FTC Releases Reports on Cigarettes and Smokeless Tobacco

The number of cigarettes sold or given away, as well as the amount spent on advertising and promotion by the five largest cigarette companies in the United States, decreased in 2004 and 2005, according to a report released today by the Federal Trade Commission. In a separate report on smokeless tobacco, the FTC said the number of pounds sold by the five largest manufacturers rose for each year from 2002 to 2004, then decreased in 2005, while advertising and promotional expenditures fluctuated during that period, with the most spent in 2005.
The FTC has issued cigarette reports since 1967 and smokeless tobacco reports since 1987. This year’s reports contain statistics on sales volumes and marketing expenditures – for cigarettes for the years 2004 and 2005 and for smokeless tobacco for the years 2002-2005. The cigarette report also updates other information contained in previous reports, such as the market share of filtered versus non-filtered cigarettes. This year’s smokeless tobacco report has new categories of information than past years, such as sales data broken down by package size.

According to information from the companies, no company solicited the appearance of any cigarette product in any motion picture or television show, or granted permission for the appearance of any cigarette product in any motion picture or television show. In 2004, the number of cigarettes sold and given away decreased 1.1 percent from 2003 levels. In 2005, the number fell another 2.4 percent. Advertising and promotional expenditures fell from $15.15 billion in 2003 to $14.15 billion in 2004, and then to $13.11 billion in 2005. For both years, the single largest subcategory of promotional allowances was price discounts paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers.

The smokeless tobacco report has sales and advertising and promotional expenditures by tobacco type: dry snuff, moist snuff, plug/twist, and loose-leaf chewing tobacco. The five largest domestic manufacturers had $2.13 billion in sales in 2001. The amount of sales rose each year from 2002 through 2004, to $2.62 billion in 2004, but dropped to $2.61 billion in 2005. Advertising and promotional expenditures fluctuated in this time period, with the lowest point of $231.08 million in 2004 and the highest point of $250.79 million in 2005.

The reports collected information from the parent companies of the five largest domestic manufacturers of each product. For cigarettes, that included Altria Group, Inc. (the ultimate parent company of Phillip Morris); Houchens Industries, Inc. (the ultimate parent company of Commonwealth Brands, Inc.); Loews Corp. (the ultimate parent of Lorillard Tobacco Co.); Reynolds American, Inc. (the ultimate parent of R.J. Reynolds Tobacco Co. and Santa Fe Natural Tobacco Company, Inc., and which acquired Brown & Williamson Tobacco Corp. in 2004); and Vector Group Ltd. (the ultimate parent of Liggett Group, Inc. and Vector Tobacco, Inc.) For smokeless tobacco, that included North Atlantic Trading Company, Inc. (the parent of National Tobacco Company); Swedish Match North America, Inc.; Swisher International Group, Inc. (the parent of Swisher International, Inc.); UST, Inc. (the parent of United States Smokeless Tobacco Company); and Conwood LLC (general partner of Conwood Sales Co., L.P.).

The Commission vote authorizing staff to issue the report was 5-0.

Copies of the reports are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.