Economic Facts About U.S. Tobacco Production and Use

Overview

Every year, tobacco companies spend billions of dollars on advertising and promotion, and U.S. consumers spend billions of dollars on tobacco products. Tobacco use then costs the United States billions of dollars in medical expenses and lost productivity.^1–3

Tobacco-Related Spending

Tobacco companies spend billions of dollars each year to market their products.

• In 2006, cigarette companies spent $12.4 billion on advertising and promotional expenses in the United States alone, down from $13.1 billion in 2005, but more than double what was spent in 1997.³
• The money cigarette companies spent on U.S. marketing in 2006 amounted to approximately $34 million per day.³
• The five major U.S. smokeless tobacco manufacturers spent $354 million on smokeless tobacco advertising and promotion in 2006.²

U.S. consumers spent an estimated $90 billion in 2006 on tobacco products.¹

• Approximately $83.6 billion was spent on cigarettes.¹
• Approximately $3.2 billion was spent on cigars.¹
• Approximately $2.6 billion was spent on smokeless tobacco (e.g., chewing tobacco and snuff).²

NOTE: Advertising and promotional expenses include items such as magazine ads, distribution of cigarette samples or coupons for free samples, ads posted in retail stores, price discounts, payments to retailer for displaying brands, volume rebates for wholesalers, and direct-mail advertising.

Tobacco-Producing States

Although U.S. tobacco production has decreased significantly since the 1950s, the United States continues to be a leading producer of tobacco leaves (along with countries like China and India):⁴

• In the United States, tobacco is currently grown in 21 states.⁵
• The largest tobacco-producing states are Kentucky and North Carolina, accounting for two-thirds of tobacco grown in the United States.⁵
• The number of tobacco-growing farms declined from more than half a million in the 1950s to approximately 57,000 in the early 2000s.⁶

Tobacco Sales

Cigarette Companies

More than 315 billion cigarettes were purchased in the United States in 2009, with 3 companies selling nearly 85% of them.⁷

Company Name	Brand Examples	Market %	Cigarettes Sold
Philip Morris USA	Marlboro, Basic, Virginia Slims	47.1%	148.7 billion
Reynolds American Inc.	Camel, Doral, Winston, Kool	25.9%	81.6 billion
Lorillard	Newport, Maverick, Kent	11.3%	35.5 billion
All other companies	American Spirit, USA Gold, Eve	15.7%	49.7 billion

Smokeless Tobacco Companies

Approximately 121.4 million pounds of smokeless tobacco were purchased in the United States in 2009 (down from 124.7 million pounds in 2008), with 3 companies selling nearly 90%.⁸

Company Name	Brand Examples	Market %	Pounds Sold
United States Tobacco	Copenhagen, Skoal	41.8%	50.7 million
American Snuff	Grizzly, Kodiak	28.6%	34.7 million
Swedish Match	Timber Wolf, Red Man	19.1%	23.1 million
All other companies	Redwood, Kayak, Beech-Nut	10.5%	12.9 million

Cigar Companies

Approximately 12 billion cigars (i.e., 9.7 billion large cigars and cigarillos; 2.3 billion little cigars) were purchased in the United States in 2009, with 3 companies selling a majority of them.⁹

Company Name	Brand Examples	Market %	Cigars Sold
Swisher International	Swisher Sweets, Universal	28.4% (large cigars and cigarillos) 32.0% (little cigars)	2.7 billion 750 million
Altadis USA	Dutch Masters, Phillies	15.4% (large cigars and cigarillos) 8.5% (little cigars)	1.5 billion 200 million
Phillip Morris	Black and Mild	12.9% (large cigars and cigarillos)	1.2 billion

Economic Costs Associated with Smoking

• During 2000–2004, cigarette smoking was estimated to be responsible for $193 billion in annual health-related economic losses in the United States ($96 billion in direct medical costs and approximately $97 billion in lost productivity).¹⁰
• The total economic costs (direct medical costs and lost productivity) associated with cigarette smoking are estimated at $10.47 per pack of cigarettes sold in the United States.¹¹
• Cigarette smoking results in 5.1 million years of potential life lost in the United States annually.¹⁰

Cigarette Pricing and Excise Taxes

Pricing

In early 2010, the average retail price of a pack of cigarettes in the United States was approximately $4.80 (including federal, state, and municipal excise taxes), but prices vary widely across states.¹²

Excise Taxes

Cigarettes are subject to both federal and state taxes.

