Economics of Alcohol and Tobacco - Alcohol And Tobacco Advertising

Alcohol Advertising

The Center for Science in the Public Interest (CSPI), a nonprofit health-advocacy organization based in Washington, D.C., estimated in 2001 that the alcohol industry spends nearly $3 billion a year on marketing and promotion. In 2003 alcohol advertising expenditures accounted for approximately $1.7 billion of marketing and promotion expenses.

According to data from Adams Business Media available through the CSPI Alcohol Policies Project, the beer industry spent approximately $1.2 billion in 2002 on advertising, up from $799.7 million in 1999. The liquor industry spent $408.1 million, up from $321.4 million in 1999. The wine industry spent $122.4 million, up from $120.5 million in 1995.

The beer industry focuses most of its advertising dollars on television, the wine industry focuses primarily on both print media (magazines, newspapers, and bill-boards) and television. Traditionally the liquor industry has focused its advertising primarily on print media, but spending on television and radio advertising rose substantially between 1999 and 2002. This dramatic increase is largely the result of the liquor industry's decision to lift its self-imposed ban on radio and television advertising.

LIFTING THE BAN.

The distilled spirits industry, in a self-imposed ban, had not advertised on television and radio for fifty years. In November 1996, however, the Distilled Spirits Council of the United States (DISCUS) announced that it had revised its advertising code and lifted the voluntary ban. DISCUS president and CEO Fred A. Meister said, "The absence of spirits from television and radio has contributed to the mistaken perception that spirits are somehow harder or worse than beer or wine and thus deserving of harsher social, political, and legal treatment." Meister continued, "Distilled spirits advertisement will continue to be responsible, dignified, and tasteful messages for adults and will avoid targeting those under the legal purchase age, regardless of the medium."

In 2001 NBC became the first broadcaster to end the ban on hard liquor advertising. It offered some restrictions: the ads would run only after 9 p.m. and only on programs where at least 85% of viewers are at least

