How to eliminate the tobacco industry

There are two ways to eliminate the tobacco industry: through competition (right but unlikely) or through exclusion (wrong). The better way is to align the industry's goals with public health.

Eliminate the tobacco industry!

It’s a catchy idea, and it has been embraced by various actors in public health and tobacco control. For example, see ASH(U.S.): Making Tobacco Industry Elimination Inevitable (February 2026)

The “tobacco endgame” represents a fundamental shift from reducing harm to permanently ending the source of harm. This report defines tobacco endgame as “a concrete plan to end all activities of the tobacco industry with a specific timeline and strategy tailored to each region’s needs.”

Or try the arrivistes at The School of Moral Ambition: Abolish the Tobacco Industry — No One Should Be Allowed to Addict and Poison Others on an Industrial Scale (May 2024) or Tobacco Is One of the Deadliest Industries of Our Time. Let’s Take It Down Once and for All (April 2025)

The idea of eliminating the tobacco industry stems from the belief that there is an irreconcilable conflict between the tobacco industry’s interests and public health. It follows, therefore, that destroying the tobacco industry must be good for public health. I have previously discussed the Irreconcilable Conflict Principle and the harm it has caused. This is a follow-up post.

What does elimination even mean?

You should expect clarity on such a lofty goal. How would we know when it is achieved, and what is the scope? Does it mean all companies, including state-owned or parastatals, or just their bête noire, the “transnational” tobacco companies like BAT, JTI and PMI? Does it refer to commercial operations in smoked tobacco, all tobacco, or all nicotine products? Does it include anything a tobacco company might diversify into - such as cannabis, or “nootropics”? Does elimination mean bankruptcy, hostile takeover, or does it mean, for example, these companies being reduced to less than 5% of of the market capitalisation they had when this goal was declared?

How’s it going?

If elimination is the aim, it is not going too well. From the start of 2024 to 5 April 2026, BAT stock was up 92%, PMI up 68%, and Altria up 68%. The Dow Jones is up by 23% [Yahoo Finance]. In general, the companies started a climb from 2024 after a few years in the stock market doldrums.

Stock price changes (%) relative to 31 December 2023 close by 5 April 2026 for three representative tobacco companies

Nor are these companies planning to surrender and go out of business. BAT, for example, claims it has rediscovered its financial mojo (what it calls its “algorithm” ): this means it expects medium-term annual growth of +3-5% in revenue, +4-6% in adjusted profit from operations, and +5-8% in adjusted diluted earnings per share. [BAT results 2025, Feb 2026]. PMI has a healthy financial outlook: its price-earnings (P/E) ratio is higher than the others at 22; BAT is currently about 13, and Altria is about 16. This ratio measures a company’s market value relative to its operating profits (or the share price relative to earnings per share).

The higher the multiple, the greater the market’s faith in the company’s future growth prospects. Some analysts argue that PMI’s higher multiple arises from a higher proportion of its revenue from non-combustibles: PMI had 42% of its net revenue from non-combustibles, BAT 18.2% in 2025 - implying that it is further advanced and better positioned in transition than BAT. This was the position in 2024.

Source: Hexis Capital Management 2026 (with thanks)

Over the longer term, these companies have faced a range of performance setbacks from regulators and litigators, as well as a relentlessly hostile political environment, so please don’t take this as investment advice! All I am saying is that they look, at least on the surface, to be financially healthy and growth-oriented.

In fact, I think they are at significant risk, but not in a good way.

The core problem with the elimination narrative

The problem with these elimination ideas is that they just wish away the demand for nicotine. Imagine trying to do that for alcohol (a far more damaging drug than nicotine). There will be demand for nicotine, whether we like it or not. That demand is likely to grow now that it can be used without much harm to the user or others, and without a package of coercive, punitive and stigmatising anti-smoking policies justified by the aim of preventing harm. The deterrence to nicotine use is now far lower.

The demand for nicotine is rooted in its psychoactive effects - pleasure, calming, stimulation, concentration - a reward system that can consolidate into dependence or addiction depending on how you define these terms, the user, and the product. It is not our purpose to discuss this here - see more in my briefing, Nicotine for Policymakers.

Yet, I do believe there are two ways today’s tobacco companies could be eliminated: one is good, but unlikely, the other is bad, but more likely.

