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Comment by flogic | Hacker News Reader

Cigarettes are literally dried up leaves. Their customers light the product on fire and then buy more the next day. Given that as a viable business model, how do you not make ridiculous quantities of money?

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They’ve also significantly reduced the materials consumed over the years. Cigarettes went from 8.6mm diameter to 8.5, 8.4, 7.9. Introduced slims 7.1, superslims 5.4. They started expanding the cellular structure of the tobacco with co2 to increase its ‘filling capability’. Longer filters, hollow filter tips. Thinner tipping paper. Thinner paperboard, thinner foil, less glue. The list goes on and on. Lots spent on R&D, but small material savings on billions of cigarettes soon adds up.

That is true, but I feel obliged to point out that tobacco is an incredibly difficult and labor-intensive crop.

But they don't have to grow it.

But they still have to buy it from people who do, and the difficulty is reflected in raw material prices.

From http://www.nasda.org/File.aspx?id=48147

Types of Tobacco & December 2016 Avg. Price/lb. – Flue Cured $5.12 – Fire Cured $7.25 – Burley $5.09 – Maryland $4.86 – Dark Air Cured $6.54 – Pennsylvania Seedleaf $5.23

For comparison, wheat is around $6 per bushel. A bushel is 56 lbs.

You can get roughly 22 packs of cigarettes from a pound of tobacco. Lets say RJ Reynolds sells those packs for 2.50 wholesale. 22 * 2.50 = 55. 10x the cost of a lb of tobacco doesn't seem too bad.

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