Cigarette sales, smokers decline


Taking a puff in California is getting to be a drag, with health concerns and high prices pushing cigarette sales in the most recent fiscal year to their steepest plunge in a decade.

Californians bought 8.1% fewer cigarettes in fiscal 2009 — which ended June 30 — than a year earlier, according to a report Tuesday from the California State Board of Equalization. The steepest previous sales drop was the 11.2% dive in fiscal 1999 from a year earlier.

Since peaking in fiscal 1980 with 2.8 billion packs, cigarette sales has tumbled 65.6% to 972 million packs, the state tax board said. That’s a drop of about 3.5% — or 59 million packs — each year.

And it’s not just that people are making do with fewer cigarettes — the percentage of smokers has been cut in half since 1985, according the California Department of Public Health.

Clay Van Nortwick, 27, of North Hollywood, said quitting smoking nine months ago was his way of moving past his younger, carefree partying days.

After 10 years of cigarettes, the reality television production manager said he started thinking about the health consequences. Although the cost wasn’t so much an issue, the pressure to quit from his girlfriend was.

“It’s one of those things that becomes so embedded in your life that if you don’t do it now, it’ll just be another year, and another year,” he said. “There are a lot of days I’d love a cigarette, but I was really just over it.”

Health consciousness and stringent restrictions on where people can smoke played a part in the overall decline in smoking. But the habit has also gotten much more expensive, with an 18.6% leap in price in November 2009 compared with a year earlier.

A federal tax rate increase went into effect in February 2009, boosting taxes on each pack 62 cents to $1.01. The California tax rate has jumped to 87 cents from just three cents in the early 1960s. So customers now pay nearly $2 in taxes for each pack of cigarettes, about 37% of the average retail price, the report said.

Manufacturers also raised prices 4.2% on average in fiscal 2009 from the previous year to deal with slipping demand. The three major cigarette manufacturers in the U.S. — Lorillard Inc., Altria Group Inc. and Reynolds American Inc. — also said they produced lower volumes in the most recent quarter.

Lorillard’s net income dropped 8% in the quarter, in part because of the higher cost of promoting brands such as Newport and Maverick; Camel-maker Reynolds’ net income fell 9.5% as it closed cigarette factories. Several companies said they were starting to focus on alternatives to smoking, such as snuff and chewing tobacco.

Buying a pack now costs an average of $5.09 in California, the highest amount since the board started keeping track in 1959, when the price per pack was 25 cents.

The board, which is responsible for collecting cigarette excise taxes in the state, brought in $839 million in cigarette taxes in fiscal 2009, compared with $913 million the year before. The funds go toward health education programs, breast cancer research, childhood development efforts and more.

The tax board said tax evasion could also be a factor in the sales decline, estimating that more than 200 million packs a year are sold as contraband.