks, including increased regulation and declining smoking rates. Some companies have looked beyond tobacco, partnering with cannabis businesses to capture the potential growth in an industry that bears many similarities to tobacco. As a result, the industry has sought to pivot to next-generation products such as e-cigarettes and vaporizers, which circumvent some drawbacks of smokable cigarettes like unwanted odor and are perceived by some as better for your health. Smoking rates have steadily declined around the world, especially in the U.S., due to health concerns and increasing regulations. Today, however, tobacco companies face a new set of challenges. The tobacco industry produced some of the 20th century's best performing stocks.
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