Skip to main content

Discounts Cited in Tobacco Trial

WASHINGTON -- According to an economist testifying in the government's racketeering trial against the tobacco industry, cigarette makers have increased price promotions in recent years, a strategy they know will lead to more underage smoking, reported Reuters.

Frank Chaloupka, an economist at the University of Illinois, told a federal judge that spending on cigarette price promotions had soared in recent years, and that the industry has long known discounts are especially attractive to teenagers. "Once defendants gained this knowledge, defendants have increasingly concentrated more and more of their growing marketing budgets on price-related marketing strategies," Chaloupka said in written testimony submitted to the court.

His testimony on behalf of the government is aimed at bolstering the government's charge that tobacco companies have continued marketing cigarettes to underage teens, even though they deny doing so.

During the testimony, a lawyer for the Justice Department showed U.S. District Judge Gladys Kessler examples of cigarette coupons, price displays, giveaways and other special offers.

"These types of promotions will in fact increase youth smoking," said Chaloupka, who
cited statistics compiled by the Federal Trade Commission that show the six largest cigarette manufacturers spent more than $7.8 billion on price discounts to retailers and wholesalers in 2002.

Spending on the discounts and other promotional allowances now makes up the biggest portion of the industry's advertising and promotion budgets. Between 2001 and 2002 it more than doubled to $9.66 billion, according to figures compiled by the FTC.

Cigarette makers have denied targeting underage teens and say price discounts reflect sharp competition in the industry. That competition has become especially fierce of late, as the major tobacco companies have tried to defend their market from an increasing number of discount cigarette makers.

Chaloupka will be questioned by tobacco industry lawyers on Thursday.
This ad will auto-close in 10 seconds