Alcohol and Tobacco Market: Trends, Economics, and Health Impacts

This essay provides an analysis of the alcohol and tobacco market, examining market trends, economic impacts, and health considerations. It explores the significant contribution of these industries to the economy through employment and tax revenues, while also acknowledging the negative health impacts on consumers. The essay delves into market statistics, including beverage consumption patterns and the rise of the tobacco industry post the cigarette-making machine. It discusses the interconnectedness of alcohol and tobacco consumption, influenced by surrogate advertising and health warnings. Furthermore, it presents a graphical representation on the impact of health warnings on cigarette packaging on beer consumption and discusses the effects of yeast shortages on cigarette purchases. The essay also examines the microeconomic effects of a smoking ban in the Isle of Man prison on crime rates and consumption patterns. The findings highlight the interplay between health policies, market dynamics, and consumer behavior within the alcohol and tobacco industries.

Alcohol and Tobacco Market
Introduction
Alcohol and Tobacco contribute significantly to the economy of a country. Not only do they
generate employment for thousands of people, but this part of the market has a sizable
contribution towards the state and local governments in terms of tax revenues. However, both
alcohol and tobacco have negative impacts on the general health of its users. This essay shall
discuss the market trends for alcohol and tobacco and its impact on the economy.
Alcohol and tobacco market economy and trends
As per the statistics derived from “Numbers Crunch”
(http://www.breweryage.com/archives/winter.spring06/IRI%203-06.pdf, 2006), 38.5% of all the
money spent on beverages was spent on alcoholic beverages. Out of this, beer contributed to the
biggest portion of 20.6% followed by wine at 12% and the remaining at 5.9% by distilled spirits
such as cocktails etc. This is a considerable portion of all the beverages consumed by people.
After the invention of the cigarette making machine by James A. Bonsack in the year 1881, the
tobacco industry saw a rise in the consumption as it was now much easier as well as cheaper to
manufacture cigarettes. However, tobacco farming was still comparatively much more time-
consuming and labor intensive. “Brazilian researchers estimate that it takes up to three thousand
person-hours per year to grow one hectare of tobacco (Alcohol)”. This means that tobacco
farming is almost ten times as labor intensive as vegetable farming.
The alcohol and tobacco market influence each other heavily. Studies show that people who
smoke and drink simultaneously are more likely to continue consumption of both the items and
less likely to quit. It has also been found that consuming alcohol leads to increased desire for
smoking and consumption of nicotine in turn enhances the consumption of alcohol. There is a
very strong connect between the consumption of alcohol and tobacco. Such consumption trends
are also very heavily influenced by surrogate advertising, which involves the marketing and
advertisement of illegal or harmful products by disguising them as another product. Examples
include music CDs, club soda and playing cards sold under the brand names such as Bacardi,
Bagpiper and Officer’s Choice. There have also been studies suggesting that consumption of

wine before smoking prevents excessive damage. “Drinking the wine prevented the release of
micro-particles from artery walls, platelets and white blood cells that is known to indicate
smoking damage (Radowitz, 2016)”.
Impact of health warning on cigarette packaging on beer consumption
Health warnings play an important role in influencing consumption trends of smokers and
alcoholics in general. It has been observed that more people have quit smoking and drinking
altogether when made aware of the health impacts and life threatening conditions they can suffer
from with continued use of tobacco and alcohol. “In other words, the more smokers think about
the dangers of cigarette smoking, the more likely they are to think about quitting (Angelle
Braganza, 2016). As has been mentioned earlier, alcohol and tobacco consumption influence
each other’s demand and supply. A study by the scientists at Baylor college of Medicine found
that smoking “dampens the ability of the brain to respond to the drug, meaning that more and
more alcohol is needed to cause the same level of pleasure (Innes, 2013). So people who drink
and smoke together are more likely to quit both smoking and drinking after being made aware of
the serious health implications caused by tobacco and alcohol consumption.
Following is a graphical representation on the impact of health warning on cigarette packaging
on beer consumption-

The above graph shows that depiction of health warnings on the packages of cigarettes is
inversely proportional to the consumption of beer. More and more people are encouraged to quit
drinking beer when made aware of the health implications. Therefore a warning on a cigarette
packet is more likely to make a person quit drinking beer as well.
Yeast shortage and cigarette purchases
In a very similar fashion as we have seen above, the shortage in yeast, which is used to make
beer, results in a drop in the purchase of cigarettes. It has been observed that “Some people even
tend to smoke only when they drink, but not at any other time (Staff, 2014).”

