Cigar
Sales Issued: 1999 TABLE OF CONTENTS I. THE FTC DATA ON CIGAR SALES AND ADVERTISING AND PROMOTIONAL
EXPENDITURES
A. Overview II. CURRENT PATTERNS OF CIGAR SMOKING PREVALENCE
III. THE HEALTH RISKS OF CIGAR SMOKING
IV. CONSUMER PERCEPTIONS OF THE RISKS OF CIGAR SMOKING
A. Rotational Health Warnings VI.
CONCLUSION
VII. TABLES Table 1:
Domestic Cigar Sales In
February 1998, in response to information
showing a resurgence of cigar use in the United States, the Federal
Trade Commission issued Special Orders to the five leading domestic
cigar manufacturers requiring them to report detailed information to
the Commission on their cigar sales and advertising and promotional
expenditures for calendar years 1996 and 1997.
[1]
The
findings of that inquiry are set forth in Part I of this Report, which
provides the first in-depth analysis of the domestic cigar industry=s sales and advertising and promotional expenditures.
Part II provides a brief overview of the recent increase in
cigar smoking prevalence and of the health risks associated with cigar
smoking. Finally, Part
III contains the Commission=s recommendation that Congress enact legislation to regulate cigars in
a manner consistent with the current federal regulation of cigarettes
and smokeless tobacco, including a requirement of health warnings on
cigar labeling and advertising, and a prohibition against advertising
cigars on any electronic media regulated by the Federal Communications
Commission. I.
THE FTC DATA ON CIGAR SALES AND A. Overview
Prior to
the issuance of the Commission=s
Special Orders, the limited information available on the cigar
industry=s advertising efforts pertained primarily to expenditures in
conventional media such as magazines, newspapers, television, and
radio. No information was
available on other types of advertising and promotional efforts.
The Commission=s
Orders required each of the cigar companies to produce a report of the
total number of cigars sold, the total dollar volume of cigar sales,
and the total dollar amounts expended on cigar advertising,
merchandising, and promotion in 1996 and 1997.
[3]
The
Orders also required a breakdown of sixteen different categories of
advertising and marketing expenses for each cigar brand marketed,
including celebrity endorsements and product placements in movies and
television.
[4]
The
data reported herein confirm that the cigar industry experienced a
dramatic increase in cigar unit sales and revenue from 1996 to 1997.
Although the total advertising and promotional expenditures for
cigars are modest, equaling approximately $30.9 million in 1996 and
$41 million in 1997, the data also show that such expenditures
increased by thirty-two percent over a two year period, with
substantial increases reported in almost every expenditure category.
[5]
For
example, expenditures on conventional advertising increased over
fifty-one percent from 1996 to 1997, with magazine advertising growing
by forty-nine percent and newspaper advertising growing by 254%.
More importantly, the Commission data indicate that over
seventy-five percent of the industry=s
1996 and 1997 advertising and promotional dollars were spent on forms
of advertising and promotion about which information was previously
unavailable. The
total expenditures in these categories increased approximately
twenty-seven percent from 1996 to 1997, with large spending increases
on point of sale advertising and public entertainment events. The
aggregate data presented in more detail below will serve as a baseline
to assist interested parties in monitoring trends in cigar advertising
and promotion, cigar smoking prevalence, and consumers=
cigar preferences. The Commission intends to furnish Congress with updated cigar
reports periodically. B.
The Increase In Cigar Sales
From
1996 to 1997, the major cigar companies greatly expanded their product
lines and experienced substantial increases in sales volume and
revenues.
[6]
The
number of cigar brands marketed increased by fifty-four percent from a
total of 207 brands in 1996 to 319 brands in 1997.
In addition, the number of cigar varieties increased by almost
forty-one percent from 1,437 varieties in 1996 to 2,025 varieties in
1997.
[7]
Table
1 shows that aggregate unit sales of the five largest manufacturers
increased fifteen percent from 1996 to 1997, from approximately 3.8
billion cigars to 4.4 billion cigars.
[8]
The
aggregate dollar sales of cigars, based upon wholesale price,
increased forty-three percent from 1996 to 1997 -- from $613 million
to $876 million. The
sales data also provide information about the market shares held by
cigars of different sizes, and their respective contributions to
industry revenues.
Table
2 shows that the percentages of the market held by little, medium,
and large cigars remained generally consistent from 1996 to 1997.
[9]
While
little cigars comprised twenty-seven to twenty-eight percent of cigars
sold in 1996 and 1997, they made up less than six percent of total
cigar revenues for those years. In contrast, large cigars comprised approximately
thirty-eight percent of all cigars sold during such time, but
accounted for sixty-five percent of total cigar revenues in 1996 and
sixty-eight percent in 1997. Medium
size cigars made up approximately thirty-four to thirty-five percent
of unit sales, and twenty-seven percent of sales revenues in 1996 and
thirty percent in 1997. C. The Increase In
Advertising And Promotional Expenditures
The
dramatic increase in cigar use in America has occurred in tandem with
the increase in promotional activities surrounding cigar smoking.
In the early 1990s, cigar enthusiasts began promoting fancy
cigar dinners and smoker=s
evenings in expensive restaurants and hotels.
Such cigar events at restaurants, bars, and private clubs are
now common. In addition, Cigar Aficionado and Smoke, two
magazines devoted almost entirely to cigar smoking, have been
introduced since 1992 and have rapidly gained popularity.
These magazines have featured on their covers and in profile
articles numerous cigar smoking actors and actresses, sports figures,
and celebrity models. Also
in recent years, cigars have appeared as props and in the plot lines
of numerous movies and television shows.
The data reported herein provide specific information on the
types of advertising and promotional activities conducted by the
leading cigar manufacturers in calendar years 1996 and 1997. Table
3 reports the cigar manufacturers= total advertising and promotional expenditures for 1996 and 1997,
together with a breakdown of those expenditures into sixteen
advertising and promotional categories.
The cigar manufacturers=
total expenditures on advertising and promotion increased thirty-two
percent from 1996 to 1997, from $30.9 million to $41 million.
