The Federal Trade Commission's annual report to Congress on cigarette sales and advertising for 1994 showed the first decrease in promotional spending since 1986. According to the report, the cigarette industry spent $4.83 billion on advertising and promotional expenditures in 1994, 19.9 percent less than the $6.03 billion spent in 1993.
The 1994 annual report, released today, contains sales and marketing statistics for calendar year 1994 and historical data dating back to 1963, the year the FTC began collecting information on the cigarette industry.
In a continuing trend away from newspaper advertising since 1981, when newspaper spending accounted for 23.1 percent of total expenditures, cigarette advertising in newspapers declined to 0.5 percent of total advertising and promotional expenditures: from $36.2 million in 1993 to $24.1 million in 1994. However, spending on magazine advertising increased from $235 million in 1993 to $251.6 million in 1994, an increase of 7.0 percent, according to the FTC report. Outdoor advertising expenditures increased from $231.5 million in 1993 to $240.0 million in 1994, while point-of-sale advertising expenditures decreased by 14.5 percent (from $401 million in 1993 to $342.7 million in 1994).
The largest category of advertising and promotional expenditures was promotional allowances. Cigarette companies spent $1.7 billion in 1994 (up from $1.6 billion in 1993) on promotional allowances, which include payments to retailers for shelf space and other expenses.
Discount coupons, multiple-pack promotions ("buy one, get one free"), and retail value added offers (non-cigarette items, such as key chains or lighters given away at the point of sale with the purchase of cigarettes) declined from $2.6 billion in 1993 to $1.2 billion in 1994. These expenditures accounted for slightly less than 26 percent of all 1994 advertising and promotional expenditures.
Domestic cigarette sales by manufacturers to wholesalers and retailers increased 6.2 percent from the 1993 level, the first such increase in several years. According to the FTC report, 1994 sales totaled 490.2 billion cigarettes, which is 29 billion more than manufacturers sold to wholesalers and retailers in the preceding year. The report noted, however, that this recent volatility in sales is not reflected in the U.S. Department of Agriculture’s cigarette consumption estimates, and that "[c]onstrued together, the two data sets suggest that some increase in the number of cigarettes actually sold to consumers occurred in 1994, but that the dramatic increase reported to the Commission likely reflects, in large part, changes in inventories rather than actual retail sales."
Copies of the "Federal Trade Commission Report to Congress for 1994 Pursuant to the Federal Cigarette Labeling and Advertising Act" are available at the FTC’s World Wide Web Site, and from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov
Brenda A. Mack or Victoria Streitfeld
Office of Public Affairs
202-326-2182 or 202-326-2718
Bureau of Consumer Protection