TABLE 7.8
Tobacco area, yield, and production worldwide, by country, 2001-03

	Area harvested			Yield per hectare			Productionb
	2001	2002	2003a	2001	2002	2003a	2001	2002	2003a
Continent and country	Hectares	Hectares	Hectares	Metric tons	Metric tons	Metric tons	Metric tons	Metric tons	Metric tons
North America:
Canada	25,091	25,091	25,091	2.12	1.95	1.70	53,112	49,015	42,683
Mexico	17,851	10,908	10,828	1.90	2.05	2.07	33,842	22,322	22,415
United States	174,992	173,782	173,782	2.57	2.32	2.32	449,745	403,000	403,518
Total	217,934	209,781	35,919	2.46	2.26	3.05	536,699	474,337	468,616
South America:
Argentina	60,000	65,500	72,100	1.64	1.95	1.61	98,110	127,500	116,000
Bolivia	1,060	1,060	1,060	0.92	0.92	0.92	980	980	980
Brazil	328,000	377,000	426,400	1.65	1.79	1.49	542,400	674,000	636,700
Chile	2,509	2,509	2,509	3.23	3.23	3.23	8,100	8,100	8,100
Colombia	23,000	23,000	23,000	1.83	1.83	1.83	42,000	42,000	42,000
Ecuador	1,774	1,774	1,774	0.62	0.62	0.62	1,100	1,100	1,100
Guyana	100	100	100	1.00	1.00	1.00	100	100	100
Paraguay	4,823	4,823	4,823	1.93	1.93	1.93	9,324	9,324	9,324
Peru	2,500	2,500	2,500	5.08	5.08	5.08	12,707	12,707	12,707
Uruguay	830	830	830	3.75	3.75	3.75	3,111	3,111	3,111
Venezuela	6,000	6,000	6,000	2.04	2.04	2.04	12,222	12,222	12,222
Total	430,596	485,096	541,096	1.70	1.84	1.56	730,154	891,144	842,344
Central America:
Costa Rica	105	105	105	1.85	1.85	1.85	194	194	194
El Salvador	600	600	600	1.95	1.95	1.95	1,167	1,167	1,167
Guatemala	8,793	9,232	9,232	2.22	2.22	2.22	19,562	20,540	20,540
Honduras	5,157	5,157	5,157	1.78	1.78	1.78	9,177	9,177	9,177
Nicaragua	844	844	844	1.60	1.60	1.60	1,349	1,349	1,349
Panama	1,160	1,160	1,160	2.04	2.04	2.04	2,367	2,367	2,367
Total	16,659	17,098	17,098	2.03	2.03	2.03	33,816	34,794	34,794
Caribbean:
Cuba	45,000	45,000	45,000	0.78	0.78	0.78	35,000	35,000	35,000
Dominican Rep	12,000	9,200	7,350	1.75	1.74	1.96	21,000	16,000	14,400
Haiti	400	400	400	1.53	1.53	1.53	611	611	611
Jamaica	1,175	1,175	1,175	1.99	1.99	1.99	2,339	2,339	2,339
St. Vincent	70	70	70	1.00	1.00	1.00	70	70	70
Trinidad & Tob.	100	100	100	1.70	1.70	1.70	170	170	170
Total	58,745	55,945	54,095	1.01	0.97	0.97	59,190	54,190	52,590
European Union:
Austria	115	115	115	1.74	1.74	1.74	200	200	200
Belgium-Lux	320	320	320	3.69	3.69	3.69	1,180	1,180	1,180
France	8,940	8,800	8,700	2.77	2.75	2.87	24,723	24,200	25,000
Germany	4,623	4,665	4,740	2.35	2.39	2.34	10,864	11,150	11,100
Greece	57,000	57,000	57,000	2.21	2.16	2.18	126,000	123,000	124,000
Italy	38,950	37,676	36,800	3.38	3.39	3.40	131,761	127,600	125,000
Portugal	2,105	2,100	2,100	2.90	2.91	2.91	6,111	6,111	6,111
Spain	12,669	12,430	12,250	3.32	3.35	3.35	42,100	41,650	41,000
Total	124,722	123,106	122,025	2.75	2.72	2.73	342,939	335,091	333,591
Western Europe:
Switzerland	635	635	635	2.09	2.09	2.09	1,325	1,325	1,325
Eastern Europe:
Albania	7,300	7,300	7,300	1.10	1.10	1.10	8,000	8,000	8,000
Bulgaria	32,460	37,260	37,260	1.26	1.35	1.35	40,885	50,210	50,210
Croatia	5,850	6,700	5,800	2.30	2.23	2.29	13,455	14,961	13,282
Hungary	5,100	5,500	5,800	2.14	1.94	2.07	10,900	10,650	12,000
Macedonia (Skopje)	22,000	22,000	22,000	1.41	1.41	1.41	31,111	31,111	31,111
Poland	12,600	11,300	10,800	1.98	2.12	2.04	25,000	24,000	22,000
Romania	12,000	12,000	12,000	1.23	1.23	1.23	14,750	14,750	14,750
Slovakia	2,000	2,000	2,000	1.75	1.75	1.75	3,500	3,500	3,500
Yugoslavia	6,200	6,200	6,200	1.23	1.23	1.23	7,604	7,604	7,604
Total	105,510	110,260	109,160	1.47	1.49	1.49	155,205	164,786	162,457

twenty-one years of age. Four months of ads promoting responsible drinking would precede the regular liquor spots. The broadcaster's decision was met with nearly universal derision, and a short time later NBC returned to its ban on hard liquor advertisements.

REACTIONS TO LIFTING THE BAN.

President Bill Clinton called the decision to end the fifty-year-old ban on alcohol advertising a "simply irresponsible move" that would make the job of rearing children harder. In April 1997 he called for an inquiry by the Federal

TABLE 7.8
Tobacco area, yield, and production worldwide, by country, 2001-03 [CONTINUED]