Moreover, there was a significant increase in the amount
spent in almost every category of advertising and promotional
expenditure. By
far, the industry=s
largest expenditures in 1996 and 1997 were on promotional allowances
-- that is, discounts and other incentives given to retailers to
encourage cigar sales. In
both years, these expenses comprised approximately forty percent of
the total amount expended for advertising and promotion.
The dollar amount spent on promotional allowances increased
over thirty-one percent, from approximately $12.4 million in 1996 to
$16.3 million in 1997. Magazine
advertising was the manufacturers=
second largest advertising expense in both years, comprising over
twenty-one percent of total expenditures in 1996 and twenty-four
percent in 1997. Actual
expenditures for magazine advertising increased forty-nine percent
from 1996 to 1997, from $6.6 million to almost $10 million.
Point of sale advertising, the next largest expenditure
category, increased almost thirty-seven percent, from $3.8 million in
1996 to $5.2 million in 1997. The
companies also reported significant spending increases between 1996
and 1997 in the following categories: public entertainment;
promotional items; newspaper advertisements; celebrity endorsements
and paid product placements; and Internet advertising.
Expenditures for public entertainment events, such as cigar
dinners and cigar tastings, rose forty-six percent, from $692,000 in
1996 to just over $1 million in 1997. Spending on promotional items other than cigars increased by
116%, from approximately $306,000 to $660,000.
The greatest percentage increase in spending was on newspaper
advertising, which rose 254% from approximately $189,000 to $671,000. Expenditures
on celebrity endorsements and appearances, and payments for product
placements in movies and television, more than doubled between 1996
and 1997, from approximately $143,500 to approximately $339,000.
[10]
The
manufacturers=
reports indicate that in 1996 and 1997 certain companies paid
endorsement fees to sports personalities, and made payments to movie
studios and third party promoters for the appearance of their cigars
in movies and a number of popular television shows. Demographic information obtained for a sampling of these
television shows indicates that, while a majority of each show=s
viewers are adults, viewers under age eighteen comprise eleven to
thirty-eight percent of the audiences for such shows.
[11 Internet
advertising rose almost 180% from 1996 to 1997, from over $78,000 to
over $218,000. Moreover, it is likely that the cigar industry=s
presence on the Internet is substantially greater than what is
reflected in their actual advertising expenditures because there may
not be costs associated with certain types of indirect promotion.
For example, Cigar Aficionado magazine places ratings
for nearly 1,300 cigars on its Internet site.
Similarly, Smoke magazine=s
website features an online shopping guide with information on more
than thirty cigar brands. In addition, several cybersmoker organizations offer chat
rooms, and some also provide hyperlinks to the websites of cigar
manufacturers. Finally, a
number of Internet cigar shopping sites advertise savings on premium
brands of cigars. Coupons
and Retail Value Added was the only category to show a significant
decline in expenditures between 1996 and 1997.
Expenditures for television and radio advertising also declined
slightly -- from approximately $327,000 to $325,000.
Even these relatively small expenditures for television and
radio advertising are noteworthy given that cigarettes, smokeless
tobacco, and little cigars are banned from such media.
[12]
Moreover,
these expenditures reflect only the broadcast advertising paid for by
the leading manufacturers, and not broadcast advertising run
independently by tobacco retailers. Finally,
the Commission Orders required the cigar manufacturers to report the
total dollar amount spent in the above advertising and promotional
categories in connection with: sponsoring or promoting any sporting
event, sports team or individual; advertising at sporting events; or
expenses for sports-related equipment or paraphernalia.
In both 1996 and 1997, sports-related expenditures comprised
only approximately one percent of the total advertising and
promotional expenditures. D. Physical Characteristics Of The Cigar Varieties
Cigars
come in a great range of weights, sizes, and styles.
As a result, cigars can vary significantly in the amounts of
nicotine and other deleterious substances that they deliver, the
smokers to whom they appeal, and the manner in which they are smoked.
The Commission Orders required the manufacturers to report
several physical characteristics of each cigar variety, including
size, style, individual cigar weight, tobacco type, method of curing,
and whether any flavorings were added to the cigar.
These baseline data provide preliminary information on the
physical characteristics of cigars and possible interrelations between
cigar styles and consumer preferences. Table
4 reports the percentages of little, medium, and large cigars that have a
non-tobacco tip and the percentages that are untipped.
In both 1996 and 1997, virtually all of the little cigars were
tipped. In addition,
roughly sixty percent of the medium size cigars were tipped, while
almost none of the large cigars were tipped. Table
5 reports the percentages of little, medium, and large cigars that
contained added flavorings. The
flavorings reported included, but were not limited to, cherry, fruit,
menthol, nutty, sweet, vanilla, and aromatic.
Some cigar varieties contained more than one flavor. The data indicate that flavored cigars were available in each
size category. However,
over eighty-three percent of little cigars contained flavoring,
compared to just thirty-one percent of large cigars in 1996 and
sixteen percent in 1997. The
table also indicates that flavored large cigars contributed
proportionally less sales revenue than unflavored large cigars. Table
6 reports the average weight of an individual cigar within each of the
three weight categories (little, medium, and large), and the range of
cigar weights within each size category.
The average weights reported are sales weighted -- that is, the
number of cigars sold at a given weight is factored into the average
weight. The average
weights ranged from just over one gram for a single little cigar to
approximately eight grams for a single large cigar.
Data on individual cigar weights are significant because a
cigar=s weight affects the amount of nicotine and other deleterious substances
emitted in its smoke Table
7 reports the percentages of little, medium, and large cigars containing
any reconstituted tobacco (in any part of the cigar) and the
percentages of cigars containing no reconstituted tobacco.
In 1996 and 1997, virtually all little and medium cigars
contained reconstituted tobacco, and the cigars containing
reconstituted tobacco accounted for almost all sales revenues in these
size categories. In the
large cigar category, the cigars made without reconstituted tobacco, i.e.,
the premium cigars, comprised only seven to ten percent of all units
sold, but approximately thirty-six to forty-seven percent of all
dollar sales in 1996 and 1997, respectively.
Table
8 reports the percentages of little, medium, and large cigars consisting
entirely of air cured tobacco and the percentages consisting in part
of heat cured tobacco (in any part of the cigar).
