What's the Big Deal About Retail Advertising for Tobacco Products?

Teens & Tobacco Ads
• Kids recall retail tobacco ads at almost twice the rate of adults (2)
• Tobacco ads have more influence than peer pressure on a teen's decision to start smoking (3)
• Tobacco ads and promotions are implicated in one third of youth experimental smoking (3)
• A May 2007 study confirms that retail advertising encourages teens to initiate smoking, and that price and merchandise promotions are instrumental in moving teens who are experimental smokers to become regular smokers (4)

In-store cigarette advertising (5)
• Increases smokers’ daily consumption by cueing smokers to light up
• Reduces current smokers resolve to quit or consider quitting
• Encourages former smokers to resume smoking by reminding them of their favorite brand
• Prompts impulse buying
• Entices children and young people to begin smoking
• Conveys the impression that smoking is normative, even desirable
 

75% of teenagers shop at convenient stores at least once a week and are routinely exposed to retail tobacco advertising.

The most popular brands among teens are those most heavily advertised by the cigarette companies.

Youth are more likely to attempt to purchase cigarettes from stores that display tobacco advertising.

$13.1 billion: Amount spent by tobacco companies in 2005 on US marketing.

Over 80% of US tobacco marketing was spent at the retail level in 2005.

Studies show that tobacco advertisements and displays in stores boost average tobacco sales by 12 percent to 28 percent.

Tobacco sales make up 20–60 percent of total sales for independently owned and franchise stores.

Two-thirds of all tobacco retail outlets participate in some type of incentive program with tobacco companies.

“Ever notice how you never notice some everyday things that are always out there? Take tobacco ads for example...”

Tobacco ads next to the air machine, Exit 8 off I-88, Mar 2008

Though they might not catch your eye, retail stores play host to a wide variety of tobacco advertisements and promotional messages. Point-of-purchase (POP) — also referred to as “point-of-sale” (POS) — advertising is the tobacco industry's most dominant force in marketing.
See Spring 2008 Media: Click Here 

City of Ithaca resolution urges retailers to minimize tobacco advertising.
Click Here to read the text.

Cheyenne brand 'little cigars' are priced insanely low at a local FasTrac, Feb 2009

Gas & cigarettes: Many gas stations post cigarette prices at the pump along with their fuel prices. It's easy viewing for anyone who's killing time while filling their tank, and for kids sitting in the vehicle. Pictured here is a promo for "little cigars" which are not in the same tax bracket as cigarettes, hence the insanely low price.
  • Click for more about "little cigars".
  • Letter to the editor (3/13/09)

Almost every (97%) CNY retail outlet licensed to sell tobacco has interior cigarette ads, with an average of 17 cigarette ads posted in each store... 56% displayed cigarette ads outside the store, including window signs, freestanding signs, and signs displayed on gas pumps. Those stores had an average of 4 outdoor ads each. Click here for additional details »

Local deli takes out a piece of big tobacco; effort to reduce cigarette advertising at stores gains momentum.

Retailer Pledge to reduce, rearrange or remove POP tobacco advertising.

“Tobacco companies are concentrating their marketing dollars at the point-of-sale to the extent that the store is their primary communication channel with customers. As a result, all shoppers regardless of age or smoking status are exposed to pro-smoking messages. Given the financial resources spent by tobacco companies in stores, this venue warrants closer scrutiny by researchers and tobacco control advocates.” (1)

Retail discounts for cigarettes are one of the tobacco industry's biggest draws

Tobacco company incentive programs are exchanges that occur between the companies and the retailers.

Incentive programs involve an array of advertising and promotion strategies such as volume discounts or buy downs. In exchange... retailers are expected to follow tobacco company requirements to place products and advertising in specific locations and to advertise special prices prominently.

In many cases the exchange occurs between the tobacco company and the corporate headquarters of the outlet so that the specific retailer in your community has no input into the level of promotional activity, or placement of advertisements.
 

LAWS to limit or prohibit point of sale advertising have been repeatedly overturned by high courts. Click here to learn more » 

Federal Trade Commission (FTC) Cigarette Report for 2004 and 2005 

Spending by U.S. cigarette manufacturers for marketing and promotion in the United States totaled $14.15 billion in 2004, and $13.1 billion in 2005. Spending in 2003 was $15.15 billion.

[Click here for much more from the FTC report.]

Promotional Allowances includes 4 categories:

  1. Price discounts (paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers such as off-invoice discounts, buy downs, and voluntary price reductions).
  2. Promotional allowances paid to retailers (payments to cigarette retailers in order to facilitate the sale or placement of cigarettes such as payments for stocking, shelving, displaying and merchandising brands, volume rebates, and incentive payments).
  3. Promotional allowances paid to wholesalers (payments for volume rebates, incentive payments, value added service and promotional execution).
  4. Other promotional allowances paid to anyone else (other than retailers and wholesalers and full-time company employees involved in the cigarette distribution and sales process, in order to facilitate the sale or placement of cigarettes).

Neon for Marlboro lights up a retail windowThe four promotional allowance categories totaled $11.86 billion for 2004 (83.8 percent of total spending that year), and $10.62 billion in 2005 (81 percent of total spending).

Spending on point-of-sale materials (ads posted at the retail location, but excluding outdoor ads on retail property) was $182.2 million in 2005.

The cigarette manufacturers spends the vast majority of their marketing dollars in stores, where the industry is relatively free from regulation.

Click here for much more from the 2007 FTC report.

"Little Cigars": Taxing & other info

  • The federal tax on little cigars will increase to $1.01 per pack, effective April 1, 2009, as part of the CHIP funding package signed by President Obama, feb 4, 2009.
  • NYS: Changes in Definitions of Cigarette, Cigar, and Tobacco Products. Download PDF (30K)
  • Comments provided by little cigar manufacturer, Cheyenne International, LLC regarding the proposed regulations that govern the classification and labeling of cigars and cigarettes for U.S. federal excise tax purposes, as proposed by the U.S. Department of Treasury and the Alcohol and Tobacco Tax and Trade Bureau (“TTB”). Download PDF (271K)
  • Text of NYS Tax Code, Article 20, Sect. 470 (Definitions.) Includes links to IRS Code for taxing tobacco.

Photo source: http://prevention.stanford.edu/_studysites/store/index.htm

(1) E C Feighery, K M Ribisl, P I Clark and H H Haladjian. How tobacco companies ensure prime placement of their advertising and products in stores: interviews with retailers about tobacco company incentive programmes. Tobacco Control 2003;12:184-188 © 2003 BMJ Publishing Group

(2) Campaign for Tobacco Free Kids. Fact Sheet: Smoking and Kids (Sept 2006) citing, National telephone survey of 509 teens aged 12 to 17 and 1,011 adults conducted by International Communications Research (ICR), March 8-13, 2006.

(3) Campaign for Tobacco Free Kids. Fact Sheet: How parents can protect their kids from becoming addicted smokers (Jan 2007) citing, Pollay R et al., “The Last Straw? Cigarette advertising and realized market shares among youths and adults,” Journal of Marketing, 1996 Apr, 60(2): 1-16. See, also, Pierce J et al., “Tobacco industry promotion of cigarettes and adolescent smoking,” Journal of the American Medical Association, 1998 Feb, 279(7): 511-515.

(4) Slater et al. The Impact of Retail Cigarette Marketing Practices on Youth Smoking Uptake. Arch Pediatr Adolesc Med. 2007 161 (5):440-445

(5) List of sources (pdf 20K)