	Area harvested			Yield per hectare			Productionb
	2001	2002	2003a	2001	2002	2003a	2001	2002	2003a
Continent and country	Hectares	Hectares	Hectares	Metric tons	Metric tons	Metric tons	Metric tons	Metric tons	Metric tons
FSU-12:c
Armenia	4,304	4,304	4,304	2.79	2.32	2.32	12,000	10,000	10,000
Azerbaijan	6,000	6,000	6,000	2.00	0.50	0.50	12,000	3,000	3,000
Belarus	800	800	800	1.75	1.75	1.75	1,400	1,400	1,400
Georgia	2,100	2,100	2,100	2.38	2.38	2.38	5,000	5,000	5,000
Kazakhstan	4,500	4,500	4,500	1.84	1.84	1.84	8,300	8,300	8,300
Kyrgyzstan	14,500	14,500	14,500	2.64	2.64	2.64	38,333	38,333	38,333
Moldova	25,000	25,000	25,000	0.60	0.48	0.48	15,000	12,000	12,000
Russia	2,000	2,100	2,200	0.90	0.90	0.91	1,800	1,900	2,000
Tajikistan	3,200	3,200	3,200	2.50	2.50	2.50	8,000	8,000	8,000
Turkmenistan	1,600	1,600	1,600	2.24	2.08	2.08	3,578	3,333	3,333
Ukraine	4,500	4,500	4,500	0.99	0.99	0.99	4,444	4,444	4,444
Uzbekistan	6,700	6,700	6,700	3.28	3.28	3.28	22,000	22,000	22,000
Total	75,204	75,304	75,404	1.75	1.56	1.56	131,855	117,710	117,810
North Africa:
Algeria	5,700	5,700	5,700	1.26	1.26	1.26	7,200	7,200	7,200
Libya	650	650	650	2.56	2.56	2.56	1,667	1,667	1,667
Morocco	5,948	5,948	5,948	1.21	1.21	1.21	7,194	7,194	7,194
Tunisia	3,100	4,000	4,000	1.79	1.39	1.39	5,556	5,556	5,556
Total	15,398	16,298	16,298	1.40	1.33	1.33	21,617	21,617	21,617
Other Africa:
Angola	3,950	3,950	3,950	0.99	0.99	0.99	3,900	3,900	3,900
Benin	917	917	917	0.77	0.77	0.77	702	702	702
Burundi	705	705	705	1.00	1.00	1.00	705	705	705
Cameroon	3,400	3,400	3,400	1.38	1.38	1.38	4,700	4,700	4,700
Central African Rep	600	600	600	0.83	0.83	0.83	500	500	500
Chad	145	145	145	1.38	1.38	1.38	200	200	200
Congo (Brazzaville)	4,000	4,000	4,000	0.45	0.45	0.45	1,800	1,800	1,800
Cote d'lvoire	3,700	3,700	3,700	1.11	1.11	1.11	4,110	4,110	4,110
Ethiopia	20,000	20,000	20,000	0.60	0.60	0.60	12,000	12,000	12,000
Ghana	4,500	4,500	4,500	0.74	0.74	0.74	3,333	3,333	3,333
Kenya	3,950	3,950	3,950	0.38	0.38	0.38	1,500	1,500	1,500
Liberia	14,500	14,500	14,500	1.38	1.38	1.38	20,000	20,000	20,000
Madagascar	10	10	10	1.00	1.00	1.00	10	10	10
Malawi	2,110	2,110	2,110	1.05	1.05	1.05	2,222	2,222	2,222
Mali	100,200	100,200	100,200	1.24	1.38	1.36	124,409	138,113	136,200
Mauritius	824	824	824	1.35	1.35	1.35	1,115	1,115	1,115
Mozambique	410	410	410	1.76	1.76	1.76	722	722	722
Niger	7,000	7,000	7,000	1.50	1.50	1.50	10,522	10,522	10,522
Nigeria	1,000	1,000	1,000	0.93	0.93	0.93	930	930	930
Reunion	10,000	10,000	10,000	2.10	2.10	2.10	21,000	21,000	21,000
Sierra Leone	200	2,000	2,000	1.00	0.10	0.10	200	200	200
South Africa; Rep	540	540	540	1.11	1.11	1.11	600	600	600
Swaziland	15,500	1,440	13,700	2.19	2.05	0.21	34,000	29,500	2,900
Tanzania; United Rep	200	200	200	1.00	1.00	1.00	200	200	200
Togo	35,500	35,500	35,500	0.00	0.00	0.00	27,967	27,967	27,967
Uganda	400	400	400	5.00	5.00	5.00	2,000	2,000	2,000
Zaire	7,525	7,525	7,525	3.33	3.33	3.33	25,080	25,080	25,080
Zambia	2,900	2,900	2,900	1.23	1.23	1.23	3,556	3,556	3,556
Zimbabwe	80,412	78,491	59,894	2.58	2.17	1.47	207,253	170,115	88,021
Total	325,098	323,877	204,380	1.58	1.50	1.84	515,236	487,292	376,685

Communications Commission (FCC) into the impact of lifting the ban.

