On 8th June Richard J Hunter wrote an article for Financial News under the title “Up in Smoke”. According to the article from July 1st smoking ban will be implemented in
At the moment the pub companies are not generally committing themselves to a plan of action. Nonetheless this has given these share prices some support. Indeed, many of the pub shares have had a stellar run over the last year. During a period when the FTSE100 has risen some 15%, Punch Taverns have made 52%, Mitchells & Butlers 72% and Enterprise Inns 53%. The FTSE250 has risen 29%, and its constituent JD Wetherspoon has spiked by 56%.
Another sector that is going to be most affected by the ban would be the tobacco companies themselves. These will enjoy an inelastic demand no matter how many obstacles like smoking ban are going to be put in front of them. Many of these companies are moving there operations to cheaper less developed countries earning those higher profits and new target markets of these countries. The share prices for tobacco companies have also been strong, with Imperial up 33% over the last year, and BATS up 24%. Market consensus positively rates Imperial, whilst BATS is seen as an extremely strong buy and probably the pick of the sector.
The smoking ban, where introduced, has had its casualties like the Bingo industry where people have stayed away in their droves now that smoking cannot be continued in bingo halls. This have also effected the share prices of bigger bingo companies. FTSE250 constituents Ladbrokes has seen just a 4% rise in its price over the last year, whilst the Rank share price has been completely flat.
There have, been other companies who have quickly adapted to the change and are now taking advantage of the new situation such as the manufacturers of outdoor heaters targeting those smokers who will continue to visit pubs, even if they must spend some of their time outdoors.