FTC Report to Congress Shows Increases in Smokeless Tobacco Revenues, and Advertising and Promotional Expenditures

Advertising and promotional expenditures for smokeless tobacco products reached $150.4 million dollars in 1997, according to a biennial Federal Trade Commission Report to Congress. The $150.4 million spent in 1997 represented an 18 percent increase over the previously-reported 1995 expenditure figure of $127.3 million. With the exception of a $3.4 million decline between 1995 and 1996, advertising and promotional expenditures have increased every year since 1987, when slightly less than $68 million was spent. The report also shows that spending on billboards, promotional allowances, and the distribution of merchandise bearing brand names or logos increased from 1995 to 1997, and that public entertainment and retail value added promotions were the top expenditure categories in 1996 and 1997.

The Comprehensive Smokeless Tobacco Health Education Act of 1986 requires the FTC to report on smokeless tobacco products every two years. This 1999 report includes new 1996 and 1997 data on sales and advertising and promotional expenditures, and discusses trends in the smokeless tobacco market.

The report shows that the total number of pounds of smokeless tobacco sold by manufacturers to wholesalers and retailers rose slightly from 1995 to 1996, but fell in 1997 to the lowest level since 1985 -- the first year for which the Commission collected data. Sales revenues received by the manufacturers rose, however, in both years: $1.79 billion in 1996 (up from $1.74 billion in 1995) and just below $1.82 billion in 1997. Revenues have increased each year since 1985.

Moist snuff has been the leader in smokeless tobacco revenues and marketing expenditures since the Commission began collecting these data and this trend continued in 1996 and 1997. Moist snuff revenues in those two years were $1.38 billion and $1.40 billion, respectively. Advertising and promotional expenditures for moist snuff -- $86.4 million in 1996 and $103.6 million in 1997-- also exceeded the expenditures for all other types of smokeless tobacco combined. Moist snuff was the only type of smokeless tobacco to experience an increase in the total number of pounds sold since the Commission's previous report (from 53.14 million pounds in 1995 to 55.28 million pounds in 1997) and for the first time, more pounds of moist snuff were sold than any other type of smokeless tobacco. Before 1996, loose leaf/chewing tobacco had been the leading seller in terms of total pounds sold.

In addition to providing the total amount of annual advertising and promotional expenditures, the report also breaks down those expenditures by category. In 1996, slightly more money was spent on public entertainment (such as sponsorship of sporting events) than on any other expenditure category -- $22.7 million -- with retail value added promotions (such as "buy one, get one free" and "buy one, get free hat") a close second at $22.4 million. In 1997, retail value added was the leading category, with expenditures of $34.9 million, while public entertainment was next at $28.9 million.

Copies of the news release and the 1999 report on smokeless tobacco are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. Copies of FTC news releases and other materials also are available on the Internet at the FTC 's web site at: http://www.ftc.gov