UNITED
STATES OF AMERICA 1997 Smokeless Tobacco Report Table of Contents
List of Tables
This report on smokeless tobacco is the sixth 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. 1.1 Contents of the Report Section 2 of this report describes the Commission's 1994 and 1995 law enforcement activities under the Smokeless Tobacco Act. It also reports on the status of the Commission's regulations implementing the Smokeless Tobacco Act. Section 3 of the report discusses the report's statistical tables. These tables contain historical information on smokeless tobacco sales and advertising for 1985 through 1993 and new tables for 1994 and 1995 figures. Section 4 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. Beyond the issues currently being addressed in pending rulemaking proceedings (discussed in Section 2.1 below), the Commission currently has no recommendations to Congress for additional administrative action or legislation. 2. COMMISSION ACTIVITIES WITH RESPECT TO THE SMOKELESS TOBACCO ACT 2.1 The Smokeless Tobacco Regulations The Smokeless Tobacco Act directs the Commission to issue implementing regulations governing the format and display of the statutory health warnings on packaging and in advertising for smokeless tobacco.(1) On October 24, 1986, the Commission promulgated regulations, specifying requirements as to the size, color, typeface, placement and rotation of the health warnings on packaging and in advertising.(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. As discussed below, the Commission amended its regulations governing the rotation of promotional materials and utilitarian items in 1996. On January 15, 1993, the Commission published a Notice of Proposed Rulemaking seeking public comment on a method for rotating the health warnings on promotional materials based on date of dissemination.(3) On February 14, 1995, the Commission published another Notice of Proposed Rulemaking seeking public comment on a proposal to permit rotation of warnings on utilitarian items based on either the date of order or the date of dissemination of the items, provided the production of such items is carried out in a manner consistent with customary business practices.(4) On August 30, 1996, the Commission, having considered all the issues raised in the two public comment periods, amended its regulations concerning the rotation of promotional materials and utilitarian items.(5) As amended, the regulations permit rotation of promotional materials and utilitarian items based on either the date of order or the date of dissemination, provided the production of such items or materials is carried out in a manner consistent with customary business practices. The effective date of these regulations was September 30, 1996. The Commission also has an open rulemaking proceeding on the question whether the Smokeless Tobacco Act's health warning requirement for advertising applies to sponsored racing vehicles and other event-related objects that display the brand name, logo or selling message of smokeless tobacco products. That rulemaking is currently being reassessed in light of the Food and Drug Administration's 1996 rule governing the sale and distribution of cigarettes and smokeless tobacco products to children because the rule prohibits sponsorship of such events and teams in the brand names of cigarettes and smokeless tobacco products. This section describes the report's statistical tables, which provide numerical information for domestic smokeless tobacco sales and advertising activity for the years 1986 through 1995.(6) These tables were prepared by Commission staff using information collected pursuant to compulsory process from the five major manufacturers of smokeless tobacco products in the United States.(7) In addition to providing newly-received data for 1994 and 1995, this report also corrects several entries in the Commission's 1995 report. The corrected figures in Tables 1 through 7 are indicated with asterisks. Tables 8A through 8H have also been corrected in this report because a review of the Commission's smokeless tobacco database led staff to change the categories (e.g., loose leaf, moist snuff) in which information for certain varieties of smokeless tobacco had been recorded in the past. 3.1 Description of Tables and Charts Table 1 provides figures on the total domestic sales of smokeless tobacco in pounds for the years 1985 through 1995. Table 2 gives the sales revenues for these years in dollars. Tables 3 through 4E provide advertising and promotion expenditures by media and promotion category for 1985 through 1995.