FTC Requires Cigar Companies to Supply Data on Cigar Sales and Advertising Expenditures

The Federal Trade Commission has issued orders to several leading cigar manufacturers requiring them to file “special reports” on their sales and advertising expenditures. The Commission has collected and publicly reported similar information from the cigarette industry since the 1960s and from the smokeless tobacco industry since the mid-1980s. This is the first time the Commission has sought such information from the cigar industry. Studies of cigar marketing show strong increases in cigar sales and raise concerns about increasing use of cigars by high school students (14-19 year olds).

The FTC orders require the cigar manufacturers to report the total number of cigars sold, the total dollar volume of cigar sales, and the total dollar amounts expended on cigar advertising, merchandising, and promotion in 1996 and 1997. The orders also require a breakdown of different categories of advertising and marketing expenses for each cigar brand marketed, including any payments for placement of cigar products in movies. These categories of information are similar to the categories of information that the cigarette and smokeless tobacco manufacturers are required to report to the Commission, and which is reported on an aggregate basis by the Commission to Congress. However, unlike cigarette and smokeless tobacco data, the cigar orders require that advertising and promotional expenses be allocated by brand, rather than by the cigar varieties within each brand.

The FTC orders also require the cigar manufacturers to provide information on the characteristics of each different variety of cigar marketed within each brand. These product characteristics include: product size, product style, individual cigar weight, the types of tobacco used, the method of curing the tobacco, and the addition of any flavorings. In addition, the orders require that manufacturers report the total units sold and total dollar sales for each cigar variety. This information should be useful in determining the sales trends for different cigar types and sizes, the FTC said.

The orders -- referred to by the Commission as Orders To File Special Report -- were sent to Consolidated Cigar Corporation, Swisher International, Inc., General Cigar Co., Inc., Havatampa Incorporated, and John Middleton Incorporated. The Commission indicated that the data will be disclosed in aggregate form only, and that privileged or confidential commercial or financial information will not be disclosed without a company's consent.

The Commission's vote to issue the orders was 4-0, with Commissioner Mary L. Azcuenaga not participating.

Copies of the "Orders To File Special Report" will be available shortly from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326- 3128; TTY 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.

(FTC File No. 972 3100)