FTC Orders 5 Cigar Makers to Report Advertising, Sales Statistics
Federal regulators took the first step Monday toward tightening regulations on the cigar industry, ordering the nation’s leading cigar makers to report sales and advertising figures.
The move could eventually lead to health warnings on all cigar advertisements.
Under the Federal Trade Commission order, manufacturers must report the total number of cigars sold and the amount spent on advertising, merchandising and promotion in 1996 and ’97. They also must submit a categorical breakdown of advertising and marketing expenses for each cigar brand marketed, including any money paid to motion pictures that featured the products.
The FTC already requires manufacturers of cigarettes and smokeless tobacco to submit similar financial information.
The orders will affect five companies: Swisher International Group Inc. of Darien, Conn.; Consolidated Cigar Holdings Co., Fort Lauderdale, Fla.; General Cigar Holdings Co., Bloomfield, Conn.; privately held Havatampa Inc., Tampa, Fla.; and privately held John Middleton Inc., King of Prussia, Pa.
The companies, which are responsible for more than three-quarters of all domestic cigar sales, have until April 9 to file the reports.
Cigars, once popular mostly with older men, became fashionable several years ago among younger men and women as celebrities such as Arnold Schwarzenegger, Demi Moore and Michael Jordan were seen smoking them.
The trend apparently has caught on among even younger people, alarming many FTC officials. A report released last summer by the Centers for Disease Control and Prevention found that more than a quarter of the nation’s teenagers had smoked a cigar in the previous year.
The government found that 26.7% of 16,417 youngsters ages 14 to 19 who were surveyed had puffed on a cigar within the previous year. Nationwide, that works out to an estimated 6 million teens.
Shares of cigar companies were mixed Monday. In New York Stock Exchange trading, Swisher lost 75 cents to close at $13.63; Consolidated Cigar rose 13 cents to $22.88; General Cigar lost 63 cents to $17.25.
Lee Peeler, associate director of the FTC’s consumer protection bureau, said the National Cancer Institute will release a report next month on the health effects of cigar smoking.
“That’s really the report that could influence decisions on [future] regulations,” he said.
Tobacco analyst Emanuel Goldman of PaineWebber Inc. said the FTC order--and any subsequent regulation--would have little impact on cigar advertising. Cigar manufacturers spend $6 million a year on cigar ads, whereas cigarette companies spend $500 million.
Goldman also cast doubt on the motivation behind the FTC order, saying that cigar ads rarely appeal to teens. He said cigarettes, not pricey cigars, are the more likely tobacco of choice for teens under age 18, the legal age to smoke.
