New FTC Report Shows Tobacco Companies Have Greatly Increased Marketing Expenditures Since 1998 Tobacco Settlement

Washington, DC — Since the November 1998 legal settlement with the states, the tobacco companies have claimed that they have changed for the better and curtailed the industry’s harmful marketing practices. Now, the Federal Trade Commission (FTC) has released conclusive new data showing that the tobacco companies have indeed changed – for the worse.

The FTC's latest annual report on cigarette sales and advertising for 2000 shows that cigarette manufacturers spent a record $9.57 billion on advertising and promotion for that year, an increase of 16.2 percent from the $8.24 billion spent in 1999. That is the largest amount ever reported since the FTC began tracking cigarette sales and advertising in 1970. The tobacco industry in 2000 spent $26.2 million a day to advertise and promote its deadly products. That amount is more than 41 states spend annually on tobacco prevention.

The bulk of the enormous increase in advertising and promotional spending by the tobacco industry is in the area of promotional allowances and retail value added, accounting for more than 75 percent of total spending. This money is being spent for retail promotions and product placements that heavily impact kids. Two-for one offers and other enticements are particularly effective with kids who have less disposable income than adults and are more likely to be influenced by promotional items in convenience stores.

The tobacco industry has embarked on an expensive public relations campaign to convince the public and policy makers that it now acts responsibly and that the state settlement significantly restricted tobacco marketing. Philip Morris has claimed that the settlement 'fundamentally changed the way cigarettes are marketed in this country…thereby significantly reducing the visibility of tobacco advertising to young people.'

The new FTC report shows that these claims are a self-serving sham aimed at heading off real change in the form of legislation to establish meaningful federal regulation of tobacco products by the U.S. Food and Drug Administration. The fact is that the settlement restricted only a small portion of tobacco industry marketing. Rather than reducing its overall marketing expenditures, the industry has simply shifted its money to other venues allowed under the settlement and significantly increased spending in these areas. Only comprehensive federal regulation will truly restrict the industry’s marketing practices, especially to kids, and protect the public health.

The report makes it imperative that Congress act quickly to grant the FDA effective authority over tobacco products so that it can restrict tobacco marketing and sales to kids and regulate tobacco products to protect the public health. And it underscores the need for states to use tobacco settlement money for comprehensive tobacco prevention programs, including aggressive counter-advertising, community and school–based programs, cessation services, and youth access enforcement.

Tobacco products kill more than 400,000 Americans every year. They cause one of every five deaths in the United States, including nearly one out of every three deaths from cancer, one out of every five deaths from heart disease and 87 percent of all lung cancer cases. They addict 2,000 more kids each day, one-third of whom will die prematurely as a result. In fact, 90 percent of all smokers begin at or before age 18.

The evidence is powerful and clear: The tobacco companies have not changed and the toll of death and disease caused by their products continues to mount. Only Congress can protect the American people, and especially our kids, by enacting legislation to grant the FDA effective authority over tobacco.

View the FTC report