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Fact Sheet

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

(updated July 2007)

• An estimated 371 billion cigarettes were consumed in the United States in 2006,¹ and cigarettes account for more than 90 percent of expenditures on all tobacco products in this country.² Total United States expenditures on tobacco were estimated to be $88.8 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 2005.³ 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
• Consumers in the United States spend about $2.61billion on smokeless tobacco products¹² and more than $1 billion on cigars each year.¹¹

Economic Costs and Years of Potential Life Lost Associated with Cigarette Smoking

• For 1997–2001, cigarette smoking was estimated to be responsible for $167 billion in annual health-related economic losses in the United States ($75 billion in direct medical costs, and $92 billion in lost productivity),¹³ or about $3,561 per adult smoker.^14,15,16
• The total economic costs associated with cigarette smoking are estimated at $7.18 per pack of cigarettes sold in the United States.¹⁷
• Cigarette smoking results in 5.5 million years of potential life lost in the United States annually.¹³

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

• As of 2006, the average retail price of a pack of cigarettes in the United States was $4.26, but ranges widely across states.¹⁸
• The federal excise tax is 39 cents per pack of cigarettes.¹ The median state cigarette excise tax rate, as of January 1, 2007, was 80 cents, but varied from 7 cents in South Carolina to $2.58 in New Jersey.¹⁹
• Increases in cigarette prices lead to significant reductions in cigarette smoking.²⁰ A 10 percent increase in price has been estimated to reduce overall cigarette consumption by about 3 to 5 percent.²⁰ 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.²⁰

References

1. Tobacco Outlook. Harvest Intentions for 2007-Crop Tobacco Advance 2 Percent..(PDF–278KB) Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, April 2007, TBS—262 [cited 2007 Apr 26]. Available from: http://usda.mannlib.cornell.edu/usda/ers/TBS//2000s/2007/TBS-04-24-2007.pdf.
2. Capehart, Tom. Expenditures for Tobacco Products and Disposable Personal Income, 1989–2005. Compiled from reports of the Department of Commerce, Bureau of Economic Analysis. [cited 2007 Mar 13]. Available from: http://www.ers.usda.gov/Briefing/Archive/Tobacco/.
3. Maxwell JC. The Maxwell Report. Year End & Fourth Quarter 2006 Sales Estimates for the Cigarette Industry. Richmond, VA: John C. Maxwell, Jr., 2007 [cited 2007 Mar 13].
4. Hoover's Online. Cigarettes, Cigars, and Smokeless Tobacco Products. [cited 2007 Mar 13]. Available from: http://www.hoovers.com/cigarettes,-cigars,-&-smokeless-tobacco-products/--HICID__1204--/free-ind-factsheet.xhtml.
5. Federal Trade Commission. Cigarette Report for 2004 and 2005.(PDF–880KB) Washington, DC: Federal Trade Commission; 2005 [cited 2007 Apr 26]. Available from: http://www.ftc.gov/reports/tobacco/2007cigarette2004-2005.pdf.
6. U.S. Census Bureau. 2005 American Community Survey. [cited 2007 Mar 13]. Available from: http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=01000US&-ds_name=ACS_2005_EST_G00_&-_lang=en&-_caller=geoselect&-format=.
7. Centers for Disease Control and Prevention. Tobacco Use Among Adults—United States, 2005. Morbidity and Mortality Weekly Report [serial online]. 2006;55(42):1145–1148 [cited 2007 Mar 13]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5542a1.htm.
8. United States Department of Agriculture. Briefing Room: Tobacco—Background. Washington, DC: United States Department of Agriculture, Economic Research Service; 2005 [cited 2007 Mar 13]. Available from: http://www.ers.usda.gov/Briefing/Archive/Tobacco/.
9. Capehart T. Trends in U.S. Tobacco Farming. (PDF–825KB)(Outlook Report No. TBS25702). Washington, DC: United States Department of Agriculture, Economic Research Service; 2004 [cited 2007 Mar 13]. Available from: http://www.ers.usda.gov/publications/tbs/nov04/tbs25702/tbs25702.pdf.
10. Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006 [cited 2007 Mar 13].
11. Maxwell JC. The Maxwell Report: Cigar Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006 [cited 2007 Mar 13].
12. Federal Trade Commission. Smokeless Tobacco Report for the Years 2002 and 2005.(PDF–619KB) Washington, DC: Federal Trade Commission; 2007 [cited 2007 Apr 26]. Available from: http://www.ftc.gov/reports/tobacco/02-05smokeless0623105.pdf.
13. Centers for Disease Control and Prevention. Annual Smoking-Attributable Mortality, Years of Potential Life Lost, and Productivity Losses—United States, 1997–2001. Morbidity and Mortality Weekly Report [serial online]. 2005;54:625-628 [cited 2007 Mar 13]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5425a1.htm.
14. Centers for Disease Control and Prevention. Cigarette Smoking Among Adults—United States, 1998. Morbidity and Mortality Weekly Report [serial online]. 2000; 49(39);882-4 [cited 2007 Jul 6]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm4939a1.htm.
15. Centers for Disease Control and Prevention. Number of Adults Who Were Current, Former, or Never Smokers, Overall and by Sex, Race, Hispanic origin, Age, and Education: National Health Interview Surveys—United States, 1965–2006 [chart online]. Atlanta, GA: Centers for Disease Control and Prevention, Office on Smoking and Health; [updated 2007 Feb 28; cited 2007 Jul 6]. Available from: http://www.cdc.gov/tobacco/data_statistics/tables/adult/table_3.htm.
16. Centers for Disease Control and Prevention. Cigarette Smoking Among Adults—United States, 2000. Morbidity and Mortality Weekly Report [serial online]. 2003; 51(29);642-645 [cited 2007 Jul 6]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5129a3.htm.
17. Centers for Disease Control and Prevention. Annual Smoking–Attributable Mortality, Years of Potential Life Lost, and Economic Costs—United States, 1995–1999. Morbidity and Mortality Weekly Report [serial online]. 2002;51:300–303 [cited 2007 Mar 13]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5114a2.htm.
18. The Tax Burden on Tobacco. Historical Compilation, Volume 39, 2004. Arlington, VA: Orzechowski and Walker; 2004 [cited 2007 Mar 13].
19. Federation of Tax Administrators. State Excise Tax Rates on Cigarettes, January 1, 2007. Washington, DC: Federation of Tax Administrators; 2007 [cited 2007 Mar 13]. Available from: http://www.taxadmin.org/fta/rate/cigarett.html.
20. Centers for Disease Control and Prevention. Reducing Tobacco Use: A Report of the Surgeon General. Atlanta, GA: Centers for Disease Control and Prevention; 2000 [cited 2007 Mar 13]. Available from: http://www.cdc.gov/tobacco/data_statistics/sgr/sgr_2000/index.htm.

Note: Economic data are based on publicly available data. Web addresses for all references were valid as of July 2007.

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.

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