[13]
The
data indicate that a substantial percentage of medium size cigars
contain heat cured tobacco -- approximately twenty-seven and
thirty-four percent of the units sold in 1996 and 1997, respectively.
Almost no little cigars and only a small percentage of large
cigars contain heat cured tobacco.
Differences in the curing, aging, and fermentation of tobacco
may affect its pH and palatability, and may also affect its chemical
content, including the levels of nicotine and nitrosamines found in
the tobacco. II. CURRENT PATTERNS OF CIGAR SMOKING PREVALENCE
The
above reported increases in cigar sales and advertising and
promotional expenditures come at a time when health authorities are
expressing increasing concern about cigar usage.
This section discusses the findings of the NCI Cigar Monograph
and other newly released survey data regarding the
recent increases in cigar smoking prevalence rates. A. Cigar Smoking Among
Adults
After
a twenty-year decline, cigar consumption in the United States has
increased significantly between 1993 and the present.
According to USDA estimates, Americans consumed slightly more
than five billion cigars in 1998, a fifty-seven percent increase over
the 3.4 billion cigars consumed in 1993.
[14]
While
consumption of all types of cigars has increased since 1993, the most
dramatic growth has been in the sales of premium cigars, i.e.,
hand-rolled cigars made entirely of long filler tobacco that retail
for more than one dollar apiece.
Unit sales of premium cigars increased over 150% between 1993
and 1998.
[15]
Cigar
smoking rates among the population also have increased markedly in the
1990s, although it is difficult to pinpoint the rate of increase due
to the varying definitions of cigar use employed in the relevant
surveys. The only
prevalence series spanning the recent rise in cigar popularity is the
California Adult Tobacco Use Survey, which shows that current cigar
use among California men almost doubled between 1990 and 1996, from
4.8% to 8.8% of the population. Current
cigar use among California women increased five-fold during this
period, from .2% to 1.1%.
[16]
Nationwide,
the 1997 National Household Survey on Drug Abuse (NHSDA) indicates
that 10.5% of men and 1.9% of women surveyed in 1997 reported smoking
cigars in the previous month.
[17]
The
greatest increase in cigar smoking prevalence has occurred among young
adult men. The California
surveys show that cigar smoking among men eighteen to twenty-four
years old increased from four percent in 1990 to almost 12.5% in 1996.
The NHSDA data show that nationally 17.5% of men eighteen to
twenty-five years old, and thirteen percent of men twenty-six to
thirty-four years old, reported smoking a cigar in the past month.
Similarly, the NHSDA data indicate that cigar smoking rates are
higher among young women, eighteen to twenty-five years old, than
among women in any other age group.
These patterns represent a significant change from earlier
surveys, which showed the greatest concentration of cigar smoking
among older men. With
regard to frequency of use, recent surveys indicate that most adult
cigar users smoke on an occasional, rather than on a daily, basis.
The 1997 NHSDA survey reports that approximately eighty-nine
percent of adult cigar smokers smoke less than daily.
[18]
In
addition, survey evidence suggests that much of the recent increase in
cigar smoking prevalence is due to an increased number of occasional
smokers. The rise in
occasional cigar use is observed most clearly in the California
surveys where daily cigar smoking rates remained constant
between 1990 and 1996, while the percentage of persons who reported
smoking cigars on a less frequent basis almost doubled.
[19]
B. Cigar Smoking Among
Youth While
there is no data on teen cigar use prior to 1996, several recently
conducted national surveys on youth cigar use show that substantial
numbers of adolescents are trying cigars.
[20]
A
1996 in-school survey conducted nationally by the Robert Wood Johnson
Foundation, and published by the Centers for Disease Control, showed
that approximately twenty-seven percent of fourteen to nineteen year
olds had smoked at least one cigar in the preceding year.
[21]
Moreover,
nearly three percent of the adolescents surveyed in the Robert Wood
Johnson study reported smoking fifty or more cigars in the previous
year. The percentage of
teenagers in this survey who reported using more than fifty cigars in
the previous year is greater than the percentage of young adults who
in a 1991 survey had reported smoking more than fifty cigars in a lifetime.
[22]
The
1997 National Youth Risk Behavior Study (ANYRB@), conducted by the Centers for Disease Control in high schools
nationwide, indicated that twenty-two percent of high school students
(grades 9-12) had smoked
cigars within the previous thirty days.
Another recent national survey of adolescents reports lower but
still significant cigar smoking rates.
The 1997 National Household Survey on Drug Abuse (ANHSDA@),
conducted at-home through a self-administered questionnaire, indicates
that five percent of twelve to seventeen year olds reported smoking a
cigar in the previous thirty days.
Thus,
while the various surveys of teenagers measured different markers,
they all indicate a substantial incidence of cigar use.
The youth prevalence data also indicate that a substantial
percentage of adolescent cigar smokers currently use cigarettes or
other tobacco products.
[23]
In
February 1999, the Department of Health and Human Services (AHHS@)
issued a report on focus groups conducted nationwide to explore
teenagers= cigar use patterns and their perceptions of cigar-related health risks.
[24]
The
focus groups, although only exploratory in nature, suggest that
adolescent cigar use is widespread, that teens believe cigar smoking
is more socially acceptable than smoking cigarettes or using spit
tobacco, and that teens can easily purchase cigars. In
addition, teens report widespread use of cigars as Ablunts@ for smoking marijuana. When
blunting, the user opens the cigar and replaces all or most of the
filler tobacco with marijuana or other substances.
The focus groups revealed that many teens smoke both ordinary
cigars and blunts, and that teen references to cigar smoking and/or
blunting are often hard to differentiate.
Thus, the practice of blunting likely contributes to the
relatively high cigar smoking prevalence rates reported by other youth
surveys. III. THE
HEALTH RISKS OF CIGAR SMOKING
The
NCI Cigar Monograph concludes from the available evidence that regular
cigar smoking, like the use of other tobacco products, can cause
several forms of cancer. The
Monograph states that although the risks of these cancers are
proportionate to the amount a person smokes, cigar smoke contains the
same toxic and carcinogenic constituents found in cigarette smoke.
