Global Trends Suggest Health-Conscious Changes

March 5, 2014 Updated: April 23, 2016

Global Trends Suggest Health-Conscious Changes

As the global economic continues to grow, there have been positives and negatives that have come as a result.  We can see nuclear weapons proliferation in more countries and rising instances of cancer, heart disease and diabetes that have come as a result of the expanded diets in large parts of the world.  In fact, countries like China now have a greater instance of diabetes than what is seen in the US.  This is not just the total number of diabetes cases in China, this is also the percentage of the country’s population.  But while some of these trends are somewhat alarming, there are other examples of changing cultural norms that will support the health and longevity of the world population.  

One such example can be found in the electronic cigarette, or “e cigarette,” which has greatly risen in prevalence over the last few years and will help consumers worldwide avoid some of the life-ending illnesses that are typically associated with traditional paper cigarette smoking.  “The health benefits that come as a result of switching to electronic cigarettes are undeniable,” said Sam Hadi at CloudCig, one of the internet’s biggest e-cigarette retailers.  “The total sales numbers from last year have been impressive, and this shows that there is a major shift now toward healthy smoking alternatives.”

Rising Sales Numbers

The earliest indication of these trends can be seen in the rising sales numbers that have been posted by e-cig manufacturers.  When we look at the largest economies, (which tend to have the biggest number of regular smoking consumers), the early performances have been nothing short of impressive.  US consumer sales passed above $1 billion last year alone, and this brought some strong support to the stock choices that are most closely related to new manufacturing maneuvers in the sector.  So, while this does not come close to the broader sales seen in paper cigarettes and in the market as a whole, the trends are still clear:  Consumers will choose healthy cigarette alternatives if given the choice.  

For the most part, there have been few options for cigarette smokers to choose from when looking for cigarette products.  But this has all been changing in the last few years and all of the early signals suggest that these numbers will continue to grow going forward.  In America alone, 2.7% of the population has already tried one of the products that are now being made available by e-cig retailers.  This is mostly impressive because we have seen advertising campaigns that are relatively small when compared to the more traditional products that are still being sold by the larger cigarette companies.  2.5 million adult consumers in America have already made the complete transition — electing to no longer buy the traditional paper items and moving into the healthier e-cigarette options instead.

Watching Stock Market Performances

Going forward, whether or not these trends can continue will depend on the improved earnings that these products are able to generate for their companies.  If we see increased revenues, we will see much greater media attention in this space.  More media advertising means more consumer attention, and this is what ultimately created an underlying cultural shift.  The broader change toward a more healthy lifestyle could not have come at a better time but the changes are clear and encouraging.  This is true, not only from a health perspective but from a market perspective as well as this will continue to create investment opportunities for the companies that put forward extended efforts to attract new consumers in this space.  

For those looking at potential stocks to buy, one of the best choices in Lorillard (LO)  as this was one of the earliest choices in a large cigarette manufacturer that devoted significant resources to research and development in the electronic space.  How well this company is performing will serve as a good gauge for the industry as a whole, and this could still be one of the best stock opportunities available now given its relative position in the industry.