• On April 1, 2009, the federal cigarette tax increased by 62 cents to $1.01 per pack.¹³
• As of July 1, 2010 the average state cigarette excise tax rate was approximately $1.44 per pack, but varied from 17 cents in Missouri to $4.35 in New York.¹²

Effects of Increased Prices

Increases in cigarette prices lead to significant reductions in cigarette smoking.^14,15

• A 10% increase in price has been estimated to reduce overall cigarette consumption among adolescents and young adults by about 4%.
• Increases in cigarette prices can lead to significant reductions in smoking prevalence by increasing cessation among smokers and reducing smoking initiation among potential young smokers.

References

1. U.S. Department of Agriculture. Table 21: Expenditures for Tobacco Products and Disposable Personal Income, 1989–2006 . Washington: U.S. Department of Agriculture, Economic Research Service, 2007 [accessed 2011 Mar 11].
2. Federal Trade Commission. Smokeless Tobacco Report for the Year 2006 .
   (PDF–307 KB) Washington: Federal Trade Commission, 2009 [accessed 2011 Mar 11].
3. Federal Trade Commission. Cigarette Report for 2006 . (PDF–386.6 KB) Washington: Federal Trade Commission, 2009 [accessed 2011 Mar 11].
4. World Health Organization. Tobacco Atlas . Geneva: World Health Organization, 2002 [accessed 2011 Mar 11].
5. U.S. Department of Agriculture. Briefing Room: Tobacco—Background . Washington: U.S. Department of Agriculture, Economic Research Service, 2005 [accessed 2011 Mar 11].
6. U.S. Department of Agriculture. Trends in U.S. Tobacco Farming . (PDF–824.06 KB) Washington: U. S. Department of Agriculture, Economic Research Service, 2004 [accessed 2011 Mar 11].
7. Maxwell JC. The Maxwell Report: Year End & Fourth Quarter 2009 Sales Estimates for the Cigarette Industry. Richmond (VA): John C. Maxwell, Jr., 2010 [cited 2010 2011 Mar 11].
8. Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2009. Richmond (VA): John C. Maxwell, Jr., 2010 [cited 2011 Mar 11].
9. Maxwell JC. The Maxwell Report: Cigar Industry in 2009. Richmond (VA): John C. Maxwell, Jr., 2010 [cited 2011 Mar 11].
10. Centers for Disease Control and Prevention. Smoking-Attributable Mortality, Years of Potential Life Lost, and Productivity Losses—United States, 2000–2004. Morbidity and Mortality Weekly Report 2008;57(45):1226–8 [accessed 2011 Mar 11].
11. Centers for Disease Control and Prevention. Sustaining State Programs for Tobacco Control: Data Highlights 2006 . (PDF–1.42 MB) Atlanta: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2006 [accessed 2011 Mar 11].
12. Centers for Disease Control and Prevention. STATE System: State Comparison Reports. [accessed 2011 Mar 11].
13. Alcohol and Tobacco Tax and Trade Bureau. Tobacco: Federal Excise Tax Increase and Related Provisions . Washington: U.S. Department of the Treasury, 2009 [accessed 2011 Mar 11].
14. U.S. Department of Health and Human Services. Reducing Tobacco Use: A Report of the Surgeon General. Atlanta: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2000 [accessed 2011 Mar 11].
15. Task Force on Community Preventive Services. Tobacco . (PDF–363.20 KB) In: Zaza S, Briss PA, Harris KW, editors. The Guide to Community Preventive Services: What Works to Promote Health? New York: Oxford University Press, 2005:3–79 [accessed 2011 Mar 11].

For Further Information

Centers for Disease Control and Prevention
National Center for Chronic Disease Prevention and Health Promotion
Office on Smoking and Health
E-mail: tobaccoinfo@cdc.gov
Phone: 1-800-CDC-INFO

Media Inquiries: Contact CDC's Office on Smoking and Health press line at 770-488-5493.