Two ways to eliminate today’s tobacco companies

I see the market moving away from smoked products and towards smoke-free products, driven primarily by consumer self-interest, changing cultural norms, and economic advantages. The consumer will migrate from high-risk to low-risk products over time, at different rates for different age groups, and with a preference for buying the products they want lawfully. At the same time, large illicit markets are emerging to meet nicotine demand where prohibition, regulation and taxation stop adult consumers from obtaining the products they want at an affordable cost. Here’s my simple segmentation:

The consumers’ preferred transition in the nicotine market

Given a robust demand for nicotine, there are only two ways to eliminate the tobacco industry (at least those firms that comprise the industry today).

1. Losing out to competition during a transition from today’s market to a future in which most nicotine use is through non-combustible products.

2. Exclusion from future markets arising from prohibitions, endgame measures, excessive regulation or taxation replacing legal supply with large illicit markets.

1. Losing: The nicotine market becomes increasingly competitive

Good, but less likely. Annihilation could come from competition from companies not currently counted as part of the tobacco industry. Leaner, faster, more innovative companies would take market share in new products, accelerating the decline in smoking and degrading the companies’ pricing power (the ability to raise cigarette prices to compensate for declining volumes). This would starve tobacco companies of cash and squeeze their operating margins (which are very high and vulnerable to competition), putting pressure on their cost base. Retailers would break the hold that tobacco companies have on display space and favour popular products offering high retail margins. Competition, if allowed to rip, would break the tobacco companies’ oligopoly power.

But history suggests that tobacco control activists cannot handle disruptive innovation.

The case of Juul in the United States. Interestingly, we saw this emerging in the United States with the rise of Juul Labs Inc. from 2016 to 2020. But that market-based process of creative destruction was brought to a rapid halt by strident opposition from tobacco control activists (fuelling a moral panic) and by federal agencies through regulation (FDA’s absurdly bureaucratic PMTA process and demands for flavour bans) and disinformation (CDC’s EVALI scare). They worked together to take Juul’s most successful products off the market because young people also used them as alternatives to cigarettes. Suppose that they had let Juul finish the job? They have done the opposite: we still don’t have the innovative Juul 2 in the U.S. market, even though it was available in the U.K. five years ago. So Juul remains on its mission to destroy the U.S. cigarette trade with a product now more than ten years old: Marlboro would like to thank the FDA for its assistance.

The case of snus. Snus, a tobacco product, has destroyed most of the cigarette industry in Sweden, where smoking is now down to below 5%. The European Union intervened in 1992 and stopped the disruption from spreading further by banning snus. Since the snus ban, 20 million Europeans have died from smoking-related diseases. Instead, suppose it had championed snus as a harm-reduction alternative? The cigarette industry may already be in retreat in Europe, and nicotine pouches would have been introduced 20 years ago. Instead, 24% of Europeans still smoke, and the EU is talking about banning pouches (already banned in several EU member states).

The case of India. With over 100 million people who smoke, India banned vapes and heated tobacco products in 2019. For this act of hostility to innovation, its health minister was awarded a WHO Director-General medal in 2021. In doing so, the WHO signalled its hostility to innovation and disruptive entrants and normalised the protection of incumbent tobacco interests.

The revealing Dirty Ashtray and Orchid awards. In 2025, at the COP-11 meeting, New Zealand was awarded the humiliating “Dirty Ashtray” for supporting vaping as an alternative to smoking and encouraging people to switch and despite impressive reductions in smoking, notably among Māori, tobacco control activists deemed this the wrong sort of success. They favour prohibitionist measures and awarded an “Orchid” award to Mexico for its anti-tobacco industry rhetoric and vape prohibitions that have gifted the emerging nicotine market to violent cartels.

The problem is that regulators and tobacco control activists loathe markets, innovation and competition, and respond with reflex hostility. As Calestous Juma puts it in his landmark book on the history of innovation:

Claims about the promise of new technology are at times greeted with skepticism, vilification or outright opposition—often dominated by slander, innuendo, scare tactics, conspiracy theories and misinformation.

The assumption that new technologies carry unknown risks guides much of the debate. This is often amplified to levels that overshadow the dangers of known risks.

Calestous Juma, Innovation and Its Enemies: Why People Resist New Technologies. Oxford University Press; 2016.