(8) Table 5 shows both the revenues and the total advertising and promotional expenditures for the years 1985 through 1995. The pounds sold and advertising and promotional expenditures for the same years are listed in Table 6. Table 7 shows both the number of pounds sold and the total revenues for smokeless tobacco products for the years 1985 through 1995. Tables 8A through 8I provide information for the years 1986 through 1995 on the sales of four types of smokeless tobacco: loose leaf chewing tobacco, plug and twist chewing tobaccos, scotch snuff and dry snuff, and moist snuff. Tables 8A through 8I also provide advertising and promotion expenditures for the various tobacco types. 3.2 Discussion of the Data Table 1 shows that the number of pounds of smokeless tobacco sold decreased slightly from 1993 to 1994, but rose again in 1995. The 1995 increase is the first since 1991. In contrast to the fluctuations in pounds sold, Table 2 shows that sales revenues to manufacturers of smokeless tobacco products have increased steadily over the ten year period from 1985 to 1995. Those revenues exceeded $1.6 billion in 1994 and $1.7 billion in 1995, and have grown by more than $100 million annually in each of the last five years. Tables 3 through 4E, taken together, show that the total amount spent on advertising and promotion declined each year from 1985 to 1987, but increased annually from 1988 through 1995. Almost $126 million was spent on advertising and promotion in 1994, and more than $127 million was spent in 1995. These spending levels reflect increases of more than $6 million from 1993 to 1994, and another $1 million from 1994 to 1995. Turning to the individual advertising and promotional categories, more money was spent providing consumers with cents-off coupons and retail value added promotions, such as buy-one-get-one-free offers or specialty gifts given at the point-of-sale, than on any other expenditure category during both 1994 and 1995. Spending on coupons and retail value added offers grew by more than $4 million from 1993 to 1994 (from $32.3 million to $36.7 million) but then declined almost $3 million from 1994 to 1995 (to $33.7 million). This was the first decline in spending on this category since the FTC began reporting these data in 1988. Public entertainment spending reached nearly $25.4 million in 1994 (an increase of almost $2.5 million from 1993) and increased again in 1995 to $26.7 million. Public entertainment was the largest single advertising and promotion spending category every year from 1986 (when the Commission first collected these data) through 1990. Since 1991, it has ranked second each year behind spending on coupons and retail value added offers. Spending to provide consumers with specialty promotional items, such as shirts and hats, other than at the point of sale more than doubled in 1994, increasing from $4.2 million in 1993 to nearly $10.4 million in 1994 (its highest level since the FTC began reporting smokeless tobacco expenditures). Spending on specialty promotional items declined slightly in 1995 to just under $10 million. Spending on direct mail advertising fell significantly in 1994, but rose slightly in 1995. In 1994, spending on direct mail declined 90% from 1993 levels, falling from $1.1 million to $103,000. Spending on direct mail recovered slightly in 1995, rising to $253,000. Direct mail experienced a similarly dramatic decline in 1990, when spending in this category fell from over $935,000 to $78,000, only to rebound to $893,000 in 1991. Spending on advertising in newspapers rose in 1994 to $1.5 million, up more than 25 percent from 1993. Spending rose once again in 1995, to almost $1.7 million, but was still below 1991 levels. Spending on advertising in magazines rose in both 1994 and 1995, reversing a three-year decline. The $10 million spent on magazine advertising in 1995 is the highest since the FTC began collecting data in 1986. Spending on point of sale advertising and outdoor billboard advertising both rose in 1994 and 