2021 FTC Reports Show Declining Cigarette Sales but Continued Focus on the Retail Environment

A report released earlier this week from the Federal Trade Commission (FTC) on cigarette and smokeless tobacco sales and marketing expenditures show that in 2021, cigarettes sales decreased to 190.2 billion – a 6.7% drop from 2020. Although this follows the first increase in 20 years between 2019-2020, as reported by the Campaign for Tobacco Free Kids, 2021 marks the first time cigarettes sales fell under 200 billion, and the overall trend is one of decline, with sales dropping 70% from a high of 636.5 billion cigarettes in 1981. This decline represents enormous public health progress over the course of decades, but so much work still remains, particularly at the point of sale. The FTC data also shows the consequences of the fact that while public health policies have set limits on avenues for tobacco marketing, the retail environment remains relatively free of restrictions. The tobacco industry continues to take full advantage of that gap, spending the large majority of all of their marketing dollars there – at the point of sale.

In 2021, the tobacco industry spent over $6.8 billion marketing and promoting cigarettes and smokeless tobacco directly in retail stores. These point-of-sale expenditures account for nearly 80% of the tobacco companies’ total marketing dollars spent on cigarettes and smokeless tobacco combined. These figures from the Federal Trade Commission Reports on Cigarettes and Smokeless Tobacco Sales and Marketing Expenditures for 2021 document a continued concentration of tobacco industry expenditures in the retail environment. The FTC has been preparing reports on sales, advertising, and promotions of cigarettes since 1967 and smokeless tobacco since 1987. Reports are issued periodically and give tobacco control advocates detailed advertising and promotion spending reports in more than two dozen categories. The spending reports show that tobacco companies spend the majority of their marketing dollars on two categories: price discounts and promotional allowances to keep products cheap and visible at the point of sale. See more details on their expenditures at the point of sale here.

When factoring in price discounts and promotional allowances paid to wholesalers, which also ultimately reduce the price of products to consumers, the amount spent rises to nearly $8.4 billion, nearly 97% of the tobacco industry’s total marketing budget for these products. These price discounts counteract the impact of tobacco control policies like excise taxes and target price sensitive smokers.

What are Price Discounts? Price discounts are what tobacco companies pay to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers, including off-invoice discounts, buy-downs, voluntary price reductions, and trade programs.
What are Promotional Allowances? Promotional allowances are what tobacco companies pay to either cigarettes retailers or wholesalers in order to facilitate the sale or placement of tobacco products. For retailers, this can include payments for stocking, shelving, displaying and merchandising brands, volume rebates, incentive payments, and the cost of tobacco products given to retailers for free for subsequent sale to consumers. For wholesalers, this can include payments for volume rebates, incentive payments, value added services, promotional execution and satisfaction of reporting requirements.

Price discounts remain the largest categories for both cigarettes and smokeless tobacco, totaling nearly 85% of total industry spending on these products. Specifically, price discounts paid to cigarette retailers in order to reduce the price of cigarettes to consumers are the single largest expenditure, totaling over $6 billion – 74.6% of total advertising and promotional expenditures for cigarettes. Combined with price discounts paid to wholesalers ($917 million), this category represents 86% of tobacco companies’ total cigarette marketing expenditures. Price discounts are the largest expenditure for smokeless tobacco as well, with tobacco companies spending $308.2 million on price discounts paid to retailers and $81.3 million on price discounts paid to wholesalers, representing a combined 67.7% of all marketing expenditures for smokeless tobacco. Learn more about strategies to prohibit discounting on our page on increasing tobacco prices through non-tax approaches.

Other key notes in the reports for this year:

The was the second year that the smokeless tobacco report has included sales of nicotine pouches and lozenges that do not contain tobacco, and sales of those products totaled $804.8 million in 2021, nearly double their sales in 2020 ($422.7 million).
Menthol cigarettes comprised an all-time high of 37% of the market in 2021 (among the major manufacturers required to report data to the FTC). The market share of menthol cigarettes has more than doubled since 1963 when it comprised 16%. This is due to the tobacco industry’s relentless and targeted marketing of these deadly products, particularly to African Americans and other marginalized communities. Learn more about menthol.
In 2021, menthol smokeless tobacco comprised 50.7% of sales by pound sold and 54.1% of dollar sales; fruit-flavored smokeless tobacco products comprised 2.7% of sales by pounds sold and dollar sales; and alcohol and other flavors of smokeless tobacco comprised 0.06% of sales by pounds sold and 0.02% in dollar sales.

Remember that these numbers are for cigarettes and smokeless tobacco alone – they do not include any marketing expenditures for cigarillos, little cigars, e-cigarettes, or any other tobacco products. The FTC has started issuing reports on e-cigarette marketing expenditures, and it has released data from through 2020 (see our summary of that data here: FTC E-Cigarette Report Shows Importance of Flavors, Price Discounts). We will report on the 2021 e-cigarette data from the FTC separately when they are released, as well as report on the combined sales and marketing expenditures across products, which you can see for 2020 on our page on the War in the Store.

Tobacco marketing at the point of sale matters. Research shows that tobacco marketing can cause youth to start smoking, keep current smokers hooked, and make it harder for current and former users to quit and stay quit. These FTC reports emphasize the critical need to monitor and address tobacco industry activity in the retail environment. Learn more about the FTC reports, The War in the Store, and strategies to limit price discounts, promotions, and point-of-sale advertising in your community.

Read the reports:

Note: In 2016, the FTC Cigarette and Smokeless Tobacco Reports began separating price discounts into amounts paid to retailers and amounts paid to wholesalers. In previous calculations, we had included this category as a whole. In an effort to keep track of what is directly spent at tobacco retail locations like convenience stores that any person can access, we calculate the amount spent at the POS uses the following categories: (a) point-of-sale advertisements, (b) price discounts to retailers, (c) promotional allowances to retailers, (d) retail-value added bonus tobacco products and bonus non-tobacco products, (e) coupons, (f) consumer engagement, and (g) sampling. Other marketing dollars not considered to be aimed at POS include, for example, dollars spent on direct mail, magazines, internet, or sponsorships. However, we also are reporting totals including price discounts and promotional allowances paid to wholesalers for their role in reducing the price of tobacco products for consumers.