But that hostile reflex usually has the unintended, if predictable, effects of raising barriers to entry and favouring the largest, richest and incumbent companies: namely, the tobacco industry. Or driving markets into illegal trade.

It is no surprise, therefore, that in the U.S., 82 of the 89 Pre-Market Tobacco Application authorisations for smoke-free alternatives to cigarettes have been granted to large tobacco companies. [FDA database - 5 April 2026], despite 26 million applications from thousands of smaller firms. To navigate that system, a company needs: high volumes to spread the costs, few and simple products, deep pockets and plenty of time, huge technical resources, and financing through cross-subsidy from cigarette sales. Who does that suit?

If regulators and activists stopped protecting the tobacco oligopoly from competition, then this mechanism is plausible, and I would be happy if they lost out to better products and leaner firms. That is competition at work, and I think the companies would struggle if they faced the raw gale of creative destruction. But also, they would accept that it was fair.

The main reason this route is unlikely to destroy the tobacco industry is that the type of regulation favoured by tobacco control activists helps incumbent big players and crushes the smaller entrants. The companies can also buy innovation and innovative companies, though that has not always been a conspicuous success.

Making this work

If they want this method to work, they would need an approach to communications, regulation, and taxation that puts the maximum competitive pressure on tobacco companies from entrants, upstarts, and insurrectionists. This would accelerate the trend toward smoke-free products, leaving them with an ever-diminishing cigarette profit pool to cross-subsidise their activities in smoke-free products.

Using risk=proportionate regulation and taxation to increase competition within the smoke-free sector and to rapidly starve the cigarette cash-cow

The problem is that the governments, public health agencies, academics, and tobacco control activists involved just do not have the intellectual discipline and moral clarity to defeat the tobacco companies using the pressures of competition and innovation. They prefer to play the anti-capitalist card, but they just end up unintentionally supporting the powerful, entrenched oligopolists or turning markets illegal.

Which brings us to the second, more likely but highly undesirable, way in which the tobacco industry could be destroyed.

2. Exclusion: The nicotine market becomes increasingly illegal

Bad but more likely. The likely death spiral for today’s tobacco industry would come from prohibitions that turn the market for new, safer nicotine products illegal or stop law-abiding companies participating in markets through prohibitions and excessive (quasi-prohibitionist) regulation, such as flavour bans or nicotine limits. This would drive supply into the illicit trade with products shipped internationally to middlemen in the end markets and distributed through criminal networks or informal economies.

The companies would then be forced to compete in the dwindling market for cigarettes. In the cigarette market, taxation is the major driver of illicit trade. That could also drive out the companies (e.g. see BAT withdrawing in different ways from South Africa and Australia), as illicit trade degrades the business opportunity.

Some may count that as a win. After all, big tobacco is in retreat. So that has to be good: remember the scream test and the irreconcilable conflict principle? Please don’t think like that.

Turning a market illicit is not a win; illegal markets are unregulated and unscrupulous, and prone to violence, extortion and corruption. They supply unregulated products with no consumer protection or redress and no regard for who they sell to or how. They engage young people as “retail” suppliers as well as consumers, and expose everyone in the supply chain to other illicit products and services. They provide apprenticeships in criminality and can blight neighbourhoods and threaten law-abiding retailers. They commit a wide range of offences that occupy law enforcement, increase the prison population, and create opportunities for corruption and bribery. Ultimately, the profits from illegal markets can reach terrorist finance or other major criminal activity.

I should not have to argue that it is better to have legal markets. Even if tobacco companies dominate legal markets, it is better than illegal markets dominated by organised crime groups and cartels.

What about enforcement?

Maybe the answer is to use enforcement to stop the migration from legal to illegal markets? This imagines a tough-guys-with-guns barrier between a neatly regulated market, just how the activists want it, and criminal gangs who somehow lose the ability to sell lucrative illicit products.

That’s not going to work… This is a tobacco control fantasy: governments should just be able to do whatever they want (endgame measures, ban entire smoke-free categories, ban flavours, limit nicotine, ban filters, close retailers, etc.), and then it is up to some all-powerful, all-seeing enforcers to make it work.

