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Friday, May 24, 2013

Cigarette companies boost giveaways as smoking declines

Responding to a dramatic decline in smoking rates over the past three decades, cigarette makers including Winston-Salem-based Reynolds American Inc. and Greensboro-based Lorillard Inc. are boosting spending on a host of discounts, giveaways and other promotions to attract an ever-declining pool of customers.
Reuters reports that the latest data from the Federal Trade Commission showed advertising spending on cigarettes rose in 2011 to $8.4 billion, up from $8 billion in 2010. It was the first time that advertising spending rose since 2003, with the majority of that money going to promotions such as coupons, samplings and buy-two, get-one free deals.
The FTC cited data provided by major tobacco companies, including Reynolds, Lorillard and Richmond, Va.-based Altria Group Inc, the maker of Marlboro cigarettes.
The efforts are being driven by a rapid decline in smoking. Roughly 19 percent of adults in the U.S. smoked as of 2011, down from 33 percent in 1980, according to the Centers for Disease Control and Prevention.
Tobacco companies aren't only looking at cigarette discounts to boost their bottom lines and are placing big bets on the electronic-cigarette market and other smokeless products.
Reynolds recently announced that it will be ramping up distribution of its Vuse e-cigarette product while Lorillard’s electronic cigarettes segment — blu eCigs — continues to reap dividends for the company, with a contribution of $57 million to total net sales for the first quarter.
Altria also is planning to add a new electronic cigarette product to the mix.


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