Economic Facts about U.S. Tobacco

Economic Facts about U.S. Tobacco Use and Tobacco Production
(updated July 2007)
http://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/economic_facts.htm

• An estimated 371 billion cigarettes were consumed in the United States in 2006,¹ and cigarettes account for more than 90 percent of expenditures on all tobacco products in this country.² Total United States expenditures on tobacco were estimated to be $88.8 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 2005.³ 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
• Consumers in the United States spend about $2.61billion on smokeless tobacco products¹² and more than $1 billion on cigars each year.¹¹

Economic Costs and Years of Potential Life Lost Associated with Cigarette Smoking

• For 1997–2001, cigarette smoking was estimated to be responsible for $167 billion in annual health-related economic losses in the United States ($75 billion in direct medical costs, and $92 billion in lost productivity),¹³ or about $3,561 per adult smoker.^14,15,16
• The total economic costs associated with cigarette smoking are estimated at $7.18 per pack of cigarettes sold in the United States.¹⁷
• Cigarette smoking results in 5.5 million years of potential life lost in the United States annually.¹³

References

1. Tobacco Outlook. Harvest Intentions for 2007-Crop Tobacco Advance 2 Percent..(PDF–278KB) Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, April 2007, TBS—262 [cited 2007 Apr 26]. Available from: http://usda.mannlib.cornell.edu/usda/ers/TBS//2000s/2007/TBS-04-24-2007.pdf.
2. Capehart, Tom. Expenditures for Tobacco Products and Disposable Personal Income, 1989–2005. Compiled from reports of the Department of Commerce, Bureau of Economic Analysis. [cited 2007 Mar 13]. Available from: http://www.ers.usda.gov/Briefing/Archive/Tobacco/.
3. Maxwell JC. The Maxwell Report. Year End & Fourth Quarter 2006 Sales Estimates for the Cigarette Industry. Richmond, VA: John C. Maxwell, Jr., 2007 [cited 2007 Mar 13].
4. Hoover's Online. Cigarettes, Cigars, and Smokeless Tobacco Products. [cited 2007 Mar 13]. Available from: http://www.hoovers.com/cigarettes,-cigars,-&-smokeless-tobacco-products/--HICID__1204--/free-ind-factsheet.xhtml.
5. Federal Trade Commission. Cigarette Report for 2004 and 2005.(PDF–880KB) Washington, DC: Federal Trade Commission; 2005 [cited 2007 Apr 26]. Available from: http://www.ftc.gov/reports/tobacco/2007cigarette2004-2005.pdf.
6. U.S. Census Bureau. 2005 American Community Survey. [cited 2007 Mar 13]. Available from: http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=01000US&-ds_name=ACS_2005_EST_G00_&-_lang=en&-_caller=geoselect&-format=.
7. Centers for Disease Control and Prevention. Tobacco Use Among Adults—United States, 2005. Morbidity and Mortality Weekly Report [serial online]. 2006;55(42):1145–1148 [cited 2007 Mar 13]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5542a1.htm.
8. United States Department of Agriculture. Briefing Room: Tobacco—Background. Washington, DC: United States Department of Agriculture, Economic Research Service; 2005 [cited 2007 Mar 13]. Available from: http://www.ers.usda.gov/Briefing/Archive/Tobacco/.
9. Capehart T. Trends in U.S. Tobacco Farming. (PDF–825KB)(Outlook Report No. TBS25702). Washington, DC: United States Department of Agriculture, Economic Research Service; 2004 [cited 2007 Mar 13]. Available from: http://www.ers.usda.gov/publications/tbs/nov04/tbs25702/tbs25702.pdf.
10. Maxwell JC. The Maxwell Report: The Smokeless Tobacco Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006 [cited 2007 Mar 13].
11. Maxwell JC. The Maxwell Report: Cigar Industry in 2005. Richmond, VA: John C. Maxwell, Jr.; 2006 [cited 2007 Mar 13].
12. Federal Trade Commission. Smokeless Tobacco Report for the Years 2002 and 2005.(PDF–619KB) Washington, DC: Federal Trade Commission; 2007 [cited 2007 Apr 26]. Available from: http://www.ftc.gov/reports/tobacco/02-05smokeless0623105.pdf.
13. Centers for Disease Control and Prevention. Annual Smoking-Attributable Mortality, Years of Potential Life Lost, and Productivity Losses—United States, 1997–2001. Morbidity and Mortality Weekly Report [serial online]. 2005;54:625-628 [cited 2007 Mar 13]. Available from: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5425a1.htm.