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Show U. S. Smoke Makers parts of the world cigarette market, which is growing at a rate higher than our own. And recent cigarette price increases in-creases are expected to bolster domestic profits contributions. contribu-tions. The pricing flexibility of the industry has allowed makers to offset rising costs over the years. In recent study of U.S. cigarette firms, the Research Department of Babson's Reports Re-ports has concluded that prospects pros-pects for the field are bright. The common stock performance perform-ance has been better than the more comprehensive market averages. Following in the track of last year's excellent financial achievements, 1981's results to date favor another year of revenue and profit advances for the U.S. cigarette industry, according to Babson's Reports Inc., Sept. 10, 1981. WHILE OPERATIONS continue to register only modest mod-est year-to-year gains in cigarette output, profits have increased at a much healthier pace. In addition, the majors have the benefit of successful non-tobacco activities to add to their fortunes. Over the years cash generated from tobacco has been funneled into a variety of enterprises, so today to-day cigarette makers normally have growth potential in a number of fields. Health concerns have brought about a substantial change in company product mix as well as the market served. At present, about one- third of all adult Americans smoke, but this is down from the estimated 40 percent back in 1964 when the Government initiated its anti-smoking campaign. cam-paign. THE SURGEON General s warning of health dangers actually led to a shake-up in cigarette products with a solid move away from full-flavor brands to low-tars. The latter have caught on in the marketplace, market-place, which may simply be a trade-off by health-conscious consumers in lieu of quitting. Currently, the low-tar market mar-ket share is estimated at 48 percent. per-cent. The growth in this segment seg-ment has been fantastic, having hav-ing tripled in the past five years alone. Looking ahead, we feel low-tars will continue to reap increasing patronage. THE INDUSTRY is comprised com-prised of very few members controlling the bulk of a sizable market. To illustrate this point, in 1980 the combined market share of R.J. Reynolds and Philip Morris topped 63 percent of the total. These two industry kingpins' cigarette sales exceeded some 388 billion bil-lion of the total 612 billion merchandised mer-chandised in the domestic arena. are-na. Cigarette sales last year were the largest since 1974. and the fine results occurred despite a recessionary environment en-vironment as well as retail price increases. Recorded financial achievements achieve-ments by member firms is impressive. im-pressive. For Example, at the end of the first-half. Philip Morris again added to its advancing financial results over a period extending back some seventeen consecutive years. Prospects favor additional addi-tional progress for this number-two factor in cigarettes. FURTHERMORE, member firms have not been successful only in cigarettes, but in other Fields as well. R.J. Reynolds is not only numberone in cigarettes cigaret-tes domestically, but also has interests in food and beverages, bever-ages, transportation, energy, and packaging products. In 1980 RJR chalked up its 10th consecutive year of record re-cord sales and earnings, with consolidated revenues approaching $9 billion. The multiple fields served should continue to provide for growth in several markets simultaneously. simul-taneously. THE COMPANIES have the benefit of several years of good earnings and relatively healthy domestic demand so far in 1981. Although the U.S. market mar-ket is somewhat mature. U.S. firms are participants in many |