Federal Trade Commission
Report to Congress
for the Years 1998 and 1999

PURSUANT TO THE COMPREHENSIVE SMOKELESS TOBACCO
HEALTH EDUCATION ACT OF 1986

Issued in 2001


TABLE OF CONTENTS

INTRODUCTION
 
I. COMMISSION ACTIVITIES WITH RESPECT TO THE SMOKELESS TOBACCO ACT
 
II. STATISTICAL DATA
 

A. Total Smokeless Tobacco Sales and Advertising and Promotional Expenditures

B. Smokeless Tobacco Advertising and Promotional Expenditures by Category

C. Smokeless Tobacco Sales and Advertising and Promotional Expenditures by Tobacco Type

III. SIGNIFICANT EVENTS IN THE SMOKELESS TOBACCO PRODUCTS MARKET
 
IV. CONCLUSION
 

Table 1 Total Smokeless Tobacco Sales and Advertising and Promotional Expenditures (for Years 1985 - 1999)

Table 2  Smokeless Tobacco Advertising and Promotional Expenditures by Category

Table 2A (for Year 1985)

Table 2B (for Years 1986 and 1987)

Table 2C (for Years 1988 - 1991)

Table 2D (for Years 1992 - 1995)

Table 2E (for Years 1996 - 1999)

Table 3  Smokeless Tobacco Sales and Advertising and Promotional Expenditures by  Tobacco Type (for Years 1986 - 1999)

Table 3A Type A - Loose Leaf/Chewing Tobacco

Table 3B Type B - Plug/Twist Chewing Tobacco

Table 3C Type C - Scotch Snuff/Dry Snuff

Table 3D Type D - Moist Snuff

APPENDIX A

INTRODUCTION

This report on smokeless tobacco is the eighth in a series that the Federal Trade Commission has submitted biennially to Congress pursuant to the Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. §§ 4401-4408) ("Smokeless Tobacco Act"). Section 8(b) of the Smokeless Tobacco Act requires that:

The Federal Trade Commission shall transmit a report to the Congress no later than January 11, 1987, and biennially thereafter, containing (1) a description of the current sales, advertising, and marketing practices associated with smokeless tobacco products, and (2) such recommendations for legislation and administrative action as it deems appropriate.

Section I of this report discusses the status of the Commission's regulations implementing the Smokeless Tobacco Act.

Section II discusses the report's statistical tables. These tables contain historical information on smokeless tobacco sales and advertising and promotion for 1985 through 1997 and new information for 1998 and 1999.

In late 1998, United States Tobacco Company ("USTC"), the largest domestic smokeless tobacco company, signed an agreement with 48 state Attorneys General, the District of Columbia, and several territories that imposed a number of restrictions on the company's advertising and promotion of its smokeless tobacco products. Among other things, the Master Settlement Agreement ("MSA") imposed phased-in restrictions on the company's use of outdoor and transit advertising and brand name sponsorships, its distribution of free samples, and its distribution and sale of apparel and merchandise with brand-name logos. Accordingly, this report shows the last year of spending prior to the implementation of that agreement, as well as the first year affected by its restrictions. The MSA might account, in part, for observed changes in certain industry promotional expenditure categories.

Section III of the report discusses trends in the advertising and marketing of smokeless tobacco products based on information gathered from marketing publications and the general press.

I. COMMISSION ACTIVITIES WITH RESPECT TO
THE SMOKELESS TOBACCO ACT

The Smokeless Tobacco Act directed the Commission to issue implementing regulations governing the format and display of the statutory health warnings on packaging and in advertising for smokeless tobacco products.(1) On October 24, 1986, the Commission promulgated regulations specifying requirements as to the size, color, typeface, placement and rotation of those warnings.(2) The Commission's regulations also require manufacturers, packagers and importers to submit plans to the Commission providing for the periodic rotation of the three warnings.

