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[ INDUSTRY NEWS]
Cigarette marketing reaches new high
According to a report issued by the Federal Trade Commission in August, tobacco companies have more than doubled their cigarette marketing campaigns, although the amount of cigarettes being sold has declined.
The Financial Times reported that the FTC report said tobacco companies spent roughly $15.2 billion on U.S. cigarette advertising and promotions in 2003, the highest figure reported by the FTC since it began preparing the report in 1967. However, the report also revealed that the five largest tobacco companies sold 19.8 billion fewer cigarettes in 2003.
Richmond, Va.-based Philip Morris USA reported that its spending on cigarette brand advertising decreased for the sixth consecutive year as the company continued to reduce magazine, newspaper and retail point-of-sale advertising in 2003. Spending on cigarette brand advertising decreased by 10 percent from 2002.
"Since 1998, Philip Morris USA's spending on cigarette brand advertising has decreased significantly as a result of voluntary reductions in magazine, newspaper and retail advertising and the elimination of certain brand advertising under the tobacco settlement agreements," said Peggy Roberts, senior director of communications. "The overwhelming majority of 2003 expenditures Philip Morris USA reported to the FTC represents price and product promotions to adult smokers."
According to the FTC, "The largest single category of expenditures was price discounts paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers." This category accounted for nearly $11 billion (71.4 percent) of total advertising and promotional expenditures in 2003.
Spending on point-of-sale promotional materials declined in 2003, reported the FTC, representing 1.1 percent of total advertising and promotion that year. Meanwhile, retail value-added expenditures, i.e., costs associated with "buy one, get one" offers, represented the largest category of expenditures reported by tobacco companies in 2003.
In 2001, the FTC began requiring the major cigarette manufacturers to report expenditures on advertisements directed to youth or their parents that are intended to reduce youth smoking. For 2003, the companies reported spending $72.9 million on such advertising, a 1.8-percent decrease from the $74.2 million spent in 2002.
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