In 1998, prompted by a congressional order, the Federal Trade Commission (FTC) investigated whether the alcohol industry was doing enough to discourage ads that appeal to underage drinkers. In a report to Congress in September 1999, the FTC called for beer, wine, and liquor companies to do more to ensure that minors do not see their advertisements. The FTC recommended that ads for alcoholic beverages should not be shown in theaters with movies rated PG or PG-13, on TV programs aimed at similar audiences, or on college campuses. Additionally, the FTC called for the formation of independent review boards to handle complaints from consumers and competitors about alcohol advertisements. The industry imposed self-regulated guidelines requiring that at least 50% of the audience for alcohol ads consist of adult consumers.

In September 2003 the FTC followed up on the recommendations issued in 1999 by surveying alcohol companies to see if they had followed the self-imposed guidelines and the recommendations offered by the FTC

TABLE 7.8
Tobacco area, yield, and production worldwide, by country, 2001-03 [CONTINUED]
SOURCE: "Table 2-46. Tobacco: Area, Yield, and Production in Specified Countries, 2001-2003," in Agricultural Statistics, U.S. Department of Agriculture, National Agricultural Statistics Service, 2004, http://www.usda.gov/nass/pubs/agr04/04_ch2.pdf (accessed March 7, 2005)

	Area harvested			Yield per hectare			Productionb
	2001	2002	2003a	2001	2002	2003a	2001	2002	2003a
Continent and country	Hectares	Hectares	Hectares	Metric tons	Metric tons	Metric tons	Metric tons	Metric tons	Metric tons
Other Asia:
Bangladesh	31,161	31,161	31,161	1.12	1.12	1.12	35,000	35,000	35,000
Burma	36,000	36,000	36,000	1.22	1.22	1.22	44,000	44,000	44,000
Cambodia	9,685	9,685	9,685	0.80	0.80	0.80	7,748	7,748	7,748
China	1,339,600	1,327,710	1,262,525	1.75	2.10	2.07	2,349,627	2,783,516	2,617,036
India	395,500	485,000	435,000	1.48	1.49	1.52	585,500	650,000	660,000
Indonesia	205,000	205,000	194,000	0.84	0.83	0.82	172,200	170,150	158,900
Japan	23,411	23,720	23,720	2.59	2.53	2.53	60,565	60,000	60,000
Korea, North	20,000	20,000	20,000	1.33	1.33	1.33	26,640	26,640	26,640
Korea, South	23,940	21,200	21,200	2.32	2.47	2.47	55,587	52,350	52,350
Laos	6,700	6,700	6,700	5.54	5.54	5.54	37,111	37,111	37,111
Malaysia	15,972	14,390	11,000	0.52	0.80	1.09	8,299	11,468	12,000
Pakistan	43,319	46,897	48,150	1.91	1.98	1.97	82,854	92,880	94,700
Phillippines	39,130	31,464	34,585	1.77	2.55	2.36	69,219	80,100	81,600
Sri Lanka	4,480	4,480	4,480	1.34	1.34	1.34	6,000	6,000	6,000
Taiwan	2,929	2,115	2,115	2.50	2.50	2.50	7,322	5,287	5,287
Thailand	42,450	41,450	40,300	1.25	1.30	1.35	53,100	53,780	54,500
Vietnam	25,000	25,000	25,000	1.28	1.28	1.28	32,000	32,000	32,000
Total	2,264,277	2,281,972	2,164,421	1.60	1.82	1.80	3,632,872	4,148,030	3,905,882
Middle East:
Cyprus	80	80	80	4.88	4.88	4.88	390	390	390
Iran	20,000	20,000	20,000	1.17	1.17	1.17	23,333	23,333	23,333
Iraq	2,400	2,400	2,400	1.04	1.04	1.04	2,500	2,500	2,500
Jordan	2,900	2,900	2,900	0.78	0.78	0.78	2,255	2,255	2,255
Lebanon	9,700	9,700	9,700	1.55	1.55	1.55	15,000	15,000	15,000
Oman	270	270	270	5.35	5.35	5.35	1,444	1,444	1,444
Syria	15,000	15,000	15,000	1.15	1.15	1.15	17,200	17,200	17,200
Turkey	237,318	206,817	210,398	0.87	0.78	0.81	207,261	161,266	171,314
United Arab.
Emirates	50	50	50	13.52	13.52	13.52	676	676	676
Yemen	5,347	5,347	5,347	2.41	2.41	2.41	12,903	12,903	12,903
Total	293,065	262,564	265,875	0.97	0.90	0.92	282,962	236,967	245,571
Oceania:
Australia	3,185	3,185	3,185	2.44	2.44	2.44	7,762	7,762	7,762
New Zealand	600	600	600	2.58	2.58	2.58	1,550	1,550	1,550
Solomon Islands	100	100	100	0.95	0.95	0.95	95	95	95
Total	3,885	3,885	3,885	2.42	2.42	2.42	9,407	9,407	9,407
World total	3,931,728	3,965,821	3,610,291	1.64	1.76	1.82	6,453,277	6,976,690	6,572,689
aPreliminary.
bProduction data in metric tons, on farm-sales-weight basis, which is about 10 percent above dry-weight data normally reported in trade statistics.
cFSU-12 includes the 12 newly independent states of the former USSR.

