Cigarette manufacturers are spending more to advertise and promote their products, but selling fewer cigarettes.
The largest companies spent a record $11.2 billion on advertising and promotions nationwide in 2001, the last year for which such figures were available, according to a study released Thursday by the Federal Trade Commission. That was a 17 percent increase from 2000, when the industry spent $9.6 billion.
But cigarette sales to retailers and wholesalers dropped 3.8 percent from 2000, according to the commission. The manufacturers spent most of their money–$4.8 billion–on free cigarettes or merchandise given out with purchases.
The companies are trying to fend off competition from small, deep-discount brands, Morgan Stanley analyst David Adelman said.
Manufacturers also spent more than $4 billion for promotional allowances, such as paying retailers for prime shelf space.
Tina Walls, vice president for tobacco giant Philip Morris USA, defended such practices. “Merchandising programs are one important way in which our company competes and markets our products responsibly,” she said.
Anti-smoking advocates say the companies are trying to lure new smokers.
“They are advertising and promoting their products in retail stores because that’s where the kids are,” said Bill Corr, executive director of the Campaign for Tobacco-free Kids.