1995. Point of sale advertising rose from $13.5 million in 1993 to $15.2 million in 1995, while billboard expenditures went from $855,643 to $1.5 million during the same period. Spending to distribute free samples of smokeless tobacco products declined by approximately $1.5 million in 1994 (from $15.8 million to $14.3 million), but rose by almost the same amount in 1995 (to $15.7 million). The figures in Table 5 indicate that sales revenues increased by 40 percent from 1991 through 1995, while advertising expenditures increased by 22 percent. Total sales revenues exceeded $1.6 billion in 1994 and $1.7 billion in 1995. Total advertising spending was nearly $126 million in 1994, and exceeded $127 million in 1995. Table 6 shows that total spending on advertising and promotion increased by more than $8 million from 1993 to 1995, and that the total number of pounds of smokeless tobacco sold declined slightly from 1993 to 1994 (from 115.9 million pounds to 115.5 million pounds), but then rose in 1995 (to 116.4 million pounds) for the first time since 1991. Table 7 illustrates that the sales revenues earned by the smokeless manufacturers increased by more than $120 million annually in both 1994 and 1995. Tables 8A through 8I present details on sales in terms of dollars, pounds, and advertising expenditures by type of smokeless tobacco.(9) Table 8I shows that loose leaf/chewing tobacco remains the most popular form of smokeless tobacco, with over 54.2 million pounds sold in 1994, and 54.6 million pounds sold in 1995. Sales of loose leaf/chewing tobacco have declined by 12 percent since 1991, however, when 62.2 million pounds were sold. Moist snuff has been the smokeless tobacco product with the strongest sales increase since 1986, growing from 36.1 million pounds that year to 53.1 million pounds sold in 1995; 1995 moist snuff sales almost matched those of loose leaf. Sales of plug/twist chewing tobacco, as well as sales of scotch and dry snuff, remained below 5 million pounds in 1994 and 1995. The sales revenues reported by the smokeless tobacco manufacturers show that moist snuff generated the highest revenues of any category. Revenues from sales of moist snuff exceeded $1.2 billion in 1994, and $1.3 billion in 1995. Revenues from loose leaf/chewing tobacco fell from $319.7 million in 1993 to $316.9 million in 1994, but then grew in 1995 to more than $323.2 million. Sales revenues for plug and twist chewing tobacco fell by $1.6 million from 1993 to 1994, and then by another $1.1 million in 1995 to $38.0 million. Total revenues from the sale of scotch and dry snuff rose from 1993 to 1994 (from $54.3 million to $55.6 million) before declining in 1995 to $53.9 million. Advertising expenditures indicate that moist snuff has received the greatest support since 1986. The five major manufacturers spent nearly $80.0 million promoting moist snuff in 1994, and almost $82.0 million on such promotions in 1995. Spending on moist snuff exceeded spending for all other types of smokeless tobacco combined. In 1994, $44.8 million was spent on advertising for loose leaf/chewing tobacco, just under $1 million was spent on plug and twist advertising, and $272,038 was spent advertising scotch and dry snuff. In 1995, $43.8 million was spent on loose leaf/chewing tobacco advertising, $1.0 million was spent to promote plug and twist tobacco, and $486,280 was spent advertising scotch and dry snuff. 4. SIGNIFICANT EVENTS IN THE SMOKELESS TOBACCO PRODUCTS MARKET 4.1 Sales and Outlook The total number of pounds of smokeless tobacco sold declined from 1993 to 1994, but sales rebounded in 1994 to exceed the 1993 level. Although loose leaf tobacco remained the most popular form of smokeless tobacco in 1995 in terms of pounds sold, published reports predict that sales of moist snuff will soon surpass sales of loose leaf tobacco.(10) Of the five major domestic manufacturers of smokeless tobacco, U.S. Tobacco reportedly continued to lead the industry with 37.1 percent of the market in 1995.(11) Conwood's market share was reported to have been 24.2 percent, and Pinkerton's share was reported at 22.3 percent.(12) Published reports also indicate that National's market share was 9.2 percent, while Swisher's was 6.2 percent.(13) Finally, the two smaller manufacturers, B&W and RC Owen, were reported to have 0.6 percent and 0.4 percent of the market respectively.