Economic Facts About U.S. Tobacco Production and Use
Every year, tobacco companies spend billions of dollars on advertising and promotion, and tobacco use costs the United States billions of dollars in medical expenses and lost productivity.1,2,3,4
Tobacco companies spend billions of dollars each year to market their products.
- In 2011, the tobacco industry spent $8.4 billion on cigarette advertising and promotional expenses in the United States alone, and 83.6% ($7.0 billion) of this expenditure was spent on price discounts.1
- Smokeless tobacco advertising and promotion rose to $451.7 million in 2011–up from $444.2 million in 2010.2
- Including both cigarette and smokeless tobacco marketing, tobacco companies spent $8.8 billion on marketing in 2011, or more than $24 million each day.1,2
- A number of electronic products, such as electronic cigarettes (e-cigarettes), cigars, and pipes, are being introduced in the marketplace. However, at the present time, comparable data on expenditures for the marketing and promotion of these products are not available.
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 retailers for displaying brands, volume rebates for wholesalers, and direct-mail advertising.
Tobacco Production in the United States
Although U.S. tobacco production has decreased significantly since the 1950s, the United States continues to be a leading producer of tobacco leaves. In 2007, four countries (China, Brazil, India, and the United States) produced two-thirds of the world's tobacco.5 In 2007—
- In the United States, tobacco was grown in 16 states.6
- The largest tobacco-producing states were Kentucky and North Carolina, accounting for 71% of tobacco grown in the United States.6
- The number of tobacco-growing farms declined from more than 500,000 in the 1950s to about 10,000 in 2007.6
More than 293 billion cigarettes were purchased in the United States in 2011, with three companies selling nearly 85% of them.7
|Company Name||Brand Examples||Market %||Cigarettes Sold|
|Philip Morris USA||Marlboro, Basic, Virginia Slims||46.1%||135.1 billion|
|Reynolds American Inc.||Camel, Doral, Winston, Kool||24.9%||72.9 billion|
|Lorillard||Newport, Maverick, Kent||13.7%||40 billion|
|All other companies||USA Gold, Sonoma, Montclair||15.3%||45 billion|
Smokeless Tobacco Companies
Approximately 124.6 million pounds of smokeless tobacco were purchased in the United States in 2011 (up from 122.6 million pounds in 2010), with three companies selling nearly 90% of this form of tobacco.8
Since 2006, two of the top three smokeless tobacco companies have been purchased by major cigarette manufacturers. In 2006, Conwood Holdings (renamed American Snuff in 2011) became a subsidiary of Reynolds American, the parent company of R.J. Reynolds Tobacco Company.9 In 2008, U.S. Smokeless Tobacco Company became a wholly owned subsidiary of Altria Group, the parent company of Philip Morris.9
|Company Name||Brand Examples||Market %||Pounds Sold|
|U.S. Smokeless Tobacco Company||Copenhagen, Skoal||44.9%||56 million|
|American Snuff||Grizzly, Kodiak||28.3%||35.3 million|
|Swedish Match||Timber Wolf, Red Man||16.7%||20.9 million|
|All other companies||Redwood, Kayak, Beech-Nut||10.1%||12.4 million|
In 2011, about 13.7 billion cigars (i.e., 12.9 billion large cigars and cigarillos and .8 billion little cigars) were purchased in the United States.10
|Company Name||Brand Examples||Market %||Cigars Sold|
|Swisher International||Swisher Sweets, Universal||18.4% (large cigars and cigarillos)|
62.7% (little cigars)
|Altadis USA||Dutch Masters, Phillies||11.6% (large cigars and cigarillos)|
11.3% (little cigars)
|Prime Time International||2.7% (large cigars and cigarillos)|
25.1% (little cigars)
|Cheyenne International, LLC||Cheyenne, Derringer, Bodyshot||19.4%* (large cigars and cigarillos)|
N/A%* (little cigars)
|All other companies||50.6%* (large cigars and cigarillos)|
26%* (little cigars)
*Cheyenne and Prime Time converted a large portion of their portfolios to large cigars as of April 1, 2009. Therefore, values available for these companies for 2011 are estimated values.10
Economic Costs Associated With Smoking
- Annual smoking-attributable economic costs in the United States estimated for the years 2009–2012 were more than $289 billion, including:4
- At least $133 billion for direct medical care of adults and more than $156 billion in lost productivity
- $5.6 billion (2006 data) for lost productivity due to exposure to secondhand smoke
Effects of Increased Prices
Increases in cigarette prices lead to significant reductions in cigarette smoking.11 This is the single most effective way to reduce smoking.
- A 10% increase in price has been estimated to reduce overall cigarette consumption by 3–5%.
- Research on cigarette consumption suggests that both youth and young adults are two to three times more responsive to changes in price than adults.
- Federal Trade Commission. Federal Trade Commission Cigarette Report for 2011. [PDF–325 KB] Washington: Federal Trade Commission, 2013 [accessed 2014 Feb 6].
- Federal Trade Commission. Federal Trade Commission Smokeless Tobacco Report for 2011. [PDF–180.58 KB] Washington: Federal Trade Commission, 2013 [accessed 2014 Feb 6].
- 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 [cited 2014 Feb 6].
- U.S. Department of Health and Human Services. The Health Consequences of Smoking—50 Years of Progress: 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, 2014 [accessed 2014 Feb 6].
- Eriksen M, Mackay J, Ross H. The Tobacco Atlas, Fourth Ed.. Atlanta, GA: American Cancer Society; New York, NY: World Lung Foundation; 2012 [accessed 2014 Feb 6].
- U.S. Department of Agriculture. Census of Agriculture—State Data: Table 45: Farms by North American Industry Classification System: 2007. [PDF–98.76 KB] Washington:
U. S. Department of Agriculture, National Agricultural Statistics Service, 2007 [accessed 2014 Feb 6].
- Maxwell JC. The Maxwell Report: Year End & Fourth Quarter 2011 Sales Estimates for the Cigarette Industry. Richmond (VA): John C. Maxwell, Jr., 2012 [cited 2014 Feb 6].
- Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2011. Richmond (VA): John C. Maxwell, Jr., 2012 [cited 2014 Feb 6].
- Tomar SC, Alpert HR, Connolly GN. Patterns of Dual Use of Cigarettes and Smokeless Tobacco Among US Males: Findings from National Surveys. Tobacco Control 2010;19(2):104–9 [cited 2014 Feb 6].
- Maxwell JC. The Maxwell Report: Cigar Industry in 2011. Richmond (VA): John C. Maxwell, Jr., 2012 [cited 2014 Feb 6].
- U.S. Department of Health and Human Services. Preventing Tobacco Use Among Youth and Young Adults: 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, 2012 [accessed 2014 Feb 6].
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