If I had been asked where the bulk of advertising money for the tobacco industry was spent, a week ago I would have said it was on print advertising. But I was surprised when the Federal Trade Commission issued two new reports identifying price discounts as the largest category of spending for advertising and promotion. According to these reports price discounting made up 78.2% of the total advertising and promotion budget in 2009 and 80% of the advertising and promotion budget in 2010 for cigarettes. For smokeless tobacco, price discounts made up 32.6% in 2009 and 21.4% in 2010. It is no surprise that the total number of cigarettes sold or given away has gone down. From 2008 to 2009 the total number of cigarettes sold or given away decreased by 10% and from 2009-2010 by 3%.
The trends we see in smokeless tobacco are also predictable (and in line with other reports we have seen recently that identify and uptick in the use of smokeless tobacco products). In 2009 the amount of smokeless tobacco sold or given away decreased, but then increased in 2010. What is surprising is how much money is being spent to lower the price of their product. Read More