Microeconomics and crime rate in the Isle of Man
“The Isle of Man is located in the Irish Sea between Scotland, England, Ireland and Wales (Isle
of Man profile - Overview, 2016)”. In august 2008, a prison’s new rules and regulations
regarding smoking cigarettes in the Isle of man led to a significant decline in the number of
robberies, burglaries and theft. This is because the prison was the first of its kind to ban smoking
by both the guards as well as the inmates on the premises of the prison. Prisoners are instead
offered nicotine patches and a lot of counseling when they arrive at the prison. “when the new
prison in Jurby opened in August that year there were reports of inmates resorting to rolling their
own cigarettes using teabags (Health, 2017)”. “The prospect of being forced to give up smoking
is apparently far more frightening (Reporter, 2009)” than actually having to go to prison. The
Isle of Man never really had a high rate of crime. But this major change brought in made the
lives of the inhabitants of this island much easier. As a result of criminals fearing their right to
smoke inside the prisons, the crime rate has decreased manifold. The number of burglaries in just
one year went down by about 35 percent. There has also been a drop of 7 percent in car thefts, 25
percent in assaults, 11 percent in domestic assaults and 8 percent in criminal damage. The
minister of Home Minister realized that he was making a hard decision, one that was not going to
please everyone. Even so, the implementation of this rule resulted in an immense drop in the
crime rates on the island. Viewing from a microeconomic perspective, it can be said that a

significant decrease in the demand of cigarettes by the inhabitants was observed. Instead a rise in
the demand of e-cigarettes and nicotine patches by the prison for its prisoners was seen.
REFERENCES-
Alcohol, T. a. (n.d.). How Alcohol, Tobacco, and Drug Use Affect Economics and Government. Retrieved
september 13, 2017, from encyclopedia.com: http://www.encyclopedia.com/law/legal-and-political-
magazines/how-alcohol-tobacco-and-drug-use-affect-economics-and-government
Angelle Braganza, K. A. (2016, December 29). Do graphic health warnings on cigarette packs work?
Retrieved September 11, 2017, from Inquirer.net: http://lifestyle.inquirer.net/246967/graphic-health-
warnings-cigarette-packs-work/
Health. (2017, March 13). Prisoners to be allowed e-cigarettes in six-month pilot project. Retrieved
September 12, 2017, from iomtoday: http://www.iomtoday.co.im/article.cfm?id=32459
http://www.breweryage.com/archives/winter.spring06/IRI%203-06.pdf. (2006, July).
Innes, E. (2013, July 22). So THAT'S why drinking and smoking go hand in hand: Nicotine dampens feel-
good chemicals in the brain, making us crave alcohol . Retrieved September 13, 2017, from
dailymail.co.uk: http://www.dailymail.co.uk/health/article-2373458/Drinking-smoking-hand-hand-
recent-research-suggests-Nicotine-dampens-feel-good-chemicals-brain-making-crave-alcohol.html
Isle of Man profile - Overview. (2016, April 21). Retrieved September 11, 2017, from bbc.com:
http://www.bbc.com/news/world-europe-18251379
Radowitz, J. V. (2016, November 15). Glass of wine before cigarette 'can prevent damage'. Retrieved
September 12, 2017, from independent.co.uk: http://www.independent.co.uk/life-style/health-and-
families/health-news/glass-of-wine-smoking-cigarette-prevent-damage-viktoria-schwarz-a7419301.html
Reporter, D. M. (2009, december 30). Drop in crime on Isle of Man attributed to Europe's only non-
smoking prison. Retrieved September 12, 2017, from dailymail.co.uk:
http://www.dailymail.co.uk/news/article-1239209/Drop-crime-Isle-Man-attributed-Europes-non-
smoking-prison.html
Staff, N. (2014, September 24). Smoking Bans Impact Beer and Spirits Consumption. Retrieved
September 13, 2017, from Netnewsledger: http://www.netnewsledger.com/2014/09/24/smoking-bans-
impact-beer-and-spirits-consumption/