Dr Branston:

I can speak to at least some of your questions, so thank you for them. I think the starting point for understanding the tobacco industry is to understand that it is incredibly profitable. It is profitable like almost no other industry that we currently face. Not only are those profits large in total—I can tell you the world’s six largest cigarette manufacturers made profits totalling about $55 billion in the most recent year that I was able to track, which was 2018—but they make large profits in the UK. I last estimated that for 2022, and it was about £900 million annually. Equally, they make a large amount of profit for each unit sold. Their profit margins are in the region of 70%, meaning that for every £100 they get to keep, having paid all excise duty, £70 of that is just pure profit. The actions of the industry are entirely guided by wanting to maintain and expand those profits going forward.

The interesting facet is that big tobacco currently does not make much, if any, profit on its new-generation products, which include e-cigarettes and other products, such as heated tobacco products. The vested interest of big tobacco is to maintain the status quo. The issue of profitability in e-cigarettes is more difficult to talk about for the private companies because many of them are based in China and do not publish their accounts, so it is difficult to tell how much, if any, profit they are making. Ultimately, companies cannot continue in existence if they are losing money, so it is a reasonable presumption that they are making some levels of profit, because they want to continue selling these products. Hopefully that gives you some background.