New FTC Report Shows Smokeless Tobacco Marketing Increased 63 Percent in Three Years After 1998 Settlement

Statement of Matthew L. Myers President, Campaign for Tobacco-Free Kids

Aug. 12 2003

Washington, D.C. — Smokeless tobacco companies increased their advertising and promotional expenditures to a record $236.68 million in 2001, according to a report released today by the Federal Trade Commission. This represents an increase of 62.7 percent since 1998, when the largest smokeless tobacco company, the United States Smokeless Tobacco Company, agreed to curtail some aspects of its marketing as part of a 1998 legal settlement with the states.

In June, the FTC reported that the cigarette companies increased their marketing expenditures to a record $11.22 billion in 2001, up 66.6 percent since the 1998 settlement. Altogether, cigarette and smokeless tobacco companies spent $11.45 billion – $31.4 million a day – to market their products in 2001.

The tobacco companies have tried to convince the public and policy makers that they have changed for the better and curtailed their harmful marketing practices since the state tobacco settlement. But the two recent FTC reports provide powerful evidence that the tobacco companies have changed for the worse and increased their marketing in ways effective at addicting children. While the 1998 settlement restricted some forms of marketing effective at reaching kids, such as billboards and event sponsorships, the tobacco companies have shifted their resources and increased spending in other ways that appeal to kids, such as high-visibility store displays, price discounts, and free gifts with purchase. Store promotions are highly effective at reaching teens who, studies show, visit a convenience store at least once a week, and price discounts make cigarettes more affordable to kids, who have less disposable income than adults.

Today's FTC report also shows that after declining in 2000, smokeless tobacco advertising in magazines increased to a record $21.96 million in 2001, a one-year jump of $8.07 million or 58 percent. Magazine advertising is another effective means of reaching kids. Another troubling increase was in distribution of free samples of smokeless tobacco products, which reached a record $17.89 million in 2001.

Today's FTC report underscores the need for Congress to enact legislation granting the U.S. Food and Drug Administration effective authority to regulate tobacco products, including the authority to restrict marketing that appeals to children. It also underscores the need for states to increase excise taxes on both smokeless tobacco and cigarettes and use more of their tobacco tax and tobacco settlement revenues to fund comprehensive tobacco prevention and cessation programs, rather than cut or eliminate such programs as many states have done recently. In Fiscal Year 2003, the states cumulatively had allocated $682.3 million for tobacco prevention, which amounts to just six percent of tobacco marketing expenditures as reported by the FTC. The states have cut prevention funding for FY2004, while tobacco marketing expenditures have likely continued to increase. It is unconscionable that the states are cutting back on programs proven to protect our kids from tobacco addiction at the same time that the tobacco industry is spending more than ever to market its deadly products.

Tobacco use is the leading preventable cause of death in the U.S., killing more than 400,000 people and costing the nation more than $75 billion in health care bills every year. Every day, another 2,000 kids become daily, regular smokers, one-third of whom will die prematurely as a result. In addition, 14.8 percent of all boys (and 1.9 percent of girls) in U.S. high schools use smokeless tobacco products, which the U.S. Surgeon General, other scientific authorities and Congress have concluded cause serious disease, including oral cancer. Today's FTC report makes it clear that the tobacco industry has not changed and remains a major cause of the problem. Congress and state legislatures must act to protect our kids and reduce the terrible toll of tobacco.

(The FTC report can be found at http://www1.ftc.gov/os/2003/08/2k2k1smokeless.pdf.)

 

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