Rae Maile: A Lifetime in Tobacco
Preferred Shares Podcast
How Taxation Fuels Illicit Trade and Crime
Rae explains the link between high taxes, cross-border purchasing, and the rise of illicit tobacco and vape markets.
Welcome to Episode 13 of the Preferred Shares Podcast.
We interviewed our friend and special guest, Rae Maile. Rae is a veteran analyst who has covered the tobacco industry for over 35 years. He has never held back his strong opinions, and always has the data to support them.
In this episode
Rae’s background in financial services, from junior analyst covering brewers and general retail to financials and tobacco
How the tobacco industry has changed and stayed the same
The perpetual lack of confidence about the tobacco industry - both from external analysts as well as industry executives
Population growth’s ‘denominator effect’ within price versus volume
Next-gen nicotine products in the industry landscape
Global demand for nicotine rising
Differences across markets and categories concerning barriers to entry, regulation, and adoption
The anti-smoking lobby’s morphing into anti-nicotine
Taxation, prohibition, and illicit trade
Moral zealotry battling against the individual’s choice
ESG-based investing and idle threats
Over the last century, tobacco is the only industry that hasn’t had a negative 10-year period. What makes the industry so special?
Should tobacco be placed next to other CPGs, or is it in a separate league?
When it comes to tobacco, why do so many analysts obsess over volumes and disregard other critical variables?
What distinguishes a great analyst? Skills needed and the psychology of markets
Rae’s unique writing style. Finding your voice and filling your role
Lessons from Marlboro Friday and price laddering models
The UK market post-Brexit
Perpetual pessimism versus share repurchase programs, dividends versus share repurchases, and capital allocation frameworks
The industry’s history of poor diversification efforts
Surrendering to the science, forgetting the consumer
Episode Resources
Lucy Page Gaston, founder of the Anti-Cigarette League of America
Sir Martin Faulkner Broughton, previous Finance Director, CEO, and Chairman of BAT
“PHILIP MORRIS AGREES TO BUY GENERAL FOODS”, Chicago Tribute, Sept. 1985.
Additional Reading
Curious to see what else we’ve been working on? Below are some pieces we’ve written independently that we think you’d like:
Discussing Going Down Tobacco Road with Gene Hoots, Lawrence Hamtil (Fortune Financial) published September, 2020
Assessing Altria and Tobacco Fundamentals Five Years After the Peak, Lawrence Hamtil (Fortune Financial) published March, 2023
The New Era of Nicotine, Devin LaSarre (Invariant) published July, 2022
Imperial Brands: Looking Through the Noise, Devin LaSarre (Invariant) published October, 2023
Altria: Back to the Race, Devin LaSarre (Invariant) published August, 2024
Philip Morris International: More More More, Devin LaSarre (Invariant) published February, 2024
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Disclaimer
All opinions expressed by Preferred Shares hosts and guests are solely their own opinions and do not reflect the opinions of their respective employers. This podcast is for informational and entertainment purposes only and should not be relied upon as a basis for investment decisions. None of the information contained in the podcast or this web site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person.
Clients of Andvari and Fortune Financial may maintain positions in the securities discussed in this podcast. Furthermore, from time to time, the Hosts may hold positions or other interests in securities mentioned in the Podcast and may trade for their own accounts based on the information presented. The Hosts may also take positions inconsistent with the views expressed in its messages on the Podcast.
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