Advertising and promotional expenditures for smokeless tobacco products reached $170.2 million in 1999, according to a biennial Federal Trade Commission Report to Congress. The report shows that promotional allowances and point of sale advertising were the top expenditure categories in 1999, with coupons and public entertainment also contributing substantially to industry spending. The $170.2 million spent in 1999 represented a 13 percent increase over the previously-reported 1997 expenditure figure of $150.4 million. With only two exceptions, advertising and promotional
expenditures have increased every year since 1987, when slightly less than $68 million was spent.
The Comprehensive Smokeless Tobacco Health Education Act of 1986 requires the FTC to report on smokeless tobacco products every two years. This 2001 report includes new 1998 and 1999 data on sales and advertising and promotional expenditures, and discusses trends in the smokeless tobacco market. Specifically, it shows the last year of spending prior to the implementation of Master Settlement Agreement ("MSA") that United States Tobacco Company -- the largest domestic smokeless tobacco company -- signed with 48 state attorneys general, the District of Columbia, and several territories, as well as the first year affected by the MSA's phased-in restrictions on certain advertising and promotional practices.
The report shows that the total number of pounds of smokeless tobacco sold by manufacturers to wholesalers and retailers fell from 1997 to 1998, and then again in 1999, to 109.4 million pounds -- the lowest level ever reported by the Commission. Sales revenues received by the manufacturers rose, however, in both years: $1.89 billion in 1998 (up from $1.82 billion in 1997) and $1.94 billion in 1999. Revenues have increased each year since 1985.
Moist snuff has been the leader in smokeless tobacco revenues and marketing expenditures since the Commission began collecting these data and this trend continued in 1998 and 1999. Moist snuff revenues in those two years were $1.48 billion and $1.58 billion, respectively. Advertising and promotional expenditures for moist snuff -- $117.3 million in 1998 and $147.3 million in 1999 -- also exceeded the expenditures for all other types of smokeless tobacco combined. More pounds of moist snuff were sold in 1998 (56.2 million) and 1999 (58.4 million ) than all other types of smokeless tobacco combined. Before 1996, loose leaf/chewing tobacco had been the leading seller in terms of total pounds sold.
In addition to providing the total amount of annual advertising and promotional expenditures, the report also breaks down those expenditures by category. In 1998, more money was spent on public entertainment (such as sponsorship of sporting events) than on any other expenditure category -- $25.4 million -- with point of sale advertising a close second at $25.3 million. In 1999, promotional allowances and point of sale led the way with $30.8 million and $26.1 million in spending, respectively.
Copies of the news release and the 2001 report on smokeless tobacco are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
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Michael Ostheimer or Shira Modell
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