FTC Reports Show Massive Spending on Tobacco Marketing, Underscoring Need for FDA Authority Over Tobacco and Further State Action

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

Apr. 26 2007

Washington, DC — While total tobacco marketing expenditures declined slightly from 2003 to 2005, tobacco marketing is still at historically high levels and has nearly doubled since the 1998 state tobacco settlement, according to the Federal Trade Commission’s latest reports on cigarette and smokeless tobacco marketing released today. The recent declines pale in comparison to the huge increase in tobacco marketing since the 1998 settlement. In 2005, the most recent year included in the FTC reports, the tobacco companies spent a massive $13.4 billion - $36.6 million a day - to market their deadly and addictive products. The tobacco companies spent $44.33 on marketing for every man, woman and child in America.

The 2005 total includes $13.1 billion in cigarette marketing and $250.8 million in smokeless tobacco marketing. In 1998, the tobacco companies spent $6.9 billion on marketing ($6.7 billion for cigarettes and $145.5 million for smokeless tobacco). It is especially troubling that tobacco companies continue to spend the bulk of their marketing dollars on price discounts that make cigarettes more affordable to children, the most price-sensitive customers, and undermine state efforts to reduce tobacco use by increasing tobacco taxes. Not coincidentally, spending on tobacco price discounts skyrocketed to $10.8 billion 2003 and $10.9 billion in 2004 as numerous states were implementing tobacco tax increases.

The staggering amounts spent on tobacco marketing should be a wakeup call to elected officials at all levels that the battle against tobacco use is far from won. We must be as aggressive in fighting tobacco use as the tobacco companies are in promoting their deadly and addictive products. These massive tobacco marketing expenditures, especially price discounts, are a key reason why progress in reducing both youth and adult smoking has stalled recently after a decade of significant progress.

The FTC reports underscore the urgent need for Congress to enact pending legislation to grant the U.S. Food and Drug Administration (FDA) authority to regulate tobacco products, including the authority to crack down on tobacco marketing that appeals to children and misleads consumers.

It is also critical that states step up their efforts to prevent and reduce tobacco use. States should significantly increase tobacco taxes to counter the industry’s heavy price discounting, increase funding for tobacco prevention and cessation programs, and accelerate the strong momentum that is spreading smoke-free workplace laws across the nation.

The FTC reports make it clear that the 1998 settlement, current laws and the tobacco industry’s own empty promises have failed to prevent the industry from marketing to children, misleading the public and bombarding us with messages that legitimize and glamorize their deadly and addictive products. The reports also show that the tobacco companies cannot be taken seriously when they claim to have made profound changes since the 1998 settlement.

FDA Legislation: This FDA legislation before Congress would immediately curtail some of the tobacco industry’s most harmful marketing practices, including those with the greatest appeal to children. It would limit tobacco advertising in stores and in magazines with significant teen readership to black-and-white text only, eliminating the colorful, youth-oriented images that depict smoking as cool and glamorous. It would require stores to place tobacco products behind the counter; ban all remaining tobacco brand sponsorships of sports and entertainment events; and ban free cigarette samples and free giveaways of non-tobacco items with the purchase of a tobacco product. The legislation would also ban candy-flavored cigarettes that clearly are a starter product for young new smokers.

In addition to these specific restrictions, the legislation would give the FDA broad authority to curtail other tobacco marketing that appeals to children and misleads consumers. The legislation would ban misleading cigarette labels such as “light” and “low-tar” that convey a false health benefit and give the FDA authority to strictly regulate any health claims about tobacco products - and marketing with such health claims - to ensure they are scientifically verified, do not encourage new users to start and do not discourage current tobacco users from quitting.

Importantly, the FDA legislation would for the first time grant states the authority to regulate cigarette marketing. States and localities could impose bans or restrictions on the time, place and manner (but not content) of the advertising or promotion of cigarettes.

Today’s reports show that the tobacco companies have easily circumvented the marketing restrictions in the 1998 settlement and increased spending on other harmful forms of marketing, especially price discounts and in-store marketing that make tobacco products more affordable and visible to kids. The reports show that the vast bulk of cigarette marketing in 2005 was spent price promotions, including $9.8 billion on price discount and $1.6 billion on coupons and free cigarette promotions (e.g., buy one, get one free).

State Action: These price promotions have reduced the cost of tobacco products and undercut state efforts to reduce tobacco use by increasing tobacco taxes. States should counter these price promotions by approving increases in tobacco taxes too large for the tobacco industry to counter.

The $13.4 billion the tobacco companies spend to market their deadly products dwarfs the $597.5 million the states are spending this year on tobacco prevention and cessation programs. The tobacco companies spend more than $22 to market tobacco products for every $1 dollar the states spend to fight tobacco use. The FTC reports should spur every state to fund a tobacco prevention and cessation program at minimum levels recommended by the Centers for Disease Control and Prevention. This would take just seven percent of the nearly $22 billion in revenue the states are collecting this year from the tobacco settlement and tobacco taxes, but the states are spending barely a third of the minimum amount.

This massive spending on tobacco marketing has undermined efforts to reduce tobacco use. The CDC’s latest survey of high school smoking found that 23 percent of high school students smoked in 2005, up from 21.9 percent in 2003 and a worrisome turnaround after a 40 percent decline since 1997 (when smoking rates peaked at 36.4 percent). The adult smoking rate was stagnant at 20.9 percent in 2004 and 2005, the first time the rate has not declined since 1997, when it was 24.7 percent. Despite the progress we’ve made, tobacco use is still the nation’s leading preventable cause of death, killing more than 400,000 people and costing the nation more than $96 billion in health care bills each year.

Our progress is at risk unless Congress takes long-overdue action to regulate tobacco products and marketing and elected officials at all levels redouble efforts to implement proven solutions to reduce tobacco use.

 

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