Economic Trends in Tobacco

Economic cost of cigarette smoking

In 2018, cigarette smoking is estimated to have cost the United States more than $600 billion, including:

• More than $240 billion in health care spending.12
• Nearly $185 billion in lost productivity from smoking-related illnesses and health conditions.2
• Nearly $180 billion in lost productivity from smoking-related premature death.32
• About $7 billion (updated to 2018 dollars) in lost productivity from premature death from secondhand smoke exposure.34

State spending on tobacco prevention

State spending on tobacco prevention and control does not meet CDC recommended levels.53

States receive billions of dollars to prevent smoking and help smokers quit. The money comes from tobacco product taxes and settlements from lawsuits against cigarette companies. However, states use only a small amount of this money for tobacco prevention.

In 2024, states will collect nearly $26 billion from tobacco taxes and the 1998 Tobacco Settlement. They will also be getting $1.1 billion from a lawsuit against Juul.5 CDC recommends that states, in total, spend $3.3 billion on tobacco prevention.

CDC provides each state with a recommended spending level, but consider the following:5

• Maine is the only state that funds its program at CDC's recommended level ($15.9 million).
• Eight states spend more than half the amount CDC recommends: Utah, Oklahoma, Delaware, Oregon, North Dakota, California, Hawaii, and Alaska.
• Thirty-one states and the District of