WASHINGTON -- 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 from the Federal Trade Commission (FTC).
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.
According to information from the companies, no company solicited the appearance of any cigarette product in any movie or TV show, or granted permission for the appearance of any cigarette product in any movie or TV show. In 2004, the number of cigarettes sold and given away decreased 1.1% from 2003 levels. In 2005, the number fell another 2.4%. 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.
Philip Morris USA's spending on cigarette promotions and brand advertising decreased 15% from 2003 through 2005, the company said in a statement about its reporting of its own data to the FTC. Its spending on cigarette brand advertising, such as print advertising, events and sponsorships, has decreased 43% from 1998 through 2005. The majority of the 2004 and 2005 expenditures PM USA reported to the FTC represented promotional allowances for adult smokers.
"We believe offering price and product promotions along with offering coupons is an effective way to deliver value and to communicate directly with adult smokers," said Brendan McCormick, senior director of corporate communications for Richmond, Va.-based PM USA, an operating company of Altria Group Inc.
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 expendituresfor 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 nonfiltered cigarettes. This year's smokeless tobacco report has new categories of information than past years, such as sales data broken down by package size.
The reports collected information from the parent companies of the five largest domestic manufacturers of each product. For cigarettes, that included Altria Group Inc. (parent company of Phillip Morris); Houchens Industries, Inc. (parent of Commonwealth Brands Inc.); Loews Corp. (parent of Lorillard Tobacco Co.); Reynolds American Inc. (parent of R.J. Reynolds Tobacco Co. and Santa Fe Natural Tobacco Co. Inc., and which acquired Brown & Williamson Tobacco Corp. in 2004); and Vector Group Ltd. (parent of Liggett Group Inc. and Vector Tobacco Inc.).
For smokeless tobacco, that included North Atlantic Trading Co. Inc. (parent of National Tobacco Co.); Swedish Match North America Inc.; Swisher International Group Inc. (parent of Swisher International Inc.); UST Inc. (parent of United States Smokeless Tobacco Co.); and Conwood LLC (general partner of Conwood Sales Co. LP).
Click here for the FTC Cigarette Report for 2004-2005.
Click here for the FTC Smokeless Tobacco Report for 2002-2005.
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