Cigar smoking can cause oral, esophageal, laryngeal and lung
cancers. Regular cigar
smokers who inhale, particularly those who smoke several cigars per
day, have an increased risk of coronary heart disease and chronic
obstructive pulmonary disease. Regular
cigar smokers have risks of oral and esophageal cancers similar to
those of cigarette smokers, but they have lower risks of lung and
laryngeal cancer, coronary heart disease, and chronic obstructive
pulmonary disease than cigarette smokers.
[25]
In
addition, cigar smoke generates high levels of indoor pollutants.
Thus, the NCI Cigar Monograph cautions that cigars are not a
safe alternative to cigarettes. Although
the recent prevalence data suggest that most cigar users smoke only
occasionally, the studies evaluated in the NCI Cigar Monograph all
involved subjects who were daily cigar smokers (one or more cigars a
day).
[26]
The
Monograph notes that the risks to occasional cigar smokers are
difficult to measure because of the wide variability in the frequency
of smoking among occasional smokers and in the amounts of tobacco
contained in different cigars. The Monograph concludes, however, that it is reasonable to
assume that the risks for occasional cigar smokers lie somewhere
between those for individuals whose only exposure to tobacco smoke is
environmental tobacco smoke and those of regular cigar smokers.
As occasional cigar smokers smoke more frequently or inhale
more deeply, their exposure to tobacco smoke increases, and with that
increased exposure comes a proportionate increase in disease risks.
[27]
There
currently is no direct evidence on the form of the dose response
relationship for occasional cigar smokers.
The most relevant information concerning the likely risks to
occasional cigar smokers is the NCI=s
analysis of the risk profile for the least intensive daily smokers,
those persons who smoked one to two cigars daily.
The NCI analysis estimates that these cigar smokers may be
subject to significantly elevated risk for oral, esophageal, and
laryngeal cancers.
[28]
Finally,
like other tobacco products, cigars contain substantial quantities of
nicotine. Cigar smoke may
be inhaled, producing the same virtually instantaneous effects of
nicotine delivery produced by cigarettes, or it may be held in the
nose and mouth, providing a somewhat slower rate of nicotine
absorption as occurs with smokeless tobacco products.
Both routes of nicotine delivery are well-documented to lead to
dependence with other forms of tobacco use. While
there are no published studies on the frequency of cigar addiction,
the available survey data indicate that a substantial majority of
adult cigar smokers smoke only occasionally.
[29]
According
to the NCI Monograph, patterns of tobacco usage are an important
indicator of addiction. Thus,
although it is likely that heavy regular smokers may develop nicotine
tolerance and a physical dependence on cigars, there would be little
basis to expect that people who rarely smoke cigars on two or more
consecutive days would become physically dependent upon cigars.
[30]
The
Monograph cautions, however, that addiction to nicotine is a process
that typically begins during adolescence and young adulthood, and
therefore the low rate of addiction among adult cigar smokers may not
apply to cigar use begun in adolescence.
[31]
The
limited information available on consumers=
perceptions of cigar-related risks suggests that consumers generally
are aware that cigar smoking poses health risks, although they lack
information about the specific risks involved. In
1996, the American Cancer Society conducted a survey of adults
indicating that a majority of both cigar users and non-users believe
cigar smoking can pose health risks.
[32]
Similarly,
the recent HHS focus group study on youth cigar use indicates that,
when specifically probed about the health risks of cigars, most teens
say they believe that cigars are dangerous and addictive.
[33]
According
to the HHS report, it appears that most teens have received little
information about the health effects of cigar use, but that they draw
general conclusions about possible cigar-related health risks based
upon their knowledge of the dangers of cigarettes or other tobacco
products. Several teens
indicated that, given the known harms of tobacco, they Finally,
the results of a 1998 Canadian focus group study similarly suggest
that consumers recognize that cigar smoking is harmful, but that they
lack knowledge of the specific risks involved.
[35]
The
Canadian focus groups, conducted on behalf of Health Canada=s Office of Tobacco Control, probed several groups of adult and
adolescent cigar smokers about their awareness of the health risks
associated with cigar smoking. The
focus group report concludes that the majority of cigar smokers
interviewed know that cigar smoking poses health risks, yet they have
only a vague awareness of the specific risks involved.
Like the HHS focus group participants, the Canadian cigar
smokers also expressed the belief that, given the health hazards of
cigarettes, cigars must pose health risks.
In addition, the cigar smokers generally expressed an interest
in getting more specific information about the consequences of cigar
smoking. However, the
focus group report also indicates that many participants believe cigar
tobacco is Acleaner@ and Amore
natural@ than cigarette tobacco, and therefore less dangerous. All
of the above research has limitations.
First, the results of these studies cannot necessarily be
projected to the overall population.
Second, there are inherent limitations in using survey research
to discern attitudes and beliefs about the riskiness of products.
In this regard, it is difficult to assess the extent to which
cigar smokers personalize their expressed beliefs about the risks of
cigar smoking generally. Each
of the above studies, for example, points to the possibility that
cigar smokers possess an Aoptimism
bias@ about their own cigar-related risks.
In other words, these cigar smokers may tend to minimize their
personal risk or to believe that they are at less risk than other
cigar smokers. Optimism
bias or Aunrealistic
optimism@
is a well-documented phenomenon among both adult and adolescent
cigarette smokers. Studies
consistently demonstrate that cigarette smokers perceive their own
risks from smoking to be lower than the risk to other The
NCI Cigar Monograph concludes that cigar smoking can pose serious
health risks. The
Commission believes that, as is already the case for cigarettes and
smokeless tobacco, consumers should be advised of these risks.
This is especially true in light of current cigar advertising,
which portrays cigar smoking as part of a glamorous and affluent
lifestyle. While
consumers may be aware generally that cigar smoking poses risks,
warnings highlighting the specific health risks of cigar smoking may
further educate consumers or reinforce their existing beliefs.
Moreover, given the public=s
extensive exposure to health warnings for cigarettes and smokeless
tobacco, the current absence of clear and conspicuous federal health
warnings for cigars may send a misleading signal that cigars are not
harmful to A.