The Commission has no recommendations to Congress for additional legislation at this time. On March 7, 2000, as part of its ongoing review of all its regulations, the Commission commenced a review of its smokeless tobacco regulations to determine what revisions, if any, should be made.(3) In October 2000, the Commission reopened and extended the public comment period until October 16th.(4)

II. STATISTICAL DATA

This section discusses the report's statistical tables, which provide numerical information for domestic smokeless tobacco sales and advertising and promotional activities.(5) Commission staff prepared these tables using information collected, pursuant to compulsory process, from the five major manufacturers of smokeless tobacco products in the United States: Conwood Company, National Tobacco Company, Swedish Match North America, Inc., Swisher International, and United States Tobacco Company.

A. Total Smokeless Tobacco Sales and Advertising and Promotional Expenditures

The figures in Table 1 indicate that the total number of pounds of smokeless tobacco sold by manufacturers to wholesalers and retailers was relatively stable from 1993 (115.89 million pounds) to 1996 (116.40 million pounds) but declined from 1997 through 1999.(6) The 109.40 million pounds sold in 1999 represent the lowest level of sales since the Commission began reporting this information.

In contrast to sales in terms of pounds sold, sales revenues received by the manufacturers of smokeless tobacco products from wholesalers and retailers have increased steadily every year since 1985. Those revenues reached $1.89 billion in 1998 and $1.94 billion in 1999.

The total amount spent on advertising and promotion by the five major manufacturers declined slightly from 1997 to 1998 (from $150.43 million to $145.49 million), then rebounded to an all time high of $170.21 million in 1999.

B. Smokeless Tobacco Advertising and Promotional Expenditures by Category

In 1997, the two top advertising and promotional categories were retail value added (offers such as "buy one, get one free" or "buy three, get free hat," where the smokeless tobacco product and the bonus item often are packaged together as a single unit) and public entertainment (e.g., sponsorship of concerts, auto racing, and fishing tournaments). In 1998, public entertainment and point of sale advertising (ads posted at the retail location) received the greatest amount of money. In 1999, expenditures on promotional allowances (e.g., payments made to retailers to facilitate sales) and point of sale advertising eclipsed those for public entertainment.

Spending on advertising in newspapers increased from $1.64 million in 1997 to $2.81 million in 1998, and then to $3.3 million in 1999, an all time high.

Magazine advertising increased from $11.87 million in 1997 to $18.39 million in 1998, and then rose to $18.44 million in 1999, also an all time high.

Spending on outdoor billboard advertising decreased from $4.99 million in 1997 to $2.23 million in 1998, and then plummeted to $7,258 in 1999. The lowest amount previously reported for outdoor advertising was $694,388 in 1992.

As they had each year since 1987, the companies reported no expenditures for audio visual advertising. They also reported no expenditures for transit advertising, as they had each year since 1986.

Point of sale advertising rose from $14.71 million in 1997 to $25.20 million in 1998 and $26.09 million in 1999. The highest amount previously reported for point of sale advertising was $15.17 million in 1995.

Spending for promotional allowances increased slightly from $14.69 million in 1997 to $14.96 million in 1998, then more than doubled to $30.76 million in 1999. The highest amount previously reported for promotional allowances was $14.77 million in 1991.

Spending to distribute free samples of smokeless tobacco products increased from $11.16 million in 1997 to $17.44 million in 1998 and to $17.88 million in 1999, the most ever spent. Spending to provide consumers with specialty promotional items (such as shirts and hats bearing the name or logo of a smokeless tobacco product) elsewhere than at the point of sale dropped from $18.00 million in 1997 to $3.77 million in 1998 and $3.16 million in 1999.(7)

The amount spent on direct mail advertising soared from $808,247 in 1997 to $6.95 million in 1998, the most ever spent for this category since the Commission began collecting information from the industry. Expenditures then decreased to $5.62 million in 1999. The highest amount previously reported for direct mail advertising was $1.29 million in 1992.

Spending on public entertainment declined from $28.94 million in 1997 to $25.43 million in 1998 and $22.14 million in 1999.

Spending on endorsements was $165,000 in 1998, the same as in 1997. Endorsement spending then decreased slightly to $130,000 in 1999.

Expenditures on coupons more than tripled from 1997 to 1998 (rising from $3.45 million to $10.97 million), and then more than doubled to $24.22 million in 1999.(8)

Spending on retail value added (offers such as "buy one, get one free" or "buy three, get free hat," where the smokeless tobacco product and the bonus item often are packaged together as a single unit) fell from $34.94 million in 1997 to $11.20 million in 1998, and then remained relatively steady at $11.14 million in 1999.(9)

As they had each year since 1996, the companies reported no expenditures for Internet advertising.

