Contents page
Industry strategy 3
— Conclusions......................................................................................................... 9
Key recommendations 10
— Philip Morris International (PMI)......................................................................... 10
Key recommendations 11
— BAT (UK)........................................................................................................... 11
Key recommendations 12
— Lorillard (US) ..................................................................................................... 12
Industry characteristics 13
— Is consolidation over? ........................................................................................ 16
Valuation of tobacco stocks 17
— Valuations.......................................................................................................... 18
— Absolute ............................................................................................................ 19
— Growth rates...................................................................................................... 20
— Profitability......................................................................................................... 21
— Financial strength .............................................................................................. 22
Major markets by volume 23
Cigarette brands by volume 24
Cigarette manufacturers by volume 25
Western European market 26
Central and eastern European market 28
Asia-Pacific market 30
North American market 32
Latin American market 34
African and Middle East market 36
US litigation 38
— Types of action .................................................................................................. 42
— The US legal system.......................................................................................... 45
— European legislation and litigation...................................................................... 48

— Taxation – harmonisation...................................................................................48
— Advertising and sponsorship ..............................................................................49
— Content and labelling requirements....................................................................50
— Public smoking bans ..........................................................................................50
— Product display bans..........................................................................................51
— Framework Convention on Tobacco Control (FCTC)..........................................51
— Non-US litigation background.............................................................................52
— Canadian tobacco litigation ................................................................................54
Company section 55
Altria Group 56
BAT (UK) 58
BAT (Malaysia) 60
Gudang Garam 62
Imperial Tobacco 64
ITC 66
Japan Tobacco 68
KT&G (Korea) 70
Lorillard 72
Philip Morris Int. 74
Reynolds American 76
Swedish Match 78