Rotational Health Warnings
Presently,
both cigarette and smokeless tobacco manufacturers are required by
federal statute to display rotational health warnings on all labeling
and advertising for their products. See
Federal Cigarette Labeling and Advertising Act, 15 U.S.C. '1331; Comprehensive Smokeless Tobacco Health Education Act of 1986,
15 U.S.C. '1441.
Similarly, the Commission believes that cigar health warnings
should be mandated by federal legislation.
In the alternative, Congress may wish to direct the Commission
to use its existing authority to require health warnings on cigars.
[38]
The Commission recommends that cigar manufacturers and
marketers be required to comply with a system of multiple rotating
warnings, similar to the rotational plans in place for cigarettes and
smokeless tobacco. The advantage of rotational warnings, as compared to a single
health warning, is that the multiple warnings can provide a broad
range of health risk information, while also increasing the likelihood
that consumers pay attention to the individual messages over an
extended period of time. However,
the Commission recognizes that the rotational plan for cigar warnings
should be appropriately tailored to accommodate the relatively small
sales volume of many cigar brands and the broad diversity of cigar
packaging.
[39]
Health
warnings should be displayed clearly and conspicuously on all labeling
and advertising for cigars. Currently,
the large majority of cigars are sold in prepackaged containers, and
the health warnings should be displayed clearly and conspicuously on
all such cigar packages.
[40]
Although
a small percentage of cigars are sold singly, without packaging, there
are a number of ways in which health warnings could be displayed on
these cigars. For
example, the warnings could be displayed on the boxes or other
containers from which individual cigars are sold, or could be posted
in retail establishments that sell cigars individually.
The Commission would be pleased to participate in any
discussions between Congress, the cigar industry, and other interested
parties on these and other options regarding the placement of warnings
on advertising and labeling. The
conclusions stated in the NCI Cigar Monograph suggest several possible
health warning messages. Such
messages should advise consumers of the risks associated with cigar
smoking in a factual, yet clear and easily understandable manner.
In adopting any final warnings, of course, care must be taken
to ensure that the warnings communicate the intended messages to
consumers. The Commission also would be pleased to assist Congress in
this effort. As
a starting point, the Commission recommends that Congress consider the
following three warnings, which address the Monograph=s
conclusions as to the major adverse health consequences of cigar
smoking:
[41]
WARNING: Regular cigar smoking can cause cancers of the mouth and
throat, even if you do not inhale. The
NCI Cigar Monograph found that regular cigar smokers are at a similar
risk of Inclusion
of the qualifier Aregular@ in the proposed warning accurately reflects the existing scientific
evidence on cigar-related health risks, which is limited to the
experiences of those who smoke on a daily basis.
While the NCI Cigar Monograph also expresses concern that
occasional cigar smokers are likely to be at some level of risk, the
magnitude cannot be quantified at present because of the wide
divergence in cigar smoking behavior and the lack of epidemiological
evidence. Nevertheless,
the potential for risk from occasional smoking suggests the
possibility that warnings limited to Aregular@
cigar use might give the misleading impression that casual use is
completely free of risk. WARNING:
Inhaling cigar smoke can cause lung cancer. The more deeply you inhale, the greater your risk. The
NCI Cigar Monograph concludes that cigar smokers who inhale,
particularly those who inhale deeply and smoke several cigars a day,
are at increased risk of lung cancer. This message is especially important to current and former
cigarette smokers since they are the cigar smokers most likely to
inhale. It is also an
important message to convey to adolescents who may be experimenting
with cigars and cigarettes interchangeably.
WARNING:
Cigars are not a safe alternative to cigarettes. The
NCI Cigar Monograph concluded that cigars are not a safe alternative
to cigarettes. This
conclusion may be obscured, however, by the recent popularity of
cigars, their high visibility in the media, and numerous celebrity
endorsements of the products. According
to the Monograph, the risks of tobacco smoke exposure are similar
for all sources of tobacco smoke, although the magnitude of a
cigar smoker=s
risk is proportionate to the frequency and intensity with which one
smokes. Regular cigar
smokers have risks of oral and esophageal cancers similar to those of
cigarette smokers, but are at lower risk for heart and lung disease
than cigarette smokers because they generally smoke less frequently
and inhale less deeply than cigarette smokers. Persons
considering switching from cigarettes to cigars are advised that the
only way to eliminate the serious harm that can result from cigarette
smoking is to quit using tobacco entirely.
While some studies indicate that cigarette smokers can reduce
their risk by switching to cigars, this reduction in risk is far
smaller than what they could achieve by eliminating all tobacco use.
The Monograph attributes the switchers=
reduction in risk to their lower inhalation and total tobacco
consumption, as compared to cigarette smokers.
However, the greater likelihood that former cigarette smokers
will inhale cigar smoke means that they are at greater risk than cigar
smokers who have never smoked cigarettes. B. Prohibition on Electronic Advertising
Advertising
on electronic media, i.e., radio and broadcast and cable
television, is the type of advertising most likely to be passively
received by minors. Presently,
cigarettes, smokeless This
Report shows that the cigar companies spent about $325,000 on
television, radio, and audiovisual advertising in both 1996 and 1997.
In addition, some portion of the $339,000 reported as
expenditures for endorsements and product placements was money spent
to place cigars on television shows.
Moreover, the extent of cigar advertising on television and
radio is greater than simply the major manufacturers=
expenditures reported herein. For
instance, it has come to the Commission=s
attention that individual cigar retailers in several parts of the
country have run cigar advertisements recently on local television and
radio stations. In
keeping with the Commission=s
belief that cigars and other tobacco products should be regulated in a
consistent manner, we recommend that Congress enact legislation
prohibiting the advertisement of cigars on television, radio, or any
other electronic media regulated by the Federal Communications
Commission. In
order to reduce youth access to tobacco products, local and municipal
governments increasingly are enacting ordinances that prohibit the
sale of cigarettes and smokeless tobacco from self-service displays,
requiring that they be placed in locations less accessible to minors.
Additionally, in 1996 the Food and Drug Administration (AFDA@)
adopted regulations restricting the sale of cigarettes and smokeless
tobacco to protect children and adolescents, in part by eliminating
self-service displays.
