Federal Trade Commission Reports Released:
Tobacco Industry Spends More at the POS Than Anywhere Else
In 2013, the tobacco industry spent over $8.6 billion marketing and promoting cigarettes and smokeless tobacco at the point of sale.
These point of sale expenditures account for over 92% of their total marketing expenditures. These figures, recently released in the Federal Trade Commission Reports on Cigarette and Smokeless Tobacco Sales and Marketing Expenditures in 2013, document a continued increase in tobacco industry expenditures at the POS over the past 30 years.Though sales and total spending on cigarette marketing decreased from 2012-2013, the proportional amount of spending on POS promotional activity remains high at 92%. Marketing expenditures for smokeless tobacco at the POS grew by 23%.
Spending on price discounts, the largest category for both smokeless tobacco and cigarettes, increased by 33% for smokeless tobacco from 2012-2013, now accounting for over 56% of total marketing dollars. Though total expenditures on price discounts for cigarettes dipped slightly, it remained at over 85.4% of all marketing dollars spent for cigarettes. Spending on coupons for cigarettes also increased by 4%. These promotions reduce the price of products, counteracting the impact of tobacco control policies like excise taxes and targeting price sensitive smokers. See more details.
Price discounts for cigarettes and smokeless tobacco seen at the POS
Tobacco marketing at the POS matters. Research shows that tobacco marketing can cause youth to start smoking, keep current smokers hooked, and make it harder to quit.
Chicago Passes Strong Minimum Price Law, Raises MLSA to 21
Raising the price of tobacco products is one of the most effective ways to reduce initiation, decrease consumption, and increase cessation. While raising excise taxes is the gold standard for raising the price of tobacco products, tobacco companies often soften this price hike by offering consumers coupons, discounts, and price promotions on multipack purchases, such as buy some-get-some offers (as seen in the latest FTC reports).
A new law passed in Chicago helps to counteract these tactics by prohibiting the redemption of coupons, banning multi-pack discounts, and setting minimum prices for all tobacco products.
In the face of high excise taxes, the tobacco industry often uses trade discounts, buy-downs, or price reductions by geographic area or brand to keep prices low. Minimum price laws prevent these price manipulations and reduce targeting of products to certain populations, such as low income or racial and ethnic minority populations, as well as youth, who are particularly price sensitive.
Since price discounts are the largest single category of tobacco industry spending on advertising and promotions, combining a minimum price law with a ban on discounting, as Chicago has just done, is a particularly strong policy approach.
The Chicago City Council also voted to raise the minimum legal sales age for tobacco to 21, following the lead of over 100 other cities across the country as well as the state of Hawaii.
The latest and greatest from our Media Gallery. Speaking of price discounts...
Thanks to Nancy Cripe for submitting this photo of a huge sandwich board on main street in the small, rural Indiana town of North Manchester.