Since 1992, the Commission has required the manufacturers to report the amount of their spending specifically associated with sports or sporting events.(10) Expenditures for sports and sporting events increased from $25.75 million in 1997 to $26.62 million in 1998, an all time high, and then declined to $23.40 million in 1999.

C. Smokeless Tobacco Sales and Advertising and Promotional Expenditures by Tobacco Type

As noted above, there are several types of smokeless tobacco products, including dry snuff, moist snuff, plug/twist, and loose leaf chewing tobacco. Tables 3A through 3D present details on sales and advertising and promotional expenditures by type of smokeless tobacco.

From 1997 to 1999, the number of pounds of moist snuff and plug/twist increased, while the number of pounds of loose leaf chewing tobacco and dry snuff sold fell. The 58.47 million pounds of moist snuff sold in 1999 exceeded the combined sales of the three other kinds of smokeless tobacco.

Similarly, moist snuff has consistently generated more revenue than any other type of smokeless tobacco. In 1998 and 1999, the difference in revenues between moist snuff and the second best selling type of smokeless tobacco (loose leaf chewing tobacco) continued to grow: total dollar sales for loose leaf chewing tobacco were $317.09 million and $278.67 million in 1998 and 1999, respectively, compared to $1.48 billion and $1.58 billion for moist snuff.

Tables 3A through D also indicate that moist snuff continued to receive the greatest advertising and promotional support. In 1998 and 1999, the five major manufacturers spent $117.33 million and $147.35 million, respectively, on advertising and promotion for moist snuff, compared to $26.78 million and $21.22 million for loose leaf chewing tobacco, $1.22 million and $1.58 million for plug/twist, and only $155,484 and $61,516 for scotch/dry snuff.

III. SIGNIFICANT EVENTS IN THE
SMOKELESS TOBACCO PRODUCTS MARKET

According to industry sources, of the five major domestic manufacturers of smokeless tobacco, U.S. Tobacco continued to lead the industry in 1999, with a 40.5% share of the total smokeless tobacco industry, in terms of pounds sold.(11) Published reports also indicate that Conwood's 1999 industry share was 23.8%, Swedish Match's was 20.5%, National's was 7.5%, and Swisher's was 6.5%.(12) U.S. Tobacco reportedly controlled 75% of the moist snuff market in 1999 in terms of pounds sold, compared to its closest competitor, Conwood, which reportedly had 13% of that market.(13) Swedish Match reportedly controlled 39% of the loose leaf market in 1999, Conwood controlled 34%, National controlled 19%,(14) and Swisher controlled 8%.(15)

IV. CONCLUSION

The Commission is pleased to provide the Congress with this update of the sales and advertising and promotional practices of the smokeless tobacco industry. Commission staff will continue to monitor compliance with the Smokeless Tobacco Act and smokeless tobacco advertising, promotion and sales to determine what Commission action, if any, may be appropriate.

TABLE 1

TOTAL SMOKELESS TOBACCO SALES
AND ADVERTISING AND PROMOTIONAL EXPENDITURES
FOR 1985 -1997

Year

Sales in Pounds Sales in Dollars Advertising and
Promotional Expenditures
1985 121,449,115 $730,618,970 $80,068,229
1986 118,778,334 $797,777,885 $76,676,706
1987 116,540,281 $852,717,347 $67,777,044
1988 114,433,782 $901,654,382 $68,223,671
1989 116,440,365 $981,637,304 $81,200,611
1990 117,415,326 $1,091,170,201 $90,101,327
1991 120,110,686 $1,237,961,670 $104,004,040
1992 118,372,693 $1,361,360,729 $115,346,708
1993 115,888,785 $1,475,460,518 $119,230,826
1994 115,495,201 $1,612,098,989 $125,972,408
1995 116,387,464 $1,735,840,489 $127,323,282
1996 116,404,222 $1,790,406,160 $123,877,458
1997 113,975,148 $1,817,508,055 $150,426,310
1998 110,036,380 $1,886,328,217 $145,486,899
1999 109,401,055 $1,940,736,017 $170,213,761