[44]
Although
the FDA regulations have not yet been implemented, several large
grocery and pharmacy chains across the country have voluntarily moved
cigarettes and smokeless tobacco products behind the counter.
As cigarettes and smokeless tobacco become less readily
accessible to underage smokers, it will be important also to restrict
youth access to cigars to prevent them from becoming the
tobacco product of choice for minors.
[45]
Thus,
the Commission recommends that Congress also consider measures to
reduce youth access to cigar products, including restrictions on the
use of self-service cigar displays.
Such legislation
could be tied to the implementation of federal restrictions on the
sale of cigarettes and smokeless tobacco products.
[46]
The
Commission recognizes that, because of their small size and sales
volume, cigar manufacturers may be unable to compete effectively with
cigarette manufacturers for restricted shelf space.
The legislation therefore should provide flexibility for
alternative cigar shelving arrangements that provide reasonably
equivalent barriers to youth access.
The Commission also recommends that tobacco specialty stores be
exempted from such regulations, provided that they take reasonable
steps to restrict unaccompanied access by minors VI.
CONCLUSION
The
Commission is pleased to provide Congress with this report of the
sales and advertising practices of the domestic cigar industry.
Commission staff will continue to monitor cigar advertising and
will send reports to Congress periodically on cigar sales and
advertising expenditures. Promotional
[1]
The Special Orders, issued pursuant to Section 6(b) of the
Federal Trade Commission Act, 15 U.S.C. ' 46(b),
were directed to Consolidated Cigar Corporation, General Cigar Co.,
Inc., Havatampa Incorporated, John Middleton Incorporated, and
Swisher International, Inc.
According to leading tobacco analysts, the five companies
together hold almost 90% of the U.S. cigar market.
See AThe Cigar Industry in 1996,@ The Maxwell Consumer Report, March 21, 1997.
[2]
U.S. Department of Health and Human Services, Smoking and
Tobacco Control Monograph No. 9 Cigars: Health Effects and Trends
(1998), NIH publication no. 98-4302.
[3]
The Commission has reported sales and advertising data on
cigarettes and smokeless tobacco for several years.
In 1967, the Commission submitted to Congress its first
annual report on cigarette advertising and labeling, pursuant to
Section 9(b) of the Federal Cigarette Labeling and Advertising
Act, 15 U.S.C. ' 1331.
The Commission began submitting biennial reports to Congress
in 1987 on the advertising and marketing practices for smokeless
tobacco products, pursuant to Section 8(b) of the Comprehensive
Smokeless Tobacco Health Education Act of 1986, 15 U.S.C. ' 1441.
The Commission=s
cigarette and smokeless tobacco reports are frequently cited as
reference sources by public health specialists, academics, and state
and federal regulatory and public health agencies.
[4]
Definitions of each of the advertising and promotional
categories are provided in the Glossary.
[5]
The cigar industry remains small in comparison to the
cigarette industry.
In 1996, the major cigarette manufacturers sold approximately
484 billion cigarettes and spent approximately $5 billion on
advertising and promotion.
Federal Trade Commission, Report to Congress for 1996
Pursuant to the Federal Cigarette Labeling and Advertising Act,
at 18 (1998).
[6]
Traditionally, machine-made cigars were sold through
drugstores, supermarkets, retail discounters, and convenience
stores.
Premium cigars most often were sold through smoke shops and
retail tobacco outlet stores.
Now, cigars also are sold in bars, restaurants, liquor
stores, and specialty food shops, as well as through several
catalogs and the Internet.
[7]
The Orders defined "brand" as cigars bearing a
common identifying name or logo, regardless of whether the products
are differentiated by size or packaging.
AVariety@ was defined as any cigar that is differentiated from any other cigar
bearing its same brand name or logo by one or more of the product
characteristics defined in the Orders.
[8]
Just as the Commission=s
cigarette reports include U.S.Department of Agriculture (AUSDA@) estimates of cigarette consumption, Table 1 hereto also includes the
USDA=s
cigar consumption estimates for 1996 and 1997.
The FTC data report actual shipments from the manufacturers
to their wholesalers and retailers in each of the calendar years.
In contrast, USDA tries to estimate actual cigar sales to
consumers.
These estimates are derived from tax revenue data on cigar
manufacturers=
wholesale sales and U.S. Customs data on cigar imports, among other
information.
The USDA consumption estimates are approximately eighteen
percent greater than the FTC=s
reported sales figures, most likely because the USDA estimates
include the sales of smaller manufacturers and importers in addition
to those of the five largest domestic manufacturers.
[9]
Because of the great size variance among cigars, this Report
segregates them into three weight categories: little cigars,
weighing not more than three pounds per thousand; medium cigars,
weighing more than three but less than ten pounds per thousand; and
large cigars, weighing more than ten pounds per thousand.
[10]
The expenses reported do not include monies that may have
been spent by the cigar magazines, cigar events sponsors, and other
cigar promoters on celebrity endorsements and paid product
placements.
[11]
The Cigar Association of America amended its cigar
advertising standards in March 1998 to state that Acigar
manufacturers should not subsidize the use of cigars in movies or
television productions through paid or donated cigar placements or
otherwise.@ These
self-regulatory standards also provide that cigar advertisements
should not portray or encourage cigar use by persons under the age
of twenty-one.
The above-referenced demographic information indicates that
persons under twenty-one comprised thirteen to forty-three percent
of the audiences for the television shows sampled.
[12]
See discussion at footnote 42 infra.
[13]
Air cured tobacco is dried slowly at ambient air temperature
and humidity, and is fermented during the aging process.
Heat cured tobacco is exposed to hot air during the curing
process, and then fermented during the aging process.
[14]
USDA, Commodity Economics Division, Economic Research
Service, Tobacco Situation and Outlook Report, Doc. No.
TSB-240 (Apr. 1999); and Table 9 herein.
[15]
Id.
While cigar consumption rose every year from 1993 to 1998,
the annual rate of increase declined in 1998 (4.4%) compared to the
1997 rate of increase (12.7%).
