Feds say drop in cash spent on cigarette promotion
Tuesday, August 2, 2011
RICHMOND, Va. (AP) — The nation's top tobacco companies are spending less money on cigarette advertising and promotion and more money on promoting smokeless tobacco products, according to the latest data from the Federal Trade Commission.
The data mirrors an industry trend as tobacco companies look to cigarette alternatives such as smokeless tobacco products for future sales growth as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher.
Numbers released by the federal agency late Friday show cigarette marketing decreased more than 34 percent to $9.94 billion in 2008, the latest year available, compared with 2003. Meanwhile, cigarette sales decreased 11 percent to 320 billion cigarettes in the same period.
Much of the money spent by cigarette makers, about 72 percent or $7.2 billion, was for price discounts paid to retailers and wholesalers in order to reduce the price of cigarettes to consumers as the average price per pack increased 19 percent to $4.55 in the five-year period.
The number of cigarettes given away fell 62 percent to 2.7 billion cigarettes between 2003 and 2008 after spiking to 11.1 billion cigarettes in 2002.
According to the federal data, the amount cigarette companies spent on advertisements directed to youth or their parents that are intended to reduce youth smoking fell 84 percent to only $11.5 million from between 2003 and 2008.
In contrast, money spent on marketing smokeless tobacco products more than doubled to $547.9 million in 2008 versus 2003 as sales increased nearly 11 percent. Companies spent about 59 percent, or $249.5 million, on price discounts to wholesalers and retailers in order to reduce prices to consumers.
The commission said that 2008 is the first year it required companies to submit data on snus — small pouches filled with tobacco that users stick between the cheek and gum — and dissolvable orbs, sticks and strips of tobacco, which have been introduced in recent years by major tobacco companies.
Although it is a positive step that cigarette marketing has declined, the tobacco companies continue to spend huge sums to market their products, Matthew Myers, president of the Campaign for Tobacco-Free Kids, a Washington-based advocacy group, said in a statement. Myers added that the increase in smokeless tobacco marketing was "troubling."
Richmond, Va.-based Altria Group Inc., parent company of Marlboro maker Philip Morris USA, is committed to marketing products responsibly by "building relationships between their brands and adult tobacco consumers while taking steps designed to limit reach to unintended audiences," spokesman Ken Garcia said in a statement. The company's U.S. Smokeless Tobacco Co. subsidiary makes Copenhagen and Skoal branded products. Altria also makes Marlboro branded snus products.
While the federal agency's most recent data is from 2008, much has changed in the industry since then, which included a large federal tax increase on tobacco products in 2009, coupled with various state tax increases. The Food and Drug Administration also was given authority to regulate the industry in 2009, which included further marketing restrictions, including a ban on tobacco companies sponsoring athletic, social and cultural events or offering free samples or branded merchandise.
The share of Americans who smoke has fallen dramatically since 1970, from nearly 40 percent to about 20 percent, or nearly 46 million adults, according to the Centers for Disease Control and Prevention. But the rate has stalled since about 2004, with about 46 million adults in the U.S. smoking cigarettes. It's unclear why it hasn't budged, but some experts have cited tobacco company discount coupons on cigarettes and lack of funding for programs to discourage smoking or to help smokers quit.
According to the most recent federal data, about 3.5 percent of American adults use smokeless tobacco.
The Federal Trade Commission has issued reports on cigarette marketing since 1967, and similar reports on smokeless tobacco since 1987. It looks at data from the top tobacco companies including: Altria Group; Winston-Salem, N.C.-based Reynolds American Inc.; Lorillard Inc., based in Greensboro, N.C.; and Commonwealth Brands Inc., the Bowling Green, Ky.-based subsidiary of the British company Imperial Tobacco.