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

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

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Fact Sheets
Adult Data
Cessation and Interventions
Economics
Fast Facts
Health Effects
Secondhand Smoke
Smokeless Tobacco
Specific Populations
Tobacco Industry and Products
Youth and Young Adult Data
An estimated 371 billion cigarettes were consumed in the United States in 2006,1 and cigarettes account for approximately 91% of expenditures on all tobacco products in this country.2 Total United States expenditures on tobacco were estimated to be $88.7 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 2006.3 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
In 2005, consumers in the United States spent $2.61 billion on smokeless tobacco products,12 and more than $1 billion on cigars each year.11
Economic Costs and Years of Potential Life Lost Associated with Cigarette Smoking
During 2000–2004, cigarette smoking was estimated to be responsible for $193 billion in annual health-related economic losses in the United States ($96 billion in direct medical costs and approximately $97 billion in lost productivity).13
The total economic costs (direct medical costs and lost productivity) associated with cigarette smoking are estimated at $10.47 per pack of cigarettes sold in the United States.14
Cigarette smoking results in 5.1 million years of potential life lost in the United States annually.13
Cigarette Pricing, Excise Taxes, and the Effect of Increased Cigarette Prices
In 2008, the average retail price of a pack of cigarettes in the United States was $4.35 (including federal, state, and municipal excise taxes), but prices vary widely across states.15
On April 1, 2009, the federal cigarette tax increased by 62 cents to $1.01 per pack.16
The median state cigarette excise tax rate, as of January 1, 2008, was $1, but varied from 7 cents in South Carolina to $2.58 in New Jersey.17
Increases in cigarette prices lead to significant reductions in cigarette smoking.18,19 A 10-percent increase in price has been estimated to reduce overall cigarette consumption among adolescents and young adults by about 4%.18 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.18
References
Capehart T. Tobacco Outlook. Harvest Intentions for 2007-Crop Tobacco Advance 2 Percent. (PDF–278 KB). Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, April 2007, TBS—262 [accessed 2008 Nov 24].
U.S. Department of Agriculture. Table 21: Expenditures for Tobacco Products and Disposable Personal Income, 1989–2006 [accessed 2009 Mar 17]. Compiled from reports of the Department of Commerce, Bureau of Economic Analysis.
Maxwell JC. The Maxwell Report. Year End & Fourth Quarter 2006 Sales Estimates for the Cigarette Industry. Richmond, VA: John C. Maxwell, Jr., 2007.
Hoover's Online. Cigarettes, Cigars, and Smokeless Tobacco Products [accessed 2008 Nov 24].
Federal Trade Commission. Cigarette Report for 2004 and 2005 (PDF–882 KB). Washington, DC: Federal Trade Commission; 2007 [accessed 2008 Nov 24].
U.S. Census Bureau. 2005 American Community Survey [accessed 2008 Nov 24].
Centers for Disease Control and Prevention. Tobacco Use Among Adults—United States, 2005. Morbidity and Mortality Weekly Report 2006;55(42):1145–1148 [accessed 2008 Dec 04].
U.S. Department of Agriculture. Briefing Room: Tobacco—Background . Washington, DC: U.S. Department of Agriculture, Economic Research Service; 2005 [accessed 2008 Nov 24].
Capehart T. Trends in U.S. Tobacco Farming. (PDF–824 KB) (Outlook Report No. TBS-257-02). Washington, DC: United States Department of Agriculture, Economic Research Service; 2004 [accessed 2008 Nov 24].
Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006.
Maxwell JC. The Maxwell Report: Cigar Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006.
Federal Trade Commission. Smokeless Tobacco Report for the Years 2002–2005. (PDF–619 KB) Washington, DC: Federal Trade Commission; 2007[accessed 2008 Nov 24].
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):1226–1228 [accessed 2008 Nov 24].
Centers for Disease Control and Prevention. Sustaining State Programs for Tobacco Control: Data Highlights 2006 (PDF–1363 KB). 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; 2006 [accessed 2008 Nov 24].
The Tax Burden on Tobacco. Historical Compilation, Volume 43, 2008. Arlington, VA: Orzechowski and Walker; 2008.
Alcohol and Tobacco Tax and Trade Bureau. Tobacco: Federal Excise Tax Increase and Related Provisions U.S. Department of the Treasury [accessed 2009 May 12].
Federation of Tax Administrators. State Excise Tax Rates on Cigarettes, January 1, 2008 (PDF–51 KB). Washington, DC: Federation of Tax Administrators; 2008 [accessed 2009 May 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; 2000 [accessed 2008 Nov 24].
Task Force on Community Preventive Services. Tobacco (PDF–363 KB) (Chapter 1). 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 2008 Dec 30].