[16]
In the California adult survey, current cigar users included
persons who reported that they Anow
smoked every day or some days.@
NCI Cigar Monograph at 27 (Table 2a) and 31-34.
[17]
U.S. Department of Health and Human Services, Substance Abuse
and Mental Health Services Administration, Office of Applied
Science, National Household Survey on Drug Abuse, 1997
(unpublished tabulations).
[18]
Id.
(unpublished tabulations)
[19]
Other recent surveys also suggest that the current increase
in cigar smoking prevalence is due primarily to an increase in
occasional users, rather than regular users.
NCI Cigar Monograph at 38-42.
[20]
All three of the surveys discussed herein were designed to be
projectible to the adolescent population nationwide.
The NCI Cigar Monograph also reports the results of youth
surveys conducted in California, Massachusetts, and New York.
[21]
U.S.
Department of Health and Human Services, Centers for Disease
Control,
ACigar Smoking Among Teenagers -- United States, Massachusetts, and New
York, 1996.@
Morbidity and Mortality Weekly Report 1997; 46 (No. 20):
433-440.
[22]
NCI Cigar Monograph at 38 (Table 7) and 42, citing the
1991 National Health Interview Survey.
Differences in the survey methodologies of these two studies
also may have affected their results.
[23]
NCI Cigar Monograph at 51; U.S. Department of Health
and Human Services, Centers for Disease Control,
ACigar Smoking Among Teenagers -- United States, Massachusetts, and New
York, 1996.@
Morbidity and Mortality Weekly Report 1997; 46 (No.
20): 433-440.
[24]
Department of Health and Human Services, Office of the
Inspector General, Youth Use of Cigars: Patterns of Use and
Perceptions of Risk, OEI-06-98-0030 (February 1999).
The HHS report emphasizes that, because of the exploratory
format of the teen focus group project, the information collected
should be used only as a starting point for further study of teen
cigar use and should not be projected to all teens.
Id. at iii.
[25]
NCI Cigar Monograph at Chapter 4 (conclusions
summarized at 155). See also Iribarren, et al., AEffect
of Cigar Smoking on the Risk of Cardiovascular Disease, Chronic
Obstructive Pulmonary Disease, and Cancer in Men,@
New England J. Med 340(23):1773-80 (1999) (a large male
cohort study showed cigar smoking to moderately increase the risk of
chronic obstructive pulmonary disease and lung cancer, and added new
evidence of an association between cigar smoking and a moderate but
significant increase in the risk of coronary heart disease).
[26]
The primary risk estimates provided in the NCI Cigar Report
are derived from the findings of the American Cancer Society=s
Cancer Prevention Study I, conducted between 1959 and 1972.
One of the largest prospective cohort studies ever
undertaken, the CPS-I followed over one million individuals.
For purposes of evaluating cigar-related mortality risks, the
NCI analysis focused on the mortality data provided for white males
who smoked at least one cigar per day.
[27]
The mortality risks for the majority of regular cigar smokers
who do not inhale deeply appear to be considerably lower than those
for cigarette smokers.
For example, NCI estimates that the excess risk mortality
(compared to nonsmokers) is 66% for cigarette smokers in contrast to
8% for daily cigar smokers.
(NCI Cigar Monograph at 112, Table 3).
According to the NCI Cigar Monograph, the risk from inhaling
cigar smoke increases with increases in the number of cigars smoked
daily and increases in the depth of inhalation.
Cigar smokers in the NCI sample who smoked five or more
cigars a day with moderate inhalation (4.5% of the total number of
daily smokers studied) approached the lung cancer rates of smokers
of twenty cigarettes per day. Some
studies also indicate that cigarette smokers who switch to cigars
reduce their risk considerably. (Id at 119).
The NCI Cigar Monograph attributes this reduced risk to lower
inhalation and overall tobacco consumption among persons who
switched from cigarettes to cigars, as compared to cigarette
smokers. The reduction
in risk for cigarette smokers who switch to cigars is, however, far
smaller than the reduction in risk they could achieve from
eliminating all tobacco use. Moreover,
the greater likelihood that former cigarette smokers will inhale
cigar smoke means that they are at greater risk than cigar smokers
who never smoked cigarettes.
[28]
The Monograph estimates that the group of least intensive
daily smokers is at more than twice the risk of oral and esophageal
cancers than non-smokers, and more than six times the risk of
laryngeal cancer than non-smokers.
NCI Cigar Report at 125 (Table 11). Although these
results do not reach statistical significance, given the limitations
of the sample size and the infrequency of oral cancer mortalities,
the data suggest that even light cigar smokers are at some increased
risk for mouth and throat cancers.
Studies with larger sample sizes would be required to resolve
the issue.
[29]
The 1997 NHSDA survey indicates that approximately 89% of
adult cigar smokers smoke less than daily.
Supra at 9.
[30]
Id. at 182, 190.
[31]
Id. at Chapter 6 (conclusions summarized at 191).
See also U.S. Department of Health and Human Services,
Preventing Tobacco Use Among Young People: A Report of the
Surgeon General, July 1994 (citations omitted) (The
younger one begins to smoke cigarettes or use smokeless tobacco, the
more likely he or she is to be a current user as an adult.
In addition, persons who begin to use tobacco as adolescents
are among the heaviest adult users.
Heavy users are the most likely to experience tobacco-related
health problems and the least likely to quit using tobacco.)
[32]
See
F. Baker et al., ARisk
Perception and Cigar Smoking Behavior,@ paper presented at American Cancer Society Conference: Cigar Smoking
Health Risks B
State of the Science Conference, Washington, D.C. (June 15, 1998).
[33]
Department of Health and Human Services, Office of the
Inspector General, Youth Use of Cigars:
Patterns of Use and Perceptions of Risk, OEI-06-98-0030,
(Feb. 1998).
As discussed supra, the HHS focus groups were
exploratory in nature and therefore should not be projected to teens
nationwide.
[34]
Despite their belief that cigars are harmful, a substantial
percentage of the focus group teens report using cigars.
Many of the cigar smokers also envision themselves smoking
cigars five years from now.
Like the youth cigar smoking prevalence surveys, the HHS
focus groups indicate that a significant percentage of teenagers who
smoke cigars also smoke cigarettes.