TABLE 2A

SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES
BY CATEGORY FOR 1985

Television & Radio Advertising $26,584,731
Total Print $8,719,379
All Other $44,764,119
Total $80,068,229

TABLE 2B

SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES
BY CATEGORY FOR 1986 AND 1987

  1986 1987
Newspapers $626,979 $1,452,710
Magazines $6,226,654 $9,237,988
Outdoor $2,722,557 $8,321,315
Television & Radio(16) $16,067,211 $0
Audio, Visual $2,579,268 $0
Transit $0 $0
Point of Sale $4,234,207 $5,789,436
Promotional Allowances $8,231,580 $7,554,592
Sampling $13,699,156 $13,877,923
Distribution Bearing Names $2,353,816 $4,312,094
Direct Mail $20,844 $48,979
Public Entertainment $13,823,266 $14,844,425
Endorsements $435,710 $245,105
All Other $5,655,458 $2,092,477
TOTAL $76,676,706 $67,777,044

TABLE 2C

SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES
BY CATEGORY FOR 1988 - 1991

  1988 1989 1990 1991
Newspapers $940,256 $449,918 $880,629 $1,109,503
Magazines $5,778,582 $6,410,401 $10,214,280 $9,652,958
Outdoor $4,801,955 $2,913,074 $2,650,471 $1,644,287
Audio, Visual $0 $0 $0 $0
Transit $0 $0 $0 $0
Point of Sale $7,436,270 $9,693,996 $10,320,657 $10,749,602
Promotional Allowances $6,360,041 $8,327,225 $9,936,022 $14,771,597
Sampling $12,345,180 $15,019,174 $13,461,932 $13,959,101
Distribution Bearing Names $4,055,180 $4,611,457 $2,854,289 $3,866,263
Direct Mail $623,731 $935,370 $78,000 $893,000
Public Entertainment $17,501,791 $19,638,397 $20,272,355 $21,116,095
Endorsements $260,539 $292,290 $264,484 $344,000
Coupons & Retail Value Added(17) $4,655,429 $9,689,049 $16,438,440 $23,306,499
All Other $3,463,919 $3,220,210 $2,729,768 $2,591,135
TOTAL $68,223,671 $81,200,611 $90,101,327 $104,004,040

TABLE 2D

SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES
BY CATEGORY FOR 1992 - 1995

  1992 1993 1994 1995
Newspapers $269,032 $274,738 $128,849 $142,562
Magazines $9,258,297 $8,040,702 $10,261,201 $11,533,093
Outdoor $694,388 $855,643 $1,112,524 $1,474,121
Audio, Visual $0 $0 $0 $0
Transit $0 $0 $0 $0
Point of Sale $12,133,489 $13,465,302 $13,555,569 $15,170,713
Promotional Allowances $11,397,882 $13,073,381 $10,244,241 $8,304,066
Sampling $15,975,134 $15,794,391 $14,279,127 $15,748,393
Distribution Bearing Names $2,609,348 $4,246,353 $10,368,596 $9,915,589
Direct Mail $1,289,000 $1,099,000 $103,000 $253,000
Public Entertainment $21,511,594 $22,912,765 $25,397,969 $26,749,679
Endorsements $155,000 $215,000 $160,000 $160,000
Coupons & Retail Value Added(18) $31,524,486 $32,297,431 $36,687,092 $33,701,379
All Other $8,529,058 $6,956,120 $3,674,240 $4,170,687
TOTAL $115,346,708 $119,230,826 $125,972,408 $127,323,282
Sports & Sporting Events $20,970,580 $22,742,986 $24,521,715 $25,863,187

TABLE 2E

SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES
BY CATEGORY FOR 1996 - 1999

