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In response to: Research the tobacco industry of today and compare it to that of previous
generations. Include sales figures, competing companies and laws that affect them.
Tobacco, whether it is smoking, chewing, or another derivative of it, has had a
long history in North America. It had been already used by the Natives in North America
and increased in popularity when the European settlers came. Through the industrial
revolution the tobacco industry saw another growth surge, which continued unparalleled
until the scientific revelations of the mid- 1990s. Many still enjoy tobacco products in
North America present day but face its many rules and regulations governing the industry.
The following will be a brief history of tobacco and the comparison to today’s industry
along with the many competing companies and laws that govern it.
Tobacco had been long used by the Native Americans before the arrival of the
Europeans. Native Americans did not only use the drug recreationally, as many people in
modern day do, they used it mainly for medicinal reasons. As they found tobacco mixed
with other plants could cure headaches, pain, and stomach indigestion. In 1609, John
Rolfe arrived at Jamestown, Virginia, and is credited as the first settler to have
successfully raised tobacco, known at the time as “brown gold”, for commercial use.
Tobacco was used as currency by the Virginia settlers for years. Throughout the 17th and
18th centuries, tobacco continued to be the cash crop of The Virginia Colony, as well as
The Carolinas. In 1883, the first tax was implemented on tobacco and accounted for one
third of internal revenue collected by the United States government.
During World War I cigarette smoking gained wide acceptance, as smoking
cigarettes was said to be more sanitary then the other alternatives. Into the twenties
cigarette advertising increased and a new market was open to gain more revenue, the
female market. With women gaining the right to vote in Canada between 1916-1925, and
in the U.S. 1920, women became empowered, and, because of the war, also became
consumers. One of the most famous advertising campaigns for cigarettes Lucky Strike’s
“reach for a lucky instead of a sweet”. Smoking cigarettes was also advertised to help
with weight loss and have health benefits, which was halted by The Federal Trade
Commission in 1930 (Brandt, The Cigarette Century).
Following the 1930s health concerns about smoking became increasingly debated
and the tone of smoking went from something widely accepted and indorsed to a ‘bad
habit’. Despite the health problems, lawsuits, and rising prices associated with cigarettes,
there is still something seductive about tobacco; this appears to be the profits. Present day
the US market is dominated by four key manufacturers known as Big Tobacco: Altria,
which sells roughly half of the nearly 500 billion cigarettes sold in the US, Reynolds
American, Loews subsidiary Lorillard Tobacco Company (part of Carolina Group), and
Vector Group's Liggett unit (see table 1). Canada is dominated by three major companies,
British American Tobacco Plc, which holds 49.5% of the Canadian Market; Philip Morris
International Inc, which holds 29.1% of the market; and Japan Tobacco Inc, with hold
over 9.4% of the Canadian market (See Table 2). The tobacco industry in the US and
Canada continues to face legal battles due to the ill health experienced by its main
consumers. Smokers have attempted to bring large class-action lawsuits against the
tobacco industry as a result of the health deficits they face including cancer and lung
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disease. Often, the courts dispel such strategies; however, individuals have fared much
better, but face lengthy appeals from the tobacco giants (Tobacco in Canada, p.20).
Every year, tobacco companies spend billions of dollars on advertising and
promotion, and U.S. and Canadian consumers spend billions of dollars on tobacco
products. Tobacco use then costs the United States and Canada billions of dollars in
medical expenses and lost productivity. In 2006, cigarette companies spent $12.4 billion
on advertising and promotional expenses in the United States alone, down from $13.1
billion in 2005, but more than double what was spent in 1997. The money cigarette
companies spent on U.S. and Canadian marketing in 2006 amounted to approximately
$34 million per day.
U.S. and Canadian consumers spent an estimated $90 billion in 2006 on tobacco
products: Approximately $83.6 billion was spent on cigarettes; Approximately $3.2
billion was spent on cigars; Approximately $2.6 billion was spent on smokeless tobacco
(e.g., chewing tobacco and snuff) (Tobacco in Canada, p.21).
Although U.S. tobacco production has decreased significantly since the 1950s, the
United States continues to be a leading producer of tobacco leaves (along with Canada).
In Canada the tobacco market has witnessed a decline from 2006- 2010 as a result of
declining sales in the cigarette and chewing tobacco category. The Canadian market
generated total revenues of 8.6 billion in 2010. In 2010 the sale of cigarettes proved to be
the most lucrative in Canada accounting for 95.3% of the markets overall value and
generating a total revenue of 8.2 billion, while smokeless tobacco generated 195.7
million. (Tobacco in Canada, p.9)
Cigarette Companies
More than 315 billion cigarettes were purchased in the United States in 2009, with
3 companies selling nearly 85% of them (See Table 1 below).
