Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC reports cigarette/smokeless tobacco revenue and ad expenditures for 2013, (Mar 22, 2016)
Organizations Mentioned:Federal Trade Commission
By Michael Menzhuber, J.D., LL.M.
The FTC has issued reports on cigarette and smokeless tobacco sales and advertising for 2013, which reveal a decrease in cigarette revenue and advertising expenditures and an increase in smokeless tobacco revenue and advertising expenditures.
According to the most recent Federal Trade Commission Cigarette Report, the number of cigarettes sold by the largest cigarette companies in the United States to wholesalers and retailers in the United States has declined from 267.7 billion in 2012 to 256.7 billion in 2013.
In 2013, the amount spent on cigarette advertising and promotion was $8.95 billion, a decrease from $9.17 billion in 2012. The main reason for the decrease was a decline in spending on price discounts (discounts paid to cigarette retailers or wholesalers to reduce the price of cigarettes to customers).
The amount spent on price discounts in 2013 was $7.64 billion, a decrease from $7.8 billion in 2012. The price discounts category was the largest expenditure category in 2013 and it accounted for 85.4 percent of industry spending.
Other areas that experienced a decrease in advertising and promotional expenditures for 2013 included: (1) point-of-sale—$55.7 million in 2013 from $67.9 million in 2012; (2) promotional allowances for retailers—$291.3 million in 2013 from $335.1 million in 2012; (3) public entertainment-adult only—$104.6 million in 2013 from $113.6 million in 2012; (4) direct mail—$38.3 million in 2013 from $45.6 million in 2012; and (5) company websites—$15.4 million in 2013 from $21.4 million in 2012.
The sale of smokeless tobacco rose from 125.5 million pounds in 2012 to 128.0 million pounds in 2013. Revenue from these sales also increased from $3.8 billion in 2012 to $3.26 billion in 2013.
There also was an increase in 2013 in the amount spent on advertising and promotion by major manufacturers of smokeless tobacco products in the United States. The amount spent had decreased from $452 million in 2011 to $435.9 in 2012. However, in 2013, the amount spent increased to $503.2 million.
The amount spent on price discounts in 2013 was $282.7 million, an increase from $212 million in 2012. Price discounts were the largest expenditure category in 2013, accounting for 56.2 percent of industry spending.
Other areas that experienced an increase in advertising and promotional expenditures for 2013 included: (1) magazines—$1 million in 2013 from $229 thousand in 2012; (2) direct mail—$9.1 million in 2013 from $8.6 million in 2012; (3) point-of-sale—$32.3 million in 2013 from $31.7 million in 2012; (4) promotional allowances for retailers and wholesalers—$29.8 million and $44.3 million in 2013 from $22.3 million and $41.4 million in 2012; (5) specialty item distribution non-branded—$12 million in 2013 from $7.7 million in 2012; (6) company websites—$5.9 million in 2013 from $3.3 million in 2012; and (7) Internet—$1.8 million in 2013 from $669 thousand in 2012.
The FTC has issued the Cigarette Report periodically since 1967 and the Smokeless Tobacco Report periodically since 1987.
News: Advertising ConsumerProtection FederalTradeCommissionNews