PHOENIX -- Last week, the U.S. Center for Disease Control & Prevention (CDC) published a study titled "Consumption of Cigarettes & Combustible Tobacco--United States, 2000-2011" (part of the Morbidity & Mortality Weekly Report) which suggested cigarette smokers were switching to cigars and RYO tobacco to avoid higher taxes. To make its case, the CDC referenced a decline of 2.5% of cigarette consumption from 2010 to 2011 as opposed to the "dramatic" rise in noncigarette consumption during the same time--further citing consumption increases of 482% for pipe tobacco and 233% for large cigars from 2000 to 2011.
With several media outlets covering the report those within the industry are questioning the validity of such claims (see Related Content below for CSP Daily News coverage).
One such individual is Paul Marquardt, vice president of marketing for Phoenix's Prime Time International. "There really isn't any factual basis for what they're saying," he told Tobacco E-News. "They're just saying cigarette consumption is declining and cigar consumption is increasing--and making a link between the two without any proof."
According to Marquardt, a quick look at what kind of cigars sales have grown in recent years disproves the study's assertion that such increases are due to cigarette smokers switching over. According to CSP's Category Management Handbook, single cigar unit sales were up 7.7% between 2010 and 2011 while packs fell nearly 12% during the same time frame--meaning it's not the cigarette-style packs that were increasing, but individual cigars.
(Click here to view cigar data from CSP's Content Management Handbook.)
Similarly, it's not a cigarette-type product that has gained the most popularity within the category.
"The fastest growing segment of cigars is cigarillos," said Marquardt. "When you look at the data in terms of increase in sales, most of what is increasing in sales is cigarillos. They are larger cigars and are usually sold in two packs."
The fact that single and two-pack cigars have seen the greatest growth also goes against the study's switching-for-savings theory. Marquardt estimates a single cigar typically costs about $1--meaning most consumers would only get six cigars for the cost of a pack of 20 cigarettes (although that number varies from state to state).
And while many companies (including Prime Time) offer 20-packs of cigars, Marquardt said that "99% of those packs are taxed the same as cigarettes" because of state laws requiring a similar tax stamp on cigar packs.
"When you take a look at the report, it's basically regurgitating unit and dollar growth and trying to link up that with taxes," said Marquardt. "It's probably not completely unrelated--there might be some of that buried in there. But 99% of what we're talking about here is unrelated to the tax and has a lot more to do with consumers in general."
And if cigarette smokers are turning to cigars, Marquardt believes it's not because they're looking for a cheaper alternative.
"The reason cigarettes are declining is pretty obvious: public awareness of the health risks is increasing," Marquardt said. "Cigars are growing because they're giving consumers the variety they're looking for and because more people are finding opportunities where they'd rather be an occasional cigar smoker than a habitual cigarette smoker."
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