(14) In the market of moist snuff, however, published reports indicate that U.S. Tobacco controls 81 percent of the market, while Conwood has 13 percent, Swisher has 5 percent, and Pinkerton has 1 percent.(15) The Commission is pleased to provide the Congress with this update of the sales and advertising practices of the smokeless tobacco industry. Commission staff will continue to monitor compliance with the Smokeless Tobacco Act and smokeless tobacco advertising and sales to determine what Commission action, if any, may be appropriate. TABLE 1 SMOKELESS TOBACCO SALES BY YEAR (In Pounds) YEAR TOTAL POUNDS 1985 121,449,115 1986 118,778,334 1987 116,540,281 1988 114,433,782 1989 116,440,365 1990 117,415,326 1991 120,110,686 1992 118,372,693 1993 115,888,785 1994 115,495,201 1995 116,387,464 TABLE 2 SMOKELESS TOBACCO SALES BY YEAR (In Dollars) YEAR TOTAL DOLLARS 1985 $730,618,970 1986 $797,777,885 1987 $852,717,347 1988 $901,654,382 1989 $981,637,304 1990 $1,091,170,201 1991 $1,237,961,670 1992 $1,361,360,729 1993 $1,475,460,518 1994 $1,612,098,989 1995 $1,735,840,489 TABLE 3 SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES BY CATEGORY 1985 Television and Radio Advertising $26,584,731 Total Print $8,719,379 All Other $44,764,119 Total $80,068,229 TABLE 4A SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES BY CATEGORY 1986 1987 Newspapers $626,979 $1,452,710 Magazines $6,226,654 $9,237,988 Outdoor $2,722,557 $8,321,315 Television and 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 4B SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES BY CATEGORY 1988 1989 Newspapers $940,256 $449,918 Magazines $5,778,582 $6,410,401 Outdoor $4,801,955 $2,913,074 Audio, Visual 0 0 Transit 0 0 Point of Sale $7,436,270 $9,693,996 Promotional Allowances $6,360,041 $8,327,225 Sampling $12,345,180 $15,019,174 Distribution Bearing Names $4,055,180 $4,611,457 Direct Mail $623,731 $935,370 Public Entertainment $17,501,791 $19,638,397 Endorsements $260,539 $292,290 Coupons and Retail Value Added $4,655,429 $9,689,049 All Other $3,463,919 $3,220,210 TOTAL $68,223,671 $81,200,611 TABLE 4C SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES BY CATEGORY 1990 1991 Newspapers $1,655,698* $1,736,489 Magazines $9,439,211 $9,025,972 Outdoor $2,650,471* $1,644,287 Audio, Visual 0 0 Transit 0 0 Point of Sale $10,320,657 $10,749,602 Promotional Allowances $9,936,022 $14,771,597* Sampling $13,461,932 $13,959,101 Distribution Bearing Names $2,854,289 $3,866,263 Direct Mail $78,000 $893,000 Public Entertainment $20,272,355 $21,116,095 Endorsements $264,484 $344,000 Coupons and Retail Value Added $16,438,440 $23,306,499 All Other $2,729,768 $2,591,135 TOTAL $90,101,327* $104,004,040* TABLE 4D SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES BY CATEGORY 1992 1993 Newspapers $865,849 $1,142,320 Magazines $8,661,480* $7,173,120 Outdoor $694,388 $855,643 Audio, Visual 0 0 Transit 0 0 Point of Sale $12,133,489 $13,465,302 Promotional Allowances $11,397,882 $13,073,381 Sampling $15,975,134 $15,794,391 Distribution Bearing Names $2,609,348 $4,246,353 Direct Mail $1,289,000 $1,099,000 Public Entertainment $21,511,594 $22,912,765 Endorsements $155,000 $215,000 Coupons and Retail Value Added $31,524,486 $32,297,431 All Other $8,529,058 $6,956,120 TOTAL $115,346,708* $119,230,826* TABLE 4E SMOKELESS TOBACCO ADVERTISING AND PROMOTIONAL EXPENDITURES BY CATEGORY 1994 1995 Newspapers $1,510,771 $1,672,562 Magazines $8,879,279 $10,003,093 Outdoor $1,112,524 $1,474,121 Audio, Visual 0 0 Transit 0 0 Point of Sale $13,555,569 $15,170,713 Promotional Allowances $10,244,241 $8,304,066 Sampling $14,279,127 $15,748,393 Distribution Bearing Names $10,368,596 $9,915,589 Direct Mail $103,000 $253,000 Public Entertainment $25,397,969 $26,749,679 Endorsements $160,000 $160,000 Coupons and Retail Value Added $36,687,092 $33,701,379 All Other $3,674,240 $4,170,687 TOTAL $125,972,408 $127,323,282 TABLE 5 SMOKELESS TOBACCO SALES TOTAL ADVERTISING EXPENDITURES (In Dollars) (In Dollars) TOTAL ADVERTISING YEAR REVENUES YEAR EXPENDITURES 1985 $730,618,970 1985 $80,068,229* 1986 $797,777,885 1986 $76,676,706 1987 $852,717,347 1987 $67,777,044 1988 $901,654,382* 1988 $68,223,671 1989 $981,657,304* 1989 $81,200,611 1990 $1,091,170,201* 1990 $90,101,327* 1991 $1,237,961,670 1991 $104,004,040* 1992 $1,361,360,729 1992 $115,346,708* 1993 $1,475,460,518 1993 $119,230,826* 1994 $1,612,098,989 1994 $125,972,408 1995 $1,735,840,489 1995 $127,323,282 SMOKELESS TOBACCO SALES TOTAL ADVERTISING EXPENDITURES (In Pounds) (In Dollars) TOTAL ADVERTISING YEAR TOTAL POUNDS YEAR EXPENDITURES 1985 121,449,115 1985 $80,068,229 1986 118,778,334 1986 $76,676,706 1987 116,540,281 1987 $67,777,044 1988 114,433,782 1988 $68,223,671 1989 116,440,365 1989 $81,200,611 1990 117,415,326 1990 $90,101,327* 1991 120,110,686 1991 $104,004,040* 1992 118,372,693 1992 $115,346,708* 1993 115,888,785 1993 $119,230,826* 1994 115,495,201 1994 $125,972,408 1995 116,387,464 1995 $127,323,282 SMOKELESS TOBACCO SALES SMOKELESS TOBACCO SALES (In Pounds) (In Dollars) YEAR TOTAL POUNDS YEAR REVENUES 1985 121,449,115 1985 $730,618,970 1986 118,778,334 1986 $797,777,885 1987 116,540,281 1987 $852,717,347 1988 114,433,782 1988 $901,654,382* 1989 116,440,365 1989 $981,637,304* 1990 117,415,326 1990 $1,091,170,201* 1991 120,110,686 1991 $1,237,961,670 1992 118,372,693* 1992 $1,361,360,729 1993 115,888,785 1993 $1,475,460,518 1994 115,495,201 1994 $1,612,098,989 1995 116,387,464 1995 $1,735,840,489 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1986 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $255,668,419 Pounds Sold = 65,697,634 Advertising Expenditures = $32,249,750 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $44,870,900 Pounds Sold = 8,835,200 Advertising Expenditures = $896,821 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $58,951,001 Pounds Sold = 8,110,168 Advertising Expenditures = $181,977 Type D - Moist Snuff Dollar Sales = $438,287,565 Pounds Sold = 36,135,332 Advertising Expenditures = $43,348,158 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1987 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $267,766,776 Pounds Sold = 64,634,524 Advertising Expenditures = $28,403,536 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $44,267,561 Pounds Sold = 8,351,803 dvertising Expenditures = $559,597 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $56,709,742 Pounds Sold = 7,255,296 Advertising Expenditures = $263,482 Type D - Moist Snuff Dollar Sales = $483,973,268 Pounds Sold = 36,298,658 Advertising Expenditures = $38,550,429 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1988 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $264,298,268 Pounds Sold = 60,648,126 Advertising Expenditures = $26,198,078 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $40,429,972 Pounds Sold = 7,282,206 Advertising Expenditures = $868,954 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $57,221,662 Pounds Sold = 7,069,754 Advertising Expenditures = $501,543 Type D - Moist Snuff Dollar Sales = $539,704,480 Pounds Sold = 39,433,696 Advertising Expenditures = $40,655,096 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1989 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $281,701,402 Pounds Sold = 61,869,625 Advertising Expenditures = $34,057,050 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $35,132,105 Pounds Sold = 6,308,415 Advertising Expenditures = $1,787,775 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $62,155,826 Pounds Sold = 7,244,911 Advertising Expenditures = $654,591 Type D - Moist Snuff Dollar Sales = $602,647,971 Pounds Sold = 41,017,414 Advertising Expenditures = $44,701,195 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1990 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $295,462,446 Pounds Sold = 60,896,991 Advertising Expenditures = $35,194,561 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $41,316,133 Pounds Sold = 6,557,216 Advertising Expenditures = $1,655,886 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $56,601,390 Pounds Sold = 6,185,410 Advertising Expenditures = $472,404 Type D - Moist Snuff Dollar Sales = $697,790,232 Pounds Sold = 43,775,709 Advertising Expenditures = $52,778,476 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1991 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $321,458,416 Pounds Sold = 62,177,203 Advertising Expenditures = $38,190,095 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $42,379,173 Pounds Sold = 5,913,172 Advertising Expenditures = $1,326,216 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $56,881,288 