  1996 1997 1998 1999
Newspapers $236,765 $1,642,347 $2,807,281 $3,306,548
Magazines $13,362,100 $11,874,395 $18,389,758 $18,436,630
Outdoor $3,544,994 $4,991,256 $2,228,381 $7,258
Audio, Visual $0 $0 $0 $0
Transit $0 $0 $0 $0
Point of Sale $13,568,572 $14,712,560 $25,202,972 $26,092,942
Promotional Allowances $12,722,615 $14,692,865 $14,959,694 $30,756,608
Sampling $12,640,816 $11,155,411 $17,439,990 $17,884,888
Distribution Bearing Names $11,728,976 $17,999,555 $3,768,161 $3,161,884
Direct Mail $314,599 $808,247 $6,948,300 $5,620,844
Public Entertainment $22,736,345 $28,940,337 $25,426,519 $22,136,453
Endorsements $162,500 $165,000 $165,000 $130,000
Coupons $3,446,225(19) $3,447,124* $10,965,387 $24,221,899
Retail Value Added $22,390,838* $34,938,115* $11,204,800* $11,135,604*
Internet $0 $0 $0 $0
All Other $4,397,683 $5,059,097 $5,980,656 $7,322,203
TOTAL $123,877,458 $150,426,310 $145,486,899 $170,213,761
Sports & Sporting Events $19,784,813 $25,751,503 $26,620,636 $23,401,714

TABLE 3A

SMOKELESS TOBACCO SALES AND ADVERTISING AND PROMOTIONAL EXPENDITURES
BY TOBACCO TYPE FOR 1986 - 1999

Loose Leaf/Chewing Tobacco

Year Pounds Sold Dollar Sales Advertising and
Promotional Expenditures
1986 65,697,634 $255,668,419 $32,249,750
1987 64,634,524 $267,766,776 $28,403,536
1988 60,648,126 $264,298,268 $26,198,078
1989 61,869,625 $281,701,402 $34,057,050
1990 60,896,991 $295,462,446 $35,194,561
1991 62,177,203 $321,458,416 $38,190,095
1992 58,850,933 $320,085,975 $42,820,544
1993 55,912,562 $319,672,867 $46,032,905
1994 54,242,322 $316,888,405 $44,807,716
1995 54,605,149 $323,156,639 $43,842,237
1996 54,204,655 $325,533,391 $36,387,774
1997 51,831,834 $330,903,053 $45,573,616
1998 46,887,918 $317,087,609 $26,780,236
1999 44,531,612 $278,670,311 $21,219,600

TABLE 3B

SMOKELESS TOBACCO SALES AND ADVERTISING AND PROMOTIONAL EXPENDITURES
BY TOBACCO TYPE FOR 1986 - 1999

Plug/Twist Chewing Tobacco

Year Pounds Sold Dollar Sales Advertising and
Promotional Expenditures
1986 8,835,200 $44,870,900 $896,821
1987 8,351,803 $44,267,561 $559,597
1988 7,282,206 $40,429,972 $868,954
1989 6,308,415 $35,132,105 $1,787,775
1990 6,557,216 $41,316,133 $1,655,886
1991 5,913,172 $42,379,173 $1,326,216
1992 5,389,336 $42,625,799 $1,722,361
1993 4,778,107 $40,702,849 $1,367,877
1994 4,410,333 $39,102,541 $936,993
1995 4,156,158 $37,996,428 $1,032,856
1996 3,096,708 $29,469,575 $653,511
1997 2,800,859 $27,434,794 $682,887
1998 3,180,093 $33,610,369 $1,216,474
1999 2,824,198 $30,733,775 $1,583,271

TABLE 3C

SMOKELESS TOBACCO SALESAND ADVERTISING AND PROMOTIONAL EXPENDITURES
BY TOBACCO TYPE FOR 1986 - 1999

Scotch/Dry Snuff

Year Pounds Sold Dollar Sales Advertising and
Promotional Expenditures
1986 8,110,168 $58,951,001 $181,977
1987 7,255,296 $56,709,742 $263,482
1988 7,069,754 $57,221,662 $501,543
1989 7,244,911 $62,155,826 $654,591
1990 6,185,410 $56,601,390 $472,404
1991 5,833,210 $56,881,288 $517,145
1992 5,623,404 $57,657,911 $354,774
1993 4,996,957 $54,302,829 $313,659
1994 4,814,130 $55,574,320 $272,038
1995 4,490,094 $53,885,040 $486,280
1996 4,218,705 $53,858,106 $437,339
1997 4,063,630 $54,725,929 $522,260
1998 3,781,891 $53,292,750 $155,484
1999 3,572,339 $53,229,345 $61,516

