if half the smokers in the world quit over night, what would happen to the cigg companies?

Question

would the ciggerette companies go out of business? would they go with supply and demand? would they bounce back from it?
*im not lookin for opinions. lookin more for some fact. my friend and i dont agree and i would like to know whos right.
i feel that if you own a company and all of a sudden you lose half your clients you would go out of business. my friend says that they will use supply and demand. i also feel that they would lose too much to use supply and demand. please help.
genie

would the ciggerette companies go out of business? would they go with supply and demand? would they bounce back from it?
*im not lookin for opinions. lookin more for some fact. my friend and i dont agree and i would like to know whos right.
i feel that if you own a company and all of a sudden you lose half your clients you would go out of business. my friend says that they will use supply and demand. i also feel that they would lose too much money to use supply and demand. please help.

Answer 1

Bankruptcy

Answer 2

I doubt they would dissapear, but there is no way to use "supply and demand" to recover from losing half your customers... The idea is that when demand is HIGH you can raise prices - when demand is cut in half it doesn't follow that you get to raise the price.... quite the opposit actually - they would want to lower the price to try to intice more people into buying their product (or have existing customers buy more because they think they're getting a better deal - this idea is seen in action with the two-for-one and buy-2-get-1 deals that are so common with cigarettes)....

Anyway, I can't agree with either of you. I doubt the cigarette companies would go totally out of business - don't forget that they still have a HUGE customer base even if it is cut in half.... but your friend is completely wrong to think that supply/demand will save their butts. I'm guess some of the biggest comanies will file for ch. 11 bankruptcy protection, some of the smaller ones will go under and close, but I think most will scale back their operations and stay afloat.

Answer 3

You are talking about a product (cigarettes) & not a brand name (like Marlboro). As such the impact would be split up over many companies & not just one. The larger companies who also make many other products other then cigarettes would scoop up the smaller compaines (or those whose cigarettes are the bulk of their buisness) & cater to the 50% of the smokers that remain, thus keeping their demand at the same rate.

Answer 4

CASE STUDY
ITC
This is an Indian company manufacturing primarily tobacco products but now have diversified business interests such as fashion apparel, food processing, agriculture, tourism and hospitalty....
So it is possible that other such companies across the globe too are involved in diversification of business rather than depend on only one line of products

Answer 5

It depends on the company, I guess. R.J. Reynolds (Camel & a few other brands) might suffer because I think their entire business model is based around tobacco. In contrast, Philip Morris (Marlboro & other brands) is owned by Altria, which has a diversified portforio of brands in the food & tobacco industries.

Answer 6

There is so much profit in cigarettes that they will after some adjustments (cut backs in factory's, employees etc.) go right on making lots of money

Answer 7

double cig prices....