Tobacco Spent Less to Advertise but Sold More

For the first time in a decade, tobacco companies reported that they spent less money advertising and promoting their products in 1994 than they had a year earlier, even though they sold more cigarettes to domestic wholesalers and retail stores that year, according to a government report released Wednesday.

The Federal Trade Commission report does not necessarily mean that Americans are smoking more, analysts said. Rather, it reflects a 1994 trend that had wholesalers and retailers stocking up on their inventories of cigarettes. Cigarette promotions, however, have continued to decline because of cost and other pressures.

“The simple truth is that the margins on cigarette sales continue to shrink,” said John G. Nelson, a tobacco industry analyst for Brown Bros. Harriman & Co. in New York. “Add that to the anti-tobacco campaign and you’re looking at a situation where it’s harder for these companies to keep up their ad budgets.”

The FTC report, which contains the most recent industry data available, also indicates that while tobacco companies were spending more on billboard and magazine ads in 1994, they were slashing spending on ads in newspapers and on special promotions such as discount coupons, 2-for-1 offers and giveaways of items such as key chains and lighters.

The FTC’s annual report shows that cigarette companies sold 490.2 billion cigarettes in 1994, 6.2% more than in 1993. But the companies spent $4.83 billion on advertising and promotion in 1994, a 19.9% drop from the previous year.