in 1999. Their report Alcohol Marketing and Advertising: A Report to Congress also investigated whether flavored malt beverages (FMBs or "alcopops" such as "hard lemonade") and advertising for them were targeted to an underage audience. The FTC found that in 99% of cases the self-imposed guideline of reaching a 50% adult audience had been followed. It also found that the alcohol industry was doing a better job of external review and that FMBs were not targeted specifically at underage consumers and advertising for them was following the guidelines set. The industry also promised to improve the self-imposed guidelines by reaching a 70% adult audience in the future. The FTC recommended that the industry be more careful about content that could be seen as appealing to underage drinkers.

In spite of the high marks given to alcohol industry advertising by the FTC, a survey commissioned by the CSPI, conducted by the Global Strategy Group and released on July 16, 2002, determined that teens are getting substantial exposure to advertisements for alcopops. These drinks carry the brand names of hard liquors, such as Bacardi and Smirnoff. The CSPI study found that 77% of teens watch television after 9 p.m. on school nights, which is a time during which the liquor industry advertises. Public-health advocates suggest that advertising these sweet drinks on television is a "back-door" method by which liquor companies can promote their names to adolescent audiences on network television. In addition, they see alcopops as a way in which the alcohol industry encourages young FIGURE 7.1
Public opinion on a law banning all advertisement of hard liquor on television, 2001
SOURCE: Eileen M. Harwood, Alexander C. Wagenaar, and Debra H. Bernat, "Figure 9.5. Favor Banning Hard Liquor Ads on TV," in Youth Access to Alcohol Survey: Charts and Appendices, University of Minnesota, Alcohol Epidemiology Program, December 2002, http://www.epi.umn.edu/alcohol/pdf/Charts_Appendices.pdf (accessed March 7, 2005) people who are unaccustomed to the taste of hard liquor to drink.

PUBLIC SUPPORT FOR RESTRICTIONS ON ALCOHOL ADVERTISING.

In neither the 1999 nor the 2003 report (the most recent at this writing) did the FTC recommend government regulation of alcohol advertising. Proponents of alcohol advertising restrictions, however, believe that industry self-regulation has failed and should be replaced by stricter government regulations. Critics state that even reaching a 30 to 50% underage audience is detrimental to children and teens.

