Cigarette makers spending less on ads

by Jenny Novac on September 25, 2012

Cigarette makers are spending less on advertising cigarettes. The basic part of the money is going toward price discounts given to retail dealers and wholesalers, the Federal Trade Commission reported on September 21.

According to the latest data, the part that is spent on cigarette marketing and promotion decreased 5% in 2010 to $8.05 billion. Spending dropped 19% from 2008.

Cig Smoking Woman

Model smoking a cigarette

The FTC has released its tobacco report form time to time since 1967, together with a smokeless tobacco report periodically since 1987.

The FTC cigarette report includes such tobacco companies as Altria Group Inc., Commonwealth Brands Inc., Lorillard Inc., Reynolds American Inc. and Vector Group Ltd.

They together spent about 81% of their advertising money, or $6.49 billion, on price discounts in 2010. Although the amount spent was decreased $180 million from 2009, the percentage spent was increased 2.5 percentage points.

The cigarette makers give discounts to retail dealers and wholesalers as a way to reduce the retail price of tobacco products to consumers. The discounts as well are known as off-invoice discounts, buy downs and voluntary price reductions.

Experts say that the direct discounts frequently are more effective with consumers than advertising displays and coupons.

The cigarette makers announced that they spent in general $46.5 million on magazine advertising in 2010. It is up from $36.7 million in 2009 and $25.5 million in 2008.

Money dedicated on providing cigarette samples to the public has dropped from $54.3 million in 2008 to $22.2 million in 2010. Anti-tobacco advocates do not accept the “sampling” marketing of cigarette makers as being focused at youth and teenagers.

David Sylvia, Altria spokesman, said that its dropped marketing spending is connected with two main factors: the drop in whole cigarette consumption and the reduction in traditional advertising options.

The FTC announced that the amount of cigarettes sold or given away to retail dealers and wholesalers in the U.S. decreased from 322.6 billion in 2008 to 290.3 billion in 2009, and to 282 billion in 2010.

Menthol-flavored cigarettes represented 22% of market share in 2010, down from 27% in 2008.

Money spent for advertising of smokeless tobacco dropped 9% to $444.2 million in 2010.

Some anti-smoking advocates assure that smokeless tobacco products are less harmful than cigarettes.

The Campaign for Tobacco-Free Kids said that the FTC report is “strong confirmation that cigarette tax hikes are one of the most effective methods to reduce smoking.” The group announced the decision in 2009 to increase the federal excise duty by 62 cents to $1.01 a pack.

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