TABLE 3D

SMOKELESS TOBACCO SALES AND ADVERTISING AND PROMOTIONAL EXPENDITURES
BY TOBACCO TYPE FOR 1986 - 1999

Moist Snuff

Year Pounds Sold Dollar Sales Advertising and
Promotional Expenditures
1986 36,135,332 $438,287,565 $43,348,158
1987 36,298,658 $483,973,268 $38,550,429
1988 39,433,696 $539,704,480 $40,655,096
1989 41,017,414 $602,647,971 $44,701,195
1990 43,775,709 $697,790,232 $52,778,476
1991 46,187,101 $817,242,793 $63,970,584
1992 48,509,020 $940,991,044 $70,449,029
1993 50,201,159 $1,060,781,973 $71,516,385
1994 52,028,416 $1,200,533,723 $79,955,661
1995 53,136,063 $1,320,802,382 $81,961,909
1996 54,884,154 $1,381,544,888 $86,398,835
1997 55,278,825 $1,404,444,279 $103,647,547
1998 56,186,478 $1,482,337,489 $117,334,705
1999 58,472,906 $1,578,102,586 $147,349,374

APPENDIX A

Newspapers: Newspaper advertising, excluding expenditures in connection with sampling, distribution of items bearing names, and public entertainment.
 
Magazines: Magazine advertising, excluding expenditures in connection with sampling, distribution of items bearing names, and public entertainment.
 
Outdoor: Outdoor advertising, excluding transit advertising, sampling, distribution of items bearing names, and public entertainment.
 
Audio, Visual: Audio, visual or video advertising on any medium of electronic communication not subject to the Federal Communication Commission's jurisdiction, including screens at motion picture theaters, video cassettes, and monitors in stores.
 
Transit: Advertising on public transportation, excluding sampling, distribution of items bearing names, and public entertainment.
 
Point of Sale: Point-of-sale advertisements, excluding promotional allowances, sampling, distribution of items bearing names, and public entertainment, and retail value added and cents-off coupons.
 
Promotional: Promotional allowances paid to retailers and any other persons (other than Allowances: employees) to facilitate the sale of any smokeless tobacco product, excluding newspapers, magazines, outdoor, audio visual, transit, and direct mail.
 
Sampling: Distribution of free samples of smokeless tobacco products, including the cost of the products and the cost of organizing, promoting, and conducting sampling.
 
Distribution: All costs of distributing items (other than smokeless tobacco products)
 
Bearing Name: including the cost of items distributed (whether the items are sold, redeemed by coupon, or otherwise distributed) that bear the name or depict any portion of the logo of a smokeless tobacco product; any payments received are subtracted; expenditures in connection with sampling are reported in that category; and expenditures on retail value added and cents-off coupon offers are excluded.
 
Direct Mail: Direct mail advertising, excluding sampling, distribution of items bearing names, public entertainment, and costs associated with retail value added and cents-off coupons.
 
Public: Public entertainment events bearing or otherwise displaying the name of a Entertainment: company or a smokeless tobacco product, excluding sampling, and distribution of items bearing names.
 
Retail Value: All expenditures and costs associated with the value added to the purchase
 
Added: of smokeless tobacco products, including buy one get one free and buy one get x (promotional item) free.
 
Cents-off: All costs associated with cents-off coupons, whether redeemed at the Coupons: point-of-sale or by mail, including costs of advertising, design, printing, distribution, and redemption.
 
Endorsements: Endorsements and testimonials, excluding newspapers, magazines, outdoor, audio visual, transit, direct mail, point-of-sale, and public entertainment.
 
Internet: Internet advertising, including on the World Wide Web, on commercial on-line services, and through electronic mail messages.
 
All Other: Advertising and promotional expenditures not covered by another category.
 
