Still Smoking : Tobacco Industry Has Quietly Stabilized Sales in U.S. Market

By MYRON LEVIN

April 12, 1996 12 AM PT

TIMES STAFF WRITER

While critics rejoice at its mounting legal and political problems, the U.S. tobacco industry may have quietly turned a corner in its struggle to stabilize its domestic market.

Domestic cigarette consumption actually rose in 1995, something that has not happened in more than a decade, according to the U.S. Department of Agriculture. It was a small increase--from about 485 billion to 487 billion cigarettes--but it arrested a long retreat in smoking by Americans.

Coupled with a recent rise in the rate of smoking by high school seniors, the figures suggest that tobacco sales have bottomed out, despite the strength of the antismoking message.

The fact that cigarette consumption has stabilized has been all but lost in the current furor surrounding the industry, which is under siege as never before.

For the antismoking forces--who have been on a roll against tobacco and have trumpeted the goal of a smoke-free society--and for ordinary citizens--who have seen the industry pummeled in the news media--the numbers are a reality check.

“Here we are, 30 years after the release of the first surgeon general’s report, and we still have 42 million smokers in this country,” said Scott Ballin, vice president of the American Heart Assn. The numbers raise “a lot of concerns about where we’re headed in the future.”

Consumption data show that the smoking opponents “are not going to get to their goal,” said Brennan Dawson, spokeswoman for the Tobacco Institute. “There will always be customers there, because there will always be people who choose to smoke.”

In 1981, Americans puffed their way through a record 640 billion cigarettes. Thereafter, consumption fell virtually every year, dropping to 485 billion cigarettes in 1993. It remained at that level in 1994 before last year’s small increase, according to the current issue of Tobacco Situation & Outlook, a quarterly report published by the Department of Agriculture’s economic research service.

In a research report that asked, “Is smoking cool again?,” the brokerage firm of Sanford C. Bernstein & Co. predicted a small rise in the percentage of smokers in what it termed the “core” age group of 18 to 24.

“Ironically, recent antismoking publicity reinforces images of smoking as glamorous, as flirting with danger, as doing something one isn’t supposed to do,” the report said.

Per capita consumption dipped slightly in 1995, but by the smallest amount in years--from 2,522 cigarettes to 2,515 cigarettes per American 18 years or older, according to USDA figures.

Martin Feldman, a senior analyst with Smith Barney, expressed doubt that smoking rates will rise, but said domestic sales will probably remain steady or will decrease at a slower rate than in the past.

“You’ve seen [tobacco] taxes go up, you’ve seen imposition of new laws . . . that have made it more and more difficult to smoke,” Feldman said. Despite these disincentives, “I think what you’ve reached is a bedrock of smokers” who are less likely to quit.

Because few people take up the habit as adults, health authorities are particularly concerned about the rise in youth smoking.

The percentage of high school seniors who smoke fell from nearly 29% in the mid-1970s to 17.2% in 1992, according to the University of Michigan’s Institute for Social Research. But the percentage has climbed each year since, reaching 21.6% in 1995--the highest rate since 1979.

“I’m extremely concerned about the increase in [smoking] prevalence among kids,” said Gary Giovino, chief of the epidemiology branch at the U.S. Office on Smoking and Health. “I’m not trying to say the sky is falling by any means, but it’s something that bears watching.”

Tobacco firms spend more than $6 billion a year to advertise and promote their brands. Although the companies deny it, health officials and antismoking groups accuse them of targeting their marketing efforts at teens, about 3,000 of whom start smoking each day.

Proposed tobacco regulations by the Food and Drug Administration are aimed at reducing youth-oriented marketing and teen access to cigarettes and smokeless tobacco. The industry has sued to block the regulations, saying they are unnecessary and that the FDA lacks authority to impose them.

Domestic sales provide its highest profit margins, but the tobacco industry long ago reduced its dependence on the U.S. market. By boosting exports to foreign smokers and production by overseas factories, the cigarette makers more than offset declines in U.S. sales.

Both industry leader Philip Morris and No. 2 R.J. Reynolds sell more cigarettes abroad than in the United States. In fact, Philip Morris sells more cigarettes abroad than the company and its rivals together sell to Americans.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

On the Rebound?

U.S. cigarette consumption rose last year for the first time in more than a decade, although the increase was less than 1%. Americans smoked 487 billion cigarettes last year compared with 485 billion in 1994 and there are strong signs teenagers are smoking more.

Cigarette Sales

In billions of cigarettes:

U.S. consumption

1995: 487.0

Exports

1995: 231.1

Total output*

1995: 760.0

Teenage Smokers

Percentage of high school seniors who smoke:**

1995: 21.6%

* U.S. and export sales may not equal total output because of adjustment for shipments to U.S. possessions and other factors.