“Sorry, busy with other stuff, and, by the way, that will never work”

It does not work that way. Illicit markets are highly adaptable and flexible - if one thing does not work, another method is possible. One container of illegal vapes is intercepted; another will take its place. Shut down legal retail, expect illegal retail. Shut down the illicit head shop and expect a WhatsApp and cycle courier system. Arrest a major criminal supplier, expect a turf war and then a new boss. The digital economy aids the fluidity of illicit markets: encrypted messaging apps, social media for publicity, complex supply chains, international payment systems, cryptocurrency, containerisation, shell companies, etc. I see illicit trade and enforcement like water flowing around rocks. It creates a lot of splashing and turbulence, but doesn’t do that much to the total flow.

May I present the poster child of this strategy, Australia? The table below from the Government of Australia’s Illicit Tobacco and E-cigarette Commissioner [ITEC / Annual Report 2024-25] shows illicit tobacco reaching 50-60% of the market and vapes reaching over 95% illicit.

And Australia has spent big money on enforcement, yet it is failing to tackle a problem of its own making:

The March 2025-26 Budget committed A$156.7 million to address key challenges, including strengthening powers to seize criminal profits and assets. This builds on the A$188.5 million package announced in January 2024 to bolster disruption and deterrence of illicit tobacco to Australia (ITEC report 2024-25)

The ITEC Commissioner’s first year of work sits within the context of broader whole-of-government efforts implementing $345 million Australian Government commitments to combat illicit tobacco and e-cigarettes.

Imagine if that had been spent on health promotion in a proportionately regulated market, encouraging switching to the safer products.

Illicit markets exclude tobacco companies

Tobacco companies will not participate in illegal markets and usually take steps to prevent their legally produced products from being traded illegally by others. They used to exploit illicit trade by orchestrating the illegal supply of their own products at arm’s length, but their executives risk racketeering charges. So if a market goes dark through prohibition or regulation, they are effectively excluded. Countries now banning e-cigarettes include many large countries with high levels of smoking: Turkey, India, Brazil, Mexico, Bangladesh, Malaysia, Thailand, Australia, Vietnam, Belgium, and the Netherlands, to name a few.

And one mid-2025 estimate puts the number of markets that are dark for legally supplied e-cigarettes at 46:

This does not mean that e-cigarettes are unavailable in these countries, of course. The decision to outlaw them is a decision to prevent lawful supply and to hand the market to criminal networks. But it does have the effect of excluding the tobacco companies, thereby shrinking their market.

If your Big Idea is to eliminate the tobacco industry by replacing it with cartels and criminal networks… well, no thanks. The trouble here is that tobacco control activists are behaving as if they want this to happen, and that illicit markets can be squeezed by more enforcement.

May I suggest some humility and study of the war on drugs if you want to know how this all ends?

Is there a better way?

Yes, there is. There could hardly be a worse way than creating giant illegal markets or protecting an oligopoly in legal markets.

The other way requires the policymaker to align (by force of law as necessary) the incentives of tobacco companies with public health objectives. To reject the Irreconcilable Conflict Principle. The aim must become less grandiose, more useful, and more achievable than “eliminate the tobacco industry”. My suggested strategy is that their reach and economic muscle are directed towards the rapid elimination of smoking (not tobacco, not nicotine, not corporations). That is a worthy public health goal and achievable - and as I suggest above, it may already be partly aligned with the companies’ incentives (raising the share of revenue from smoke-free products).

Is it possible to align tobacco industry interests with public health?

Yes, and it is easy to see how. You just need to understand and accept a few things, even if they are uncomfortable truths. Here are some premises:

1. The demand for nicotine is likely to persist. It has been used for 12,000 years, and people use it for pleasure, mood modulation, perceived cognitive enhancements, and some therapeutic effects. It doesn’t matter if you think these people are wrong or disapprove; this is an explanation, not a recommendation.

2. Well over one billion people use nicotine via its most dangerous delivery system (smoking), and around 8 million people die prematurely each year as a result. Many more young people take up smoking each day, emulating the adults in their lives. Each is at significant risk.

3. There is a very large (probably three orders of magnitude) “continuum of risk” in the way nicotine can be used, with a large discontinuity between smoking and smoke-free products. Very large health gains can be made through the population-wide migration of nicotine use from high-risk to low-risk methods of use. That remains the case even if there is a large net increase in nicotine use.

4. Most people taking up nicotine use today will never suffer the burdens of disease and death that arose from cigarette use over multiple generations. They will either never start or switch to safer products well before risks increase from age 40 onwards. The central public health problem is with older adults with entrenched smoking habits and a reluctance to switch away from smoking.