Pounds Sold = 5,833,210 Advertising Expenditures = $517,145 Type D - Moist Snuff Dollar Sales = $817,242,793 Pounds Sold = 46,187,101 Advertising Expenditures = $63,970,584 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1992 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $320,085,975 Pounds Sold = 58,850,933 Advertising Expenditures = $42,820,544 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $42,625,799 Pounds Sold = 5,389,336 Advertising Expenditures = $1,722,361 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $57,657,911 Pounds Sold = 5,623,404 Advertising Expenditures = $354,774 Type D - Moist Snuff Dollar Sales = $940,991,044 Pounds Sold = 48,509,020 Advertising Expenditures = $70,449,029 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1993 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $319,672,867 Pounds Sold = 55,912,562 Advertising Expenditures = $46,032,905 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $40,702,849 Pounds Sold = 4,778,107 Advertising Expenditures = $1,367,877 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $54,302,829 Pounds Sold = 4,996,957 Advertising Expenditures = $313,659 Type D - Moist Snuff Dollar Sales = $1,060,781,973 Pounds Sold = 50,201,159 Advertising Expenditures = $71,516,385 SMOKELESS TOBACCO SALES BY TOBACCO TYPE (In Dollars and Pounds) 1994 1995 Type A - Loose Leaf/Chewing Tobacco Dollar Sales = $316,888,405 $323,156,639 Pounds Sold = 54,242,322 54,605,149 Advertising Expenditures = $44,807,716 $43,842,237 Type B - Plug/Twist Chewing Tobacco Dollar Sales = $39,102,541 $37,996,428 Pounds Sold = 4,410,333 4,156,158 Advertising Expenditures = $936,993 $1,032,856 Type C - Scotch Snuff/Dry Snuff Dollar Sales = $55,574,320 $53,885,040 Pounds Sold = 4,814,130 4,490,094 Advertising Expenditures = $272,038 $486,280 Type D - Moist Snuff Dollar Sales = $1,200,533,723 $1,320,802,382 Pounds Sold = 52,028,416 53,136,063 Advertising Expenditures = $79,955,661 $81,961,909 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 Allowances: Promotional allowances paid to retailers and any other persons (other than 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 Bearing Name: All costs of distributing items (other than smokeless tobacco products) 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 Entertainment: Public entertainment events bearing or otherwise displaying the name of a company or a smokeless tobacco product, excluding sampling, and distribution of items bearing names. Retail Value Added and Cents-off Coupons: All expenditures and costs associated with the value added to the purchase of smokeless tobacco products, including buy one get one free; buy one get x (promotional item) free; and all costs associated with cents-off coupons, whether redeemed at the 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. All Other: Advertising and promotional expenditures not covered by another category. 1. 15 U.S.C. § 4402. 2. 15 Fed. Reg. 40,005 (1986). 3. 58 Fed. Reg. 4874 (1993). Promotional materials include both point-of-sale and non-point-of-sale materials. Point-of-sale promotional materials include shelf-talkers (cards or brochures attached to the shelf where the product is located in a retail outlet), rack header cards (cards identifying a particular smokeless brand on semi-circular racks displaying cans of snuff), and tear pads. Non-point-of-sale promotional materials include direct mail circulars, coupons, leaflets and pamphlets. 4. 60 Fed. Reg. 8312 (1995). Utilitarian items include items such as pens, pencils, clothing or sporting goods. 5. 61 Fed. Reg. 45,883 (1996). 6. 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 effective; and (c) they were meant to serve as baseline data. 7. 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. 8. Appendix A provides the definition of the categories used to collect data on advertising and promotional expenditures. 9. FTC staff is reviewing the product categories used in Tables 8A-8I, and will revise these categories in future reports if they do not reflect current industry classifications. 10. John Maxwell, The Maxwell Report: USA-Smokeless, Tobacco Reporter 16, 19 (Aug. 1996). 11. Id. at 18. 12. Id. 13. Id. 14. Id. 15. Id. at 19. 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. |