Tobacco Advertising, Promotion Rises

FTC release new reports on cigarette, smokeless tobacco marketing

Published in CSP Daily News

WASHINGTON -- The amount spent on cigarette advertising and promotion by the largest cigarette companies in the United States rose 2.9% from $8.05 billion in 2010 to $8.37 billion in 2011, due mainly to an increase in spending on price discounts or discounts paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers.

Spending on price discounts increased from $6.49 billion in 2010 to $7 billion in 2011, according to the new Federal Trade Commission Cigarette Report for 2011. The price discounts category was the largest one in 2011, as it has been each year since 2002.

The number of cigarettes sold to wholesalers and retailers in the United States declined from 281.6 billion in 2010 to 273.6 billion in 2011.

The industry reported spending $171.2 million on coupons to reduce the retail cost of cigarettes in 2011, a decrease from the $235.8 million reported in 2010.

Spending on "outdoor" advertising increased from $1.7 million in 2010 to $3.1 million in 2011. Since 2002, "outdoor" advertising has been defined to mean billboards; signs and placards in arenas, stadiums and shopping malls and any other advertisements placed outdoors, regardless of their size, including those on cigarette retailer property.

Spending on point-of-sale (POS) materials--ads posted at the retail location but excluding outdoor ads on retailer property--fell from $106.6 million in 2010 to $76.6 million in 2011.

The report also looked at tar ratings, filters, length and flavor.

In 2008, menthol cigarettes were 27% of the market, while nonmenthols held 73% of the market. In 2009 and 2010, the market share of menthol cigarettes reported by the companies were 21% and 22%, respectively. In 2011, menthol cigarettes rose to 32% of the market.

Smokeless

Spending on advertising and promotion by the major manufacturers of smokeless tobacco products in the United States rose from $444.2 million in 2010 to $451.7 million in 2011, with price discounts making up the largest spending category and accounting for $168.8 million, said the new Federal Trade Commission Smokeless Tobacco Report for 2011.

The dollar value of sales by these manufacturers rose from $2.78 billion in 2010 to $2.94 billion in 2011.

Moist snuff continued to generate more revenue than any other type of smokeless tobacco. In 2011, sales of moist stuff were $2.51 billion, representing 85.6% of total smokeless tobacco sales.

The weight of smokeless tobacco sold rose from 120.5 million pounds in 2010 to 122.7 million pounds in 2011.

The FTC has issued the Cigarette Report periodically since 1967 and the Smokeless Tobacco Report periodically since 1987.