5. The tobacco industry is a major force in this marketplace in almost every country in the world. It can be a prime mover in the migration of the nicotine market from high-risk to low-risk nicotine use if its business incentives align (or are forced into alignment).

6. Tobacco companies are not one monolithic Big Tobacco with a single controlling mind: they compete with each other, with non-tobacco entrants, and with illicit supply. Often, there is competition within companies to shape the future and secure career advancement. Some companies are government-owned, others are publicly quoted multinationals. They can develop new technologies through R&D or acquire IP or smaller companies.

7. Tobacco companies are not (all) simple “profit maximisers”. Well, not quite. They aim to maximise “shareholder value”; this includes a market assessment of the medium- to long-term sustainability of their profit model adjusted for the level of risk they are taking. The future matters to their shareholders today. As discussed above, they try to increase the ratio of market capitalisation to profits, not just increase profits. A better migration trajectory to low-risk products helps them with that.

8. The evolution of the nicotine market is driven by consumers’ demand for safer and better ways to take nicotine. There are now five mechanisms that are squeezing out smoking:

   1. Prevention - avoiding any nicotine uptake among youth;

   2. Quitting - traditional smoking cessation and abstinence;

   3. Switching - choosing safer smoke-free nicotine use instead of smoking;

   4. Diversion - taking safer smoke-free nicotine use instead of smoking;

   5. Death

9. Switching and diversion are relatively new and can lead to very rapid changes in population health risk. They work for many people because they allow for the use of nicotine and meet the underlying demand for the psychoactive experience, which is resilient. They do not stop prevention or quitting, and they may form a staged approach to achieving nicotine abstinence (deal with smoking risks first, and then consider nicotine abstinence)

10. These dynamics are forcing tobacco companies into a business transition they cannot stop, even if they wanted to. Several recognise this and have tried to lead in transition (PMI currently has around 42% of its revenue from smoke-free products, aiming to reach 66% by 2030; BAT/Reynolds has about 18%, aiming to reach 50% by 2035). Others are laggards and will face stress as consumer demand migrates. Tobacco control activists are helping the laggards.

11. That migration of the nicotine market toward far safer products can be accelerated or obstructed by choices made about law, policy, regulation, taxation, communication, and professional practice. These shape consumer behaviour and form part of the incentive structure for firms in the marketplace. Using a risk-proportionate approach will work. But treating all tobacco products as if they are the same will not. Treating consumer products like pharmaceutical products is the wrong approach and has failed everywhere it has been tried.

The question in the title above should be phrased differently: What can we do to align the tobacco industry’s interests with public health? We are not bystanders. The point is that all the resources and political capital of public health are there to do something useful, and it would be very useful to engineer the migration of the tobacco and nicotine market from high-risk to low-risk usage.

Revisiting the Irreconcilable Conflict principle

In a previous post, I discussed the malign effects of adhering to a belief in the Irreconcilable Conflict Principle - the assumed zero-sum game between the interests of tobacco companies and public health. This principle is not only flawed and wrong, but it also implies public health is impotent. It suggests we have no agency or influence to better align these companies’ interests with public health through law, regulation, taxation, and communications.

Not so.

There should be one guiding principle for tobacco control: to reduce harm to the greatest extent and as quickly as possible. In practice, that means making nicotine use much less harmful, rather than relying on stopping nicotine use altogether. It means giving the highest priority to migrating the nicotine market away from smoking.

The Irreconcilable Conflict Principle is a relic of the past and fails a modern reality check. It is the reason why tobacco control activists may now be doing more harm than good.

It makes no sense to try to eliminate the tobacco industry, other than through the bracing forces of competition. Something worse will take its place. The competition in question should be for the rapid migration of the consumer nicotine market from high-risk to low-risk nicotine products, driven by informed consumer agency.

The problem with the tobacco control fundamentalists is that they are not seriously committed to winning for public health. Just content to carry on losing in an endless, unwinnable war to eliminate the tobacco industry by eliminating nicotine, slowing down the migration away from smoking, harming more nicotine users, and nurturing criminal gangs.

Following the path proposed here is workable, winnable and effective for public health. It might even eliminate the tobacco industry through competition (see option 1 above), but that is neither necessary nor sufficient for success.