Economic Facts About U.S. Tobacco Use and Tobacco Production

• An estimated 371 billion cigarettes were consumed in the United States in 2006,¹ and cigarettes account for approximately 91% of expenditures on all tobacco products in this country.² Total United States expenditures on tobacco were estimated to be $88.7 billion in 2005,² of which $82 billion were spent on cigarettes.²
• Five cigarette companies accounted for more than 90% of all sales in the United States in 2006.³ They were Altria Group Inc. (Philip Morris USA; 49.2%), Reynolds American Inc. (27.8%), Lorillard (9.7%), Commonwealth Brands (3.7%), and Liggett (2.4%).³
• Total reported company revenue for the five largest cigarette companies were as follows: Altria Group Inc. (parent company of Philip Morris USA), $10.4 billion (2005); Reynolds American Inc., $1.2 billion (2006); Loews Corporation (parent company of Carolina Group, which owns Lorillard), $2.49 billion (2006); Houchens Industries (parent company of Commonwealth Brands), $2.36 billion (2005); and Vector Group Ltd. (parent company of Liggett), $52.4 million (2005).⁴ Altria Group Inc. was ranked 20th, Loews 145th, and Reynolds American Inc. 280th on the Fortune 500 list of the largest corporations in the United States in 2006.⁴
• In 2005, cigarette companies spent $13.11 billion on advertising and promotion, down from $15.12 billion in 2003,5 but nearly double what was spent in 1998.⁵ This amounted to more than $36 million per day,⁵ more than $45 for every person in the United States,^5,6 and more than $290 for each U.S. adult smoker.^5,7
• Tobacco is grown in 21 states.⁸ The largest tobacco producing states are Kentucky and North Carolina, accounting for two-thirds of tobacco grown in the United States.⁸ The number of tobacco-growing farms declined from 512,000 in 1954 to approximately 57,000 in 2002.⁹
• United States Tobacco, Conwood, and Swedish Match are the largest smokeless tobacco companies in the United States, accounting for nearly 90% of total sales.¹⁰ Altadis USA and Swisher International Inc. are the largest cigar companies, accounting for about 60% of total United States sales of large cigars, cigarillos, and little cigars.¹¹
• In 2005, consumers in the United States spent $2.61 billion on smokeless tobacco products,¹² and more than $1 billion on cigars each year.¹¹

Economic Costs and Years of Potential Life Lost Associated with Cigarette 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).¹³
• 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.¹⁴
• Cigarette smoking results in 5.1 million years of potential life lost in the United States annually.¹³

Cigarette Pricing, Excise Taxes, and the Effect of Increased Cigarette Prices

• In 2008, the average retail price of a pack of cigarettes in the United States was $4.35 (including federal, state, and municipal excise taxes), but prices vary widely across states.¹⁵
• On April 1, 2009, the federal cigarette tax increased by 62 cents to $1.01 per pack.¹⁶
• The median state cigarette excise tax rate, as of January 1, 2008, was $1, but varied from 7 cents in South Carolina to $2.58 in New Jersey.¹⁷
• Increases in cigarette prices lead to significant reductions in cigarette smoking.^18,19 A 10-percent increase in price has been estimated to reduce overall cigarette consumption among adolescents and young adults by about 4%.¹⁸ 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.¹⁸

References

1. Capehart T. Tobacco Outlook. Harvest Intentions for 2007-Crop Tobacco Advance 2 Percent. (PDF–278 KB). Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, April 2007, TBS—262 [accessed 2008 Nov 24].
2. U.S. Department of Agriculture. Table 21: Expenditures for Tobacco Products and Disposable Personal Income, 1989–2006 [accessed 2009 Mar 17]. Compiled from reports of the Department of Commerce, Bureau of Economic Analysis.
3. Maxwell JC. The Maxwell Report. Year End & Fourth Quarter 2006 Sales Estimates for the Cigarette Industry. Richmond, VA: John C. Maxwell, Jr., 2007.
4. Hoover's Online. Cigarettes, Cigars, and Smokeless Tobacco Products [accessed 2008 Nov 24].
5. Federal Trade Commission. Cigarette Report for 2004 and 2005 (PDF–882 KB). Washington, DC: Federal Trade Commission; 2007 [accessed 2008 Nov 24].
6. U.S. Census Bureau. 2005 American Community Survey [accessed 2008 Nov 24].
7. Centers for Disease Control and Prevention. Tobacco Use Among Adults—United States, 2005. Morbidity and Mortality Weekly Report 2006;55(42):1145–1148 [accessed 2008 Dec 04].
8. U.S. Department of Agriculture. Briefing Room: Tobacco—Background . Washington, DC: U.S. Department of Agriculture, Economic Research Service; 2005 [accessed 2008 Nov 24].
9. Capehart T. Trends in U.S. Tobacco Farming. (PDF–824 KB) (Outlook Report No. TBS-257-02). Washington, DC: United States Department of Agriculture, Economic Research Service; 2004 [accessed 2008 Nov 24].
10. Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006.
11. Maxwell JC. The Maxwell Report: Cigar Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006.
12. Federal Trade Commission. Smokeless Tobacco Report for the Years 2002–2005. (PDF–619 KB) Washington, DC: Federal Trade Commission; 2007[accessed 2008 Nov 24].
13. 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):1226–1228 [accessed 2008 Nov 24].
14. Centers for Disease Control and Prevention. Sustaining State Programs for Tobacco Control: Data Highlights 2006 (PDF–1363 KB). 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 2008 Nov 24].
15. The Tax Burden on Tobacco. Historical Compilation, Volume 43, 2008. Arlington, VA: Orzechowski and Walker; 2008.
16. Alcohol and Tobacco Tax and Trade Bureau. Tobacco: Federal Excise Tax Increase and Related Provisions U.S. Department of the Treasury [accessed 2009 May 12].
17. Federation of Tax Administrators. State Excise Tax Rates on Cigarettes, January 1, 2008 (PDF–51 KB). Washington, DC: Federation of Tax Administrators; 2008 [accessed 2009 May 12].
18. 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; 2000 [accessed 2008 Nov 24].
19. Task Force on Community Preventive Services. Tobacco (PDF–363 KB) (Chapter 1). 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 2008 Dec 30].

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.