2:45 p.m.
Tobacco companies spent less money marketing and advertising their products in 2004 and 2005, after setting a record high in 2003, a federal agency said today.
Promotional spending by the five largest U.S. cigarette makers dropped to $14.15 billion in 2004, down from $15.15 billion in the previous year, and fell further to $13.1 billion in 2005, according to a report issued by the Federal Trade Commission. The FTC has monitored cigarette sales and marketing trends in regular reports since 1967.
The report comes as Congress considers legislation that would give the Food and Drug Administration the authority to regulate the production and marketing of tobacco products. Similar legislation passed the Senate in 2004 but not the House. The current bill may have better prospects for passage with Democrats now in charge of both chambers.
Most of the tobacco companies’ promotional spending is in the form of price discounts to cigarette retailers and wholesalers to reduce the price of cigarettes to consumers, the FTC report said. The companies provided $10.9 billion in price discounts in 2004, equal to 77.3 percent of all marketing expenditures, and $9.8 billion, or 74.6 percent of promotional spending, in 2005, the report said.
The agency said its findings were based on data submitted by the five major cigarette makers in the United States: Altria Group Inc., parent of Philip Morris, which makes Marlboro cigarettes; Reynolds American Inc., which owns R.J. Reynolds Tobacco Co., makers of Camels; Houchens Industries Inc., the parent of Commonwealth Brands Inc., which makes discount brands USA Gold and Sonoma; Loews Corp., which owns Lorillard Tobacco Co., which makes Newports; and Vector Group Ltd., parent of Liggett Group Inc. and Vector Tobacco, which sells Grand Prix and Eve cigarettes.
Houchens sold Commonwealth Brands Inc. to British company Imperial Tobacco Group PLC earlier this year.
Philip Morris USA is based in Richmond.
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