The Youth Access to Alcohol Survey (Alcohol Epidemiology Program, University of Minnesota, December 2002; the most recent at this writing), released by the Robert Wood Johnson Foundation, found that Americans are very concerned about underage drinking and support restrictions on alcohol advertising. More than two-thirds (67.2%) either strongly or somewhat favored a ban on hard liquor advertising on television in 2001. (See Figure 7.1.) A smaller percentage of those surveyed (58.9%) either strongly or somewhat supported bans on beer and wine advertising on television. (See Figure 7.2.) Sixty-two percent favored bans on the use of sports teams and athletes as symbols in advertising and promotions of alcoholic beverages. (See Figure 7.3.)

IS THERE A LINK?

It is unclear whether exposure to alcohol advertising will predispose young people to drink. Both the Federal Trade Commission and the Department of Health and Human Services have released statements claiming there is no research suggesting a significant relationship between alcohol consumption and advertising. Recent studies (Casswell and Zhang 1998; Grube and Wallack 1994; Wylliet et al. 1998) are careful to state that alcohol advertisements may influence the decisions made about drinking by young men and women.

FIGURE 7.2
Public opinion on a law banning all advertisement of beer and wine on television, 2001
SOURCE: Eileen M. Harwood, Alexander C. Wagenaar, and Debra H. Bernat, "Figure 9.6. Favor Banning Beer and Wine Ads on TV," in Youth Access to Alcohol Survey: Charts and Appendices, University of Minnesota, Alcohol Epidemiology Program, December 2002, http://www.epi.umn.edu/alcohol/pdf/Charts_Appendices.pdf (accessed March 7, 2005)

Using advertising industry databases and methods, the Center on Alcohol Marketing and Youth (CAMY) at Georgetown University has documented that young people (ages twelve to twenty) were exposed to more alcohol advertisements in magazines than adults from 2001 to 2003: 52% more for beer and ale and 33% more for distilled spirits in 2001; 57% more for beer and ale and 23% more for distilled spirits in 2002; and 49% more for beer and ale and 20% more for distilled spirits in 2003. They were also sixty times more likely to see a commercial for alcohol than an advertisement for responsible drinking.

According to the CSPI, children frequently exposed to television beer ads can usually match brand names and beer slogans. The Budweiser frogs were part of a popular ad campaign launched in 1995, prompting Mothers against Drunk Driving president Karolyn Nunnallee to remark that "Alcohol marketers are bombarding our children with characters that look like they belong on Saturday morning cartoons, and it's absurd to think these don't affect our young people."

Children were nearly as familiar with the "Bud-weis-er" slogan as they were with Bugs Bunny's famous "What's Up Doc?" greeting. In 1996 the Budweiser ads were among children's favorite advertisements. (Children, Health and Advertising, Issue Briefs, Studio City, CA: Mediascope Press, 2000). The Budweiser ads were initially launched during the Super Bowl, home to more than a few liquor advertisements. Often these ads receive more attention than the game, leading CAMY's executive director to refer to them as the "Ad Bowl" of the "Super Bowl" ("Alcohol Commercials Bowl Over Responsibility Ads," US Newswire, February 3, 2003).

The Centers for Disease Control and Prevention (CDC) has expressed concern that alcohol ads placed in convenience stores, small groceries, and gas stations could increase underage drinking. These ads are often FIGURE 7.3
Public opinion on a law banning the use of sports teams and athletes as symbols in advertising and promotions of alcoholic beverages, 2001
SOURCE: Eileen M. Harwood, Alexander C. Wagenaar, and Debra H. Bernat, "Figure 9.4. Favor a Ban on Sports Ads and Promotions," in Youth Access to Alcohol Survey: Charts and Appendices, University of Minnesota, Alcohol Epidemiology Program, December 2002, http://www.epi.umn.edu/alcohol/pdf/Charts_Appendices.pdf (accessed March 7, 2005) of "high intensity" and placed at a child's eye level. Particularly troubling is that CDC officials report that 75% of teenagers shop at convenience stores or gas stations weekly.

Tobacco Advertising

According to the FTC's Cigarette Report for 2002, which was issued in 2004, cigarette sales fell 5.5% over the previous year, to 376.4 billion cigarettes. Advertising expenditures in 2002 increased 11% from 2001, to approximately $12.5 billion, the most ever reported to the Federal Trade Commission. As expenditures increased, however, per capita cigarette consumption continued to drop. (See Figure 7.4).

