Smoked Out! - (1 August 2021)


Philip Morris & A Smoke Free World!

Philip Morris International (PMI) announced it would exit the cigarette business within a decade in the UK. This comes at a time when the number of smokers (smokership?) in the developed economies is declining and also government regulations are getting stricter. The UK for instance, has pledged to end smoking in the country by 2030.

PMI now aims to achieve more than half of its revenues from smoke free products by 2025. However, a recent WHO report highlights that these smoke free products make the youngsters vulnerable to nicotine addiction and double the risk of them smoking cigarettes in future. Furthermore, the long term effects are not yet known. 


We think that this change has many reasons but an important one is the change of investor behaviour. The emergence of ESG investing is causing companies to rethink their strategy. A third of American millennials invest exclusively in 'ethical' companies. Earlier this year, Reliance Industries, one of India's largest fossil fuel companies also announced initiatives in this direction. We believe that investors will have to account for this move to ethical investing as they create portfolios. 

China's Ed Tech Industry Curb

China has placed a curb on the after-school tutoring firms and made it mandatory for them to go non- profit, disallowing them to raise any further capital. This step is seen as a measure to promote its recent three child policy by limiting the cost of raising a child. 


An important source of capital for this USD 100 billion industry in China is VC/PE funding. In 2020, China, India and USA were the largest players that drew VC funding in ed-tech, with China grabbing a two-third share. India’s own ed tech industry stands around USD 800 million and is expected to grow to USD 30 billion in the next decade.



We believe that in immensely populated India, education would thrive well with private ed-tech players offering not just after school tutoring but also vocational training. Indian ed-tech will have to account for potential regulation (may not be as draconian) that may bring controls on pricing. Governments may push ed-tech to focus on skill development that translates into real jobs.


Our Recent Favourite!

Great news: We've had a 45% drop in poverty.

Not great news: The 3 programs that cut poverty most — stimulus checks, increased food stamps, and expanded unemployment insurance — have ended or will soon revert to their pre-pandemic size.


Lesson: Poverty is a political choice.

— Robert Reich (@RBReich) July 28, 2021