Sports and All costs associated with sponsoring, advertising or promotion of sports or Sporting Events: sporting events, including football, weight lifting, sailing, rodeo, automobile, race car, funny car, motorcycle, bicycle, truck, monster truck, tractor-pull, fishing, and hunting events, competitions, tournaments and races. This category is duplicative of expenditures for other categories.

Endnotes:

1. 15 U.S.C. § 4402.

2. 15 Fed. Reg. 40,005 (1986).

3. 65 Fed. Reg. 11944 (Mar. 7, 2000), Request for Comments Concerning Regulations Implementing the Smokeless Tobacco Health Education Act of 1986.

4. 65 Fed. Reg 60899 (Oct. 13, 2000), Reopening and Extension of Time for Comments Concerning Regulations Implementing the Smokeless Tobacco Health Education Act of 1986.

5. Some 1985 data are included. The 1985 data are less detailed than those from 1986 forward because: (a) they were collected retrospectively; (b) they covered a time period before the Smokeless Tobacco Act was in effect; and (c) they were meant to serve as baseline data.

6. Sales data are presented in terms of dollars and pounds, but not units sold. In contrast to cigarettes, there is no consistent unit for different types of smokeless tobacco products, such as loose leaf chewing tobacco (which is generally sold in pouches) and moist snuff (which is usually packaged in small cans). Moreover, the unit size may vary widely, even for the same type of smokeless tobacco. For example, loose leaf chewing tobacco is commonly sold in pouches, but the pouches may contain from 3.5 to 5 ounces of tobacco.

7. This expenditure category -- which is called "distribution bearing names" -- does not include specialty items provided at retail with smokeless tobacco products (e.g., "buy three, get free hat"), which are considered retail value added.

8. Some portion of this increase might be due to the fact that prior to1998, USTC's accounting system did not separately track expenditures for coupons. Instead, USTC (the largest smokeless tobacco manufacturer) included these expenditures in the point of sale or promotional allowances categories in its submissions to the Commission.

9. These figures understate actual spending because USTC's accounting system has not been separately tracking expenditures for retail value added. Instead, USTC has included these expenditures in the point of sale or promotional allowances categories in its submissions to the Commission.

10. These expenditures are also reported in the appropriate individual advertising and promotional categories (e.g., a newspaper advertisement for a sponsored sporting event is included in the newspaper category). Accordingly, to avoid double-counting, sports and sporting event expenditures are not included in the calculation of total advertising and promotional expenditures.

11. John C. Maxwell, Smokeless Drops, Tobacco Reporter, August 2000 at 20.

12. Id.

13. Id. at 22.

14. In February 2000, Swedish Match initiated an effort to acquire the loose leaf chewing tobacco brands and certain other assets of National. On June 23, 2000, the Commission filed a Federal District Court complaint seeking to enjoin that transaction. The FTC alleged that the proposed acquisition would violate federal antitrust laws by lessening competition in the loose leaf chewing tobacco market. On December 14, 2000, the United States District Court for the District of Columbia issued an order granting the Commission's motion for a preliminary injunction. On December 21, 2000, the Commission issued an administrative complaint alleging that the proposed acquisition, if consummated, would violate the Federal Trade Commission Act and the Clayton Act. On December 22, 2000, Swedish Match withdrew the premerger notification it had filed in connection with the proposed acquisition, and advised the Commission that the parties had determined to abandon the acquisition. On January 4, 2001, the Commission issued an Order dismissing the administrative complaint without prejudice.

15. Maxwell, supra note 11, at 22.

16. Expenditures allocated for television and radio advertising on electronic media subject to Federal Communication Commission ("FCC") regulations cover approximately six months of 1986 because the statutory broadcast ban became effective on August 28, 1986.

17. USTC reported no expenditures for this category because its accounting records were not maintained to allow calculation of these expenditures. Instead, these expenditures were reported to the Commission in the Point of Sale or Promotional Allowances categories.

18. USTC reported no expenditures for this category because its accounting records were not maintained to allow calculation of these expenditures. Instead, these expenditures were reported to the Commission in the Point of Sale or Promotional Allowances categories.

19. USTC reported no expenditures for this category because its accounting records were not maintained to allow calculation of these expenditures. Instead, these expenditures were reported to the Commission in the Point of Sale or Promotional Allowances categories.