The tobacco industry is forbidden by law to advertise on radio and television. Where do the industry's advertising dollars go? The largest share (about $7.9 billion) of the approximately $12.5 billion spent in 2002 was used for price discounts, which are paid to cigarette retailers or wholesalers to discount the price of the cigarettes to the consumer. Another approximate $2.5 billion was spent on sampling distribution—giving free cigarettes to the public. Slightly more than $1 billion was spent on giving bonus cigarettes with purchases, and about $1.3 billion was used for retailer promotional allowances, which pays them for stocking, shelving, and displaying cigarettes.

In 2001 the FTC required for the first time that cigarette makers report how much they spent on advertisements intended to reduce smoking among teenagers and adults. Cigarette makers spent $79.4 million on such advertisements in 2001 and $74.2 million in 2002 (which was not part of the $12.5 billion in advertising spending).

In the past, cigarette advertisements in magazines were usually full-page and full-color productions showing FIGURE 7.4
Cigarette consumption and marketing expenditures, 1975-2001
SOURCE: Adapted from Federal Trade Commission Cigarette Report for 2001, Federal Trade Commission, 2003 http://www.ftc.gov/os/2003/06/2001cigreport.pdf (accessed March 7, 2005) glamorous, sophisticated people or rugged, outdoor types, depending on the market toward which the advertisement was targeted. New Food and Drug Administration (FDA) rules that were to become effective in August 1996 would have permitted just black and white, text-only advertising. However, lawsuits were filed against the FDA, contending, among other challenges, that these advertising restrictions violated the First Amendment protection of free commercial speech.

In March 2000 the Supreme Court ruled that federal health authorities, such as the FDA, have no power to regulate the manufacture and sale of cigarettes. A few days after the ruling was announced, President Bill Clinton urged Congress to give the FDA the authority to regulate tobacco advertising and tighten legislation regarding tobacco purchases by children under eighteen. In 2001 a bipartisan coalition renewed the effort to grant the Food and Drug Administration authority to regulate tobacco, reintroducing a bill that would let the FDA restrict tobacco advertising that targets children. The proposed legislation is called the Kids Deserve Freedom from Tobacco Act of 2001 (KIDS Act). The bill was referred to the Senate Committee on Health, Education, Labor, and Pensions, where it remained. On March 22, 2005, Senators Olympia Snowe, Michael DeWine, and Edward Kennedy introduced a refashioned bill: the Family Smoking Prevention and Public Health Protection Act, which would give the FDA the authority to regulate the marketing and manufacture of tobacco products in an effort to curb youth smoking.

ADVERTISING TARGETED AT WOMEN.

Women did not generally smoke—at least not in public—before World War I (1914-18). Just after the war, Lorillard began using images of women to advertise its Murad and Helman brands. During the 1920s Marlboro advertised in fashion magazines, and Lucky Strike encouraged women to "Reach for a Lucky Instead of a Sweet," implying that they could stay slim by smoking. Other ads focused on women's struggle to gain voting rights, encouraging women to express their desire for liberation by smoking.

In the late 1960s Philip Morris introduced its successful Virginia Slims brand. Its "You've Come a Long Way, Baby" campaign implied that smoking cigarettes was as much a part of women's rights as equal pay. John P. Pierce et al., in "Smoking Initiation by Adolescent Girls, 1944 through 1988" (Journal of the American Medical Association, February 23, 1994), found that "In girls younger than eighteen years, smoking initiation increased abruptly around 1967, when tobacco advertising aimed at selling specific brands to women was introduced. This increase was particularly marked in those females who never attended college. Initiation rates for females younger than eighteen years peaked around 1973, at about the same time sales of these brands peaked."

The controversial Virginia Slims campaigns continued. In 1991 the company launched the "Find Your Voice" campaign, showing beautiful women from around the world. The campaign, according to many critics, was about linking smoking to being attractive and empowered. A 2000 study by the Harvard School of Public Health noted that women in lead or supporting roles in films were more likely than their male counterparts to be depicted smoking. In 2001 cigarette ads appeared that targeted African-American women and implied that smoking makes women attractive, sexy, and the center of attention.

ADVERTISING TARGETED AT TEENAGERS.

