Tobacco Companies Shift Spending to Smokeless Products

NATIONAL REPORT -- Tobacco companies have ramped up advertising and promotions for smokeless products while spending fewer dollars on traditional cigarette advertising and promotions, according to the Federal Trade Commission (FTC).

According to FTC data reported by Forbes, U.S. tobacco companies spent $547.9 million in 2008 -- the latest year data was available -- on smokeless advertising and marketing, more than double what was spent in 2003. During that time, sales of smokeless tobacco products increased by 11 percent.

By contrast, marketing and advertising spending on traditional cigarette products declined 34 percent compared to 2003, to $9.94 billion. During that time, industrywide sales decreased 11 percent to 320 billion cigarettes. Of the money spent on traditional products, $7.2 billion was spent on price discount promotions to retailers and wholesalers, so they could reduce the average price of a pack of cigarettes paid by consumers, according to the FTC.

This spending shift is most likely because tobacco manufacturers believe cigarette alternatives face fewer roadblocks, such as smoking bans and tax hikes, than traditional cigarettes face, Forbes said in its report.

If more recent data than 2008 were available, though, the numbers could be considerably different. A large federal excise tax, several state tax increases and the Food and Drug Administration being given the authority to regulate the industry all occurred in 2009, according to Forbes.

Twenty percent of Americans, or about 46 million people, smoke according to the Centers for Disease Control and Prevention. That number has remained virtually unchanged since 2004.

Federal data shows about 3.5 percent of American adults use smokeless tobacco.