Tuesday 27 March 2018

First The Pubs, Now For The Corner Shops

I've written about the pathetic and futile tobacco control policy of 'divestment' before. If you've not heard of it, the theory kinda goes something like this:
"If we convince people to stop investing in tobacco companies, Big Tobacco will inevitably fail and victory will be ours! Ours I tell you! Muahahahaha!"
It's the kind of daft policy a ten year old with a very loose grasp of how the world works would think up, but tobacco control apparently seem to think they're onto a winner. Hint: They're not.
As I've explained before, it just goes to further show that tobacco controllers have absolutely no clue about economics and finance.  
The only loser in this sad story are the poor pensioners and future pensioners who are cursed to have lost high performing stocks as a result of stupidity. The tobacco industry couldn't give a toss. 
You see, the price of a company's shares is entirely separate to the profitability or true worth of the business. Unless the company concerned is thinking of announcing a rights issue to raise funds - something tobacco companies don't have to do because they are highly profitable - the share price is irrelevant to them as far as income is concerned. 
Profitability and worth are real things, share price is just a measure for those who wish to make money on the back of that profitability and worth by way of yield and dividends. 
Righteous types can sell billions of shares on principle but it doesn't matter one iota to 'Big Tobacco'. The share price may wane but nobody will stop smoking because of it, but whoever buys the shares after that makes a lot more money.
The sum total of people who will quit smoking as a result of divestment is precisely zero, as Snowdon further emphasised writing for City AM last year
You have to wonder whether campaigners for divestment really understand how the stock market operates. From their rhetoric, you would think that Exxon Mobil and Philip Morris were startup companies looking to raise money by floating on the stock exchange, and that they can be starved of cash if people refuse to buy their shares. 
This is obviously not how it works. Divesting from tobacco stock will have a negligible impact on the share price and will have absolutely no impact on either cigarette sales or company profits. There is no mechanism by which selling shares could deter a single person from smoking.
Yep, it's just further proof that tobacco control has now ceased most of its efforts at helping people to quit smoking, and are now dedicating their time towards pseudo-political posturing against big industry instead. It's not about health anymore, it's just about bashing 'Big Tobacco', as we saw from the laughable and Orwellian WCTOH earlier this month. 

Well, now it seems that Cancer Research UK is hoping to extend this idea to UK corner shops, as this research funded by them illustrates. 
In comparison to other products sold in small retail shops, profit margins from tobacco are low (4–6%). For example, profits (sic) margins on confectionary (sic) sales are estimated at 30%
Well yes, if I compare apples with oranges I could make many stupid claims too. Of course margins on cigarettes are going to be small, probably because of the huge 80% tax that government has slapped on them; margins are larger on confectionery because the Exchequer has not found a credible way of taxing children ... yet. They're still working on that particular piece of hideous state interference. 

Yet again, though, we see tobacco control embarrassing themselves with their knowledge of how businesses work, abjectly failing to understand smokers, and overlooking what their role is supposed to be. Let's, for example, assume that CRUK manage to persuade small retailers to abandon cigarette sales entirely. What public health benefit will accrue? 

Well, nothing, of course. How does a retailer deciding to stop selling cigarettes make anyone quit smoking? 

These cretins seriously believe that corner shops stopping selling cigarettes will inevitably lead to locals smoking less or quitting because of the nuisance. Erm, no, it would more likely mean smokers would buy from supermarkets instead - almost certainly cheaper due to economies of scale - and they'd stock up by buying in bulk rather than as single packs. The only loser here is the local shop who has stupidly forsaken footfall as a main driver of his business, on the advice of tax-sponging no-marks employed in an unproductive industry which is a costly drain on our economy.

Because, you see, the study admits this in its data. This research found that tobacco is important not just because of footfall, but also because of revenue: 90.3% say tobacco sales are important or very important and 80.2% say they rely on tobacco sales for footfall - precisely the mechanism that drives customers to the more lucrative 30% profit margins of other products such as, well, confectionery.

If tobacco controllers weren't such irretrievable morons when it comes to basic economic principles, they might have worked it out for themselves. After all, 250 years ago Adam Smith wrote about how self-interest drives business, not the financially-illiterate, state-led coercive bullshit peddled by cranks and charlatans in 'public health'.
"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
This is true of any business. I don't run mine to benefit my customers, I run it to make a living. Just like corner shops sell cigarettes because it is helpful to their bottom line; if it wasn't they wouldn't sell them. If I didn't make that living, what's the point? I'm not a charity. Only people who float through life not having to worry about where the next dime is coming from can possibly get this fundamental business principle wrong.

Which is why it is completely alien to tobacco controllers.

Hmm, so let's think how corner shops could better serve their own self-interest and simultaneously benefit health goals without obliterating their footfall, shall we? The authors of this research say that some retailers reported higher margins on e-cigarettes, but make nothing of it. Wouldn't this be a better message to send from a CRUK-funded study than this blunt and flawed insistence that small shops abandon cigarette sales simply because tobacco control hate the tobacco industry and don't give a monkey's chuff about the profits that local retailers need to stay in business?

Well yes, but you won't hear tobacco controllers making that argument. In fact, in Cape Town, one of their finest said the exact opposite in a press conference about e-cigs.
Between 2012 and 2015, the UK phased out the display of cigarettes in shops, and all cigarettes now have to be hidden behind shutters but “as tobacco was removed, e-cigarettes came in and took their place within their displays,” said UK scientist (University of Stirling) Catherine Best.
Yes Catherine, isn't that the entire fucking point? This, by the way, is the same University of Stirling which advised government that no pubs had closed as a result of the smoking ban. Do you see a trend?

There really is no pleasing these people. And let me emphasise once again that this study was funded by CRUK, those fine upstanding champions of e-cigs and harm reduction. Yet their researchers were presented with an open goal here and hoofed the ball into row Z of the upper tier instead. They can advocate for retailers to cease selling fags as much as they like, but the only result will be as many bankrupt and empty corner shops as there now are pubs. Here was an opportunity to offer a positive message but, dagnabbit, they just couldn't shake that addiction to coercion and bullying of honest, hard-working businesses instead.

Christ! What a waste of their time and, more importantly, everyone else's money.  

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