Critics of tobacco advertising have frequently cited the cartoon character Joe Camel, which RJ Reynolds used to advertise its Camel brand of cigarettes, as an example of advertising targeted to children and teenagers. Results of a study reported in 1991 in the Journal of the American Medical Association noted that young people had been strongly influenced by the Joe Camel campaign. Among children, Joe Camel was as easily recognized as Mickey Mouse. Between 1987, when the campaign began, and 1993, the percentage of Camel smokers under the age of eighteen increased from 3% to 16%.

The RJ Reynolds Tobacco Company responded with a November 1993 survey indicating that Joe Camel was no more recognizable to teenagers than any other advertising character. Furthermore, the survey showed that recognition of Joe Camel did not necessarily influence teenagers to start smoking. The tobacco industry maintains that it has no desire to see teenagers smoking. According to the industry, peer pressure, not advertising, is the major factor that leads young people to smoke. The tobacco industry claims that its advertising is designed to attract the 60% of smokers who change their brand of cigarettes at some time during their lifetime.

Nevertheless, the Federal Trade Commission (FTC) officially issued an administrative complaint in May 1997. The FTC charged that the Joe Camel advertising campaign violated federal fair trade laws by promoting a lethal and addictive product to children and adolescents who could not legally purchase or use it. In 1997 the RJ Reynolds Tobacco Company agreed to eliminate Joe Camel and other cartoon characters from its advertisements and packaging.

THE PRISON MARKET.

The prison population has long represented a large and lucrative population for cigarette manufacturers. Many wardens passed out free cigarettes to prisoners. According to a Wall Street Journal article (Vanessa O'Connell, "Bans on Smoking in Prison Shrink a Coveted Market," August 27, 2003), inmates in the Menard Correctional Center in Illinois produced inexpensive cigarettes from the 1940s through the 1990s. The cigarettes were sold to the prisoners; the funds were then used to support prison programs. The Lorillard Tobacco Co. sponsored programs such as "Play Ball with Newport." Under this program, prison officials bundled together empty Newport pack wrappers to trade in for sports equipment or board games. They also offered the "Great Newport Sneaker Deal," in which three hundred to four hundred empty packs could be traded in for hightop sneakers.

Prisons have been a successful market for cigarette firms. As Mark Smith, a spokesman for Brown & Williamson, said in the Wall Street Journal article, "when smokers are either bored or under stress they might use more tobacco."

According to the article, roughly 70 to 80% of the prison population is thought to smoke regularly. A store in a large prison may generate $500,000 annually in cigarette sales (cigarettes can have markups as high as 60%, representing significant profits for a prison store).

BILLBOARD ADVERTISING.

On April 23, 1999, all tobacco billboards in the United States had to come down as part of the settlement between the tobacco industry and state attorneys general in forty-six states. The tobacco companies accepted the FDA's authority to regulate tobacco products and restrict their advertising. However, the outdoor advertising ban applied only to signs larger than fourteen square feet. Retailers put up smaller cigarette signs in front of their stores, "right at the kids' eye level," noted William Godshall, executive director of Smokefree Pennsylvania.

In 1998 a federal judge struck down New York City's Youth Protection against Tobacco Advertising and Promotion Act. This law prohibited tobacco advertisements on doors and awnings and in windows. The judge ruled that only the federal government (via the enactment of laws by Congress) could address public health concerns by imposing restrictions on tobacco advertising. Additionally, other court decisions in 1997, 1998, and 2000 ruled that the FDA did not have the authority to regulate tobacco products, which invalidated all of the FDA's 1996 regulations.

A number of cities and states then implemented restrictions on alcohol and tobacco billboard advertising. For example, the Los Angeles city council and the state of Massachusetts voted to ban tobacco and alcohol billboards and other outdoor advertising from locations within one thousand feet of parks, schools, and residential areas. The tobacco industry challenged the Massachusetts ban based on the right to free speech. In January 2001 the U.S. Supreme Court agreed to hear this case, and in June 2001 ruled that efforts to ban tobacco advertising near playgrounds and schools violate federal law and free speech rights. The Court added that cities and states may not add restrictions to the federal law that bans cigarette advertising on television and requires warning labels on packages. Only Congress has the power to amend federal law.