Company Name
Brand Examples
Market %
Cigarettes Sold
Philip Morris USA
Marlboro, Basic, Virginia Slims
47.1%
148.7 billion
Reynolds American Inc.
Camel, Doral, Winston, Kool
25.9%
81.6 billion
Lorillard
Newport, Maverick, Kent
11.3%
35.5 billion
Table 1
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Canada tobacco market share: % share, by value, 2010
Company
% Share
British American Tobacco Plc
49.5%
Philip Morris International Inc.
29.1%
Japan Tobacco Inc.
12.1%
9.4%
Table 2
Others
(Tobacco in Canada, p.13)
Smokeless Tobacco Companies
Approximately 121.4 million pounds of smokeless tobacco were purchased in the
United States in 2009 (down from 124.7 million pounds in 2008), with 3 companies
selling nearly 90%. (See Table 3)
Company Name
Brand Examples
Market %
Pounds Sold
United States Tobacco
Copenhagen, Skoal
41.8%
50.7 million
American Snuff
Grizzly, Kodiak
28.6%
34.7 million
Swedish Match
Timber Wolf, Red Man
19.1%
23.1 million
Table 3
Canada tobacco market segmentation: % share, by value, 2010
Category
Cigarettes
% Share
95.3%
Cigars and Cigarillos
2.3%
Loose tobacco
1.3%
Chewing tobacco
(Tobacco in Canada, p.11)
1.1%
Table 4
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In 1997, the Tobacco Act was enacted to regulate the manufacturing, sale,
labeling and promotion of tobacco products in Canada. Aspects of tobacco promotion
addressed in the Act include direct means such as advertisements, sponsorships and retail
marketing; and also less direct means, such as the portrayal of tobacco in the movies, and
in foreign media.
The Tobacco Control Act: Recognizes that virtually all-new users of tobacco
products are under 18 – the minimum legal age to purchase these products in the United
States, and 19 in Canada. Many new users will become addicted before they are old
enough to understand the risks and ultimately will die too young of tobacco-related
diseases. The Tobacco Control Act seeks to prevent and reduce tobacco use by these
young people. It recognizes that tobacco products are legal products available for adult
use, prohibits false or misleading labeling and advertising for tobacco products.
Tobacco companies may not: Attempt to convince young people of the
desirability of their product by associating it with glamour, recreation, excitement,
vitality, risk, daring, or sexuality (section 22); Depict any tobacco product, or its package
or brand — or even any imagery that might evoke a product or brand (section 22);
Sponsor youth-oriented activities or events (section 24); Include the name of a tobacco
product or manufacturer as part of the name of a permanent sports or cultural facility
(section 25) (unknown, Centers for Disease Control and Prevention) .
In conclusion, through the evolution of the tobacco industry throughout the
decades, and the sanctions and regulations the industry has incurred, one thing remains
the same. It is one of the most profitable industries in the world and despite health risks
associated with tobacco, the seductive habit continues to have a hold over the North
American consumer, and the tobacco industry continues reaping the benefits indefinitely.
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Works cited
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Brandt, Allan M.. The cigarette century: the rise, fall, and deadly persistence of
the product that defined America. New York: Basic Books, 2007. Print.
Federal Trade Commission. Smokeless Tobacco Report for the Year 2006
Washington: Federal Trade Commission, 2009
Unknown. "Industry Profile." Tobacco in Canada 1 (2011): 1-40. Datamonitor.
Web. 30 Mar. 2012.
U.S. Department of Agriculture. Briefing Room: Tobacco—Background.
Washington: U.S. Department of Agriculture, Economic Research Service, 2005
U.S. Department of Agriculture. Trends in U.S. Tobacco Farming. Washington:
U. S. Department of Agriculture, Economic Research Service, 2004
Centers for Disease Control and Prevention. Smoking-Attributable Mortality,
Years of Potential Life Lost, and Productivity Losses—United States, 2000–2004.
Morbidity and Mortality Weekly Report 2008;57(45):1226–8
Task Force on Community Preventive Services. Tobacco. In: Zaza S, Briss PA,
Harris KW, editors. The Guide to Community Preventive Services: What Works
to Promote Health? New York: Oxford University Press, 2005:3–79