Economic Facts About U.S. Tobacco Production and Use

Overview

Every year, tobacco companies spend billions of dollars on advertising and promotion, and tobacco use costs the United States billions of dollars in medical expenses and lost productivity.^1,2,3,4

Tobacco-Related Spending

Tobacco companies spend billions of dollars each year to market their products.

• In 2008, the tobacco industry spent $9.94 billion on cigarette advertising and promotional expenses in the United States alone, and 72.1% ($7.17 billion) of this expenditure was spent on price discounts.¹
• Smokeless tobacco advertising and promotion increased from $354 million in 2006 to $547.9 million in 2008.²
• Including both cigarette and smokeless tobacco marketing, the tobacco companies spent $10.5 billion on marketing in 2008, or nearly $29 million each day.^1,2

NOTE: Advertising and promotional expenses include items such as magazine ads, distribution of cigarette samples or coupons for free samples, ads posted in retail stores, price discounts, payments to retailers for displaying brands, volume rebates for wholesalers, and direct-mail advertising.

Tobacco-Producing States

Although U.S. tobacco production has decreased significantly since the 1950s, the United States continues to be a leading producer of tobacco leaves. In 2009, four countries (China, Brazil, India, and the United States) produced more than two-thirds of the world's tobacco.⁵

• In the United States, tobacco is currently grown in 16 states.⁶
• The largest tobacco-producing states are Kentucky and North Carolina, accounting for 71% of tobacco grown in the United States.⁶
• The number of tobacco-growing farms declined from more than 500,000 in the 1950s to about 10,000 in 2007.⁶

Tobacco Sales

Cigarette Companies

More than 303 billion cigarettes were purchased in the United States in 2010, with three companies selling nearly 85% of them.⁷

Company Name	Brand Examples	Market %	Cigarettes Sold
Philip Morris USA	Marlboro, Basic, Virginia Slims	46.4%	140.8 billion
Reynolds American Inc.	Camel, Doral, Winston, Kool	25.5%	77.5 billion
Lorillard	Newport, Maverick, Kent	12.3%	37.4 billion
All other companies	USA Gold, Sonoma, Montclair	15.8%	47.9 billion

Smokeless Tobacco Companies

Approximately 122.6 million pounds of smokeless tobacco were purchased in the United States in 2010 (up from 121.4 million pounds in 2009), with three companies selling nearly 90% of this form of tobacco.⁸

Since 2006, two of the top three smokeless tobacco companies have been purchased by major cigarette manufacturers. In 2006, Conwood Holdings (renamed American Snuff in 2011) became a subsidiary of Reynolds American, the parent company of R.J. Reynolds Tobacco Company⁹; in 2009, United States Tobacco became a wholly owned subsidiary of Altria Group, the parent company of Philip Morris.¹⁰

Company Name	Brand Examples	Market %	Pounds Sold
United States Tobacco	Copenhagen, Skoal	44.3%	54.3 million
American Snuff	Grizzly, Kodiak	27.9%	34.2 million
Swedish Match	Timber Wolf, Red Man	17.7%	21.7 million
All other companies	Redwood, Kayak, Beech-Nut	10.5%	12.4 million

Cigar Companies

In 2010, about 13.3 billion cigars (i.e., 12.3 billion large cigars and cigarillos; 1 billion little cigars) were purchased in the United States, with three companies selling nearly 54% of them.¹¹

Company Name	Brand Examples	Market %	Cigars Sold
Swisher International	Swisher Sweets, Universal	21.0% (large cigars and cigarillos) 57.8% (little cigars)	2.6 billion 575 million
Cheyenne International, LLC	Cheyenne, Derringer, Bodyshot	14.7%* (large cigars and cigarillos) 3.0%* (little cigars)	1.8 billion 30 million
Altadis USA	Dutch Masters, Phillies	12.4% (large cigars and cigarillos) 11.1% (little cigars)	1.5 billion 110 million
All other companies		51.9%* (large cigars and cigarillos) 28.1%* (little cigars)	6.4 billion 280 million

*Cheyenne (listed above) and Prime Time (included in "All other companies") converted a large portion of their portfolios to large cigars as of April 1, 2009. Therefore, values available for these companies for 2010 are estimated values.¹¹

Economic Costs Associated with Smoking

• During 2000–2004, cigarette smoking was estimated to be responsible for $193 billion in annual health-related economic losses in the United States (nearly $96 billion in direct medical costs and an additional $97 billion in lost productivity).⁴
• Cigarette smoking results in 5.1 million years of potential life lost in the United States annually.⁴

Effects of Increased Prices

Increases in cigarette prices lead to significant reductions in cigarette smoking.^12,13

• A 10% increase in price has been estimated to reduce overall cigarette consumption among adolescents and young adults by about 4%.
• 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.



References

1. Federal Trade Commission. Cigarette Report for 2007 and 2008 . (PDF–130.44 KB) Washington: Federal Trade Commission, 2011 [accessed 2012 Apr 24].
2. Federal Trade Commission. Smokeless Tobacco Report for 2007 and 2008 .
   (PDF–137.24 KB) Washington: Federal Trade Commission, 2011 [accessed 2012 Apr 24].
3. U.S. Department of Agriculture. Table 21: Expenditures for Tobacco Products and Disposable Personal Income, 1989–2006. Washington: U.S. Department of Agriculture, Economic Research Service, 2007 [accessed 2012 Apr 24].
4. Centers for Disease Control and Prevention. Smoking-Attributable Mortality, Years of Potential Life Lost, and Productivity Losses—United States, 2000–2004. Morbidity and Mortality Weekly Report 2008;57(45):1226–8 [accessed 2012 Apr 24].
5. Eriksen M, Mackay J, Ross H. The Tobacco Atlas, Fourth Ed. . Atlanta, GA: American Cancer Society; New York, NY: World Lung Foundation; 2012. [accessed 2012 July 31].
6. U.S. Department of Agriculture. Census of Agriculture—State Data: Table 45: Farms by North American Industry Classification System: 2007. (PDF–98.76 KB) Washington:
   U. S. Department of Agriculture, National Agricultural Statistics Service, 2007 [accessed 2012 Apr 24].
7. Maxwell JC. The Maxwell Report: Year End & Fourth Quarter 2010 Sales Estimates for the Cigarette Industry. Richmond (VA): John C. Maxwell, Jr., 2011 [accessed 2012 Apr 24].
8. Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2010. Richmond (VA): John C. Maxwell, Jr., 2011 [accessed 2012 Apr 24].
9. American Snuff Company. History of the American Snuff Company .[accessed 2012 Apr 24].
10. U.S. Smokeless Tobacco Company. Our History: 2000—Present. [accessed 2012 Apr 24].
11. Maxwell JC. The Maxwell Report: Cigar Industry in 2010. Richmond (VA): John C. Maxwell, Jr., 2011 [cited 2012 Apr 24].
12. U.S. Department of Health and Human Services. Reducing Tobacco Use: A Report of the Surgeon General. Atlanta: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2000 [accessed 2012 Apr 24].
13. Task Force on Community Preventive Services. Tobacco . (PDF–363.20 KB) In: Zaza S, Briss PA, Harris KW, editors. The Guide to Community Preventive Services: What Works to Promote Health? New York: Oxford University Press, 2005:3–79 [accessed 2012 Apr 24].

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.