However, twenty-two percent of the teens in the focus groups
who report ever using tobacco indicate that cigars were their
first experience with tobacco.
Id.
[35]
Environics Research Group, AFocus
Group Report on Warning Labels for Cigars, Pipes, and Chewing
Tobacco,@ prepared for Health Canada (Mar. 1998).
The Canadian focus groups were exploratory in nature, and the
information collected should not be projected to all cigar smokers.
[36]
See e.g. Weinstein, N.D. AAccuracy
of Smokers=
Risk Perceptions,@
Ann. Behav. Med. 20(2): 135-140 (1998) (a review of the
literature); Ayanian, J.Z., Cleary, P.D. APerceived
Risks of Heart Disease and Cancer Among Cigarette Smokers,@ J. Am. Med. Assoc. 281(11): 1019-21 (1999); Segerstrom, S.C. et
al AOptimistic
Bias Among Cigarette Smokers,@
J. Applied Social Psychology 23:1606-1618 (1993); Chapman, S.
et al., ASelf-Exempting Beliefs about Smoking and Health: Differences Between
Smokers and Ex-Smokers, Am. J. of Public Health 83:215-219
(1993).
For studies on adolescents, see e.g. Reppuci, J.D. et
al., AUnrealistic
Optimism Among Adolescent Smokers and Non-Smokers,@
J. Primary Prevention 11:227-236 (1991); Hanson, W.B.,
Malotte, C.K., APerceived Personal Immunity: The Development of Beliefs about
Susceptibility to the Consequences of Smoking,@ Preventive Medicine 15:363-372 (1986); Cohn, L.D. et al., ARisk
Perception: Differences Between Adolescents and Adults,@ Health Psychology 14:21-222 (1995).
[37]
Beginning in 1989, many nationally available cigars brands
began to display the following general health warning label required
by the State of California: WARNING:
This Product Contains Chemicals Known To The State Of California To
Cause Cancer, And Birth Defects Or Other Reproductive Harm. This
warning is not an adequate substitute for federally mandated
warnings.
It is very often inconspicuous and it is required only on
labeling and not in advertising.
In addition, the warning=s generic message does not adequately warn of the specific adverse
health consequences associated with cigar smoking. In January, 1999, the Attorney General of Massachusetts
enacted consumer protection regulations for the advertising and sale
of cigars, cigarettes, and smokeless tobacco.
These regulations, which become effective August 1, 1999,
require that the following two health warnings be rotated on cigar
advertising and packaging:
WARNING: Cigar Smoke
Contains Carbon Monoxide And Nicotine, An Addictive Drug. WARNING:
Cigars Are Not A Safe Alternative To Cigarettes Or
Smokeless Tobacco Products.
The Massachusetts labeling requirements currently apply only to
manufactured cigars and not to hand-rolled cigars.
The Massachusetts regulations also contain several other
requirements and prohibitions, including prohibitions against the
sale of cigars from self-service displays and the promotion of
cigars through sampling and give-aways.
[38]
Under Section 5 of the FTC Act, the Commission has authority
to institute administrative proceedings to require cigar
manufacturers and marketers to display health warnings if it finds
that the absence of warnings would be unfair or deceptive.
[39]
For example, Congress could consider requiring rotation of
the health warnings on a yearly basis, rather than on a more
frequent basis as is done with cigarettes and smokeless tobacco.
[40]
Cigars come in a variety of package types including, but not
limited to, cigar boxes, tins, soft packs, hard packs, tubes, and
cellophane wraps.
[41]
NCI Cigar Monograph at i, 19, 155.
[42]
The Cigarette Act was amended in 1969 to make it unlawful to
advertise cigarettes on any electronic medium subject to the
jurisdiction of the Federal Communications Commission. (Public
Health Cigarette Smoking Act of 1969, Pub. L. No. 91-222
(1969)).
In 1973, in response to dramatic increases in the advertising
and sales of little cigars, and the Surgeon General=s
determination that little cigars were hazardous to health, Congress
amended the Cigarette Act to include Alittle
cigars@ within the electronic medium prohibition.
This amendment defined little cigars as Aany
roll of tobacco wrapped in leaf tobacco or any substance containing
tobacco . . . and as to which one thousand units weigh not more than
three pounds.@ (Little
Cigar Act, Pub. L. No. 93-109 (1973)).
As discussed above, little cigars are not subject to any
other federal advertising or labeling restrictions.
The same prohibition on electronic advertising is included in
the Smokeless Tobacco Act (Comprehensive Smokeless Tobacco Health
Education Act of 1986 '3(f),
Pub. L. No. 99-252 (1986)).
[43]
NCI Cigar Monograph at 21-24.
[44]
Regulations Restricting the Sale and Distribution of
Cigarettes and Smokeless Tobacco to Protect Children and Adolescents,
61 Fed. Reg. 44,396 (1996).
The Fourth Circuit Court of Appeals overturned FDA=s
regulations based upon its finding that FDA does not have
jurisdiction to regulate tobacco.
Brown & Williamson Tobacco v. FDA, No. 97-1604,
slip op. at 14 (4th Cir. Aug. 4, 1998), cert. granted 1999
U.S. LEXIS 2981 (Apr. 26, 1999).
[45]
While the sale of cigars to minors is illegal in all fifty
states, a February 1999 report of the Department of Health and Human
Services, entitled AYouth Use of Cigars: Federal, State Regulation and Enforcement,@
indicates that the states generally give very low priority to
enforcement of unlawful cigar sales as compared to enforcement of
unlawful cigarette sales.
The report also found that many states have little
information on the extent of cigar sales to minors, the ease with
which minors can purchase cigars, and the degree to which minors= use of cigars is a problem in their states.
[46]
The FDA regulations list several ways for retailers to
eliminate the use of self-service displays: place tobacco products
in locked cases or in locations where they are supervised by
cashiers; place them behind only one or two checkout lanes instead
of at each one; sell them only from one controlled area of the
store, where store employees are present to handle other
administrative tasks; or establish a system so that one employee can
respond to requests for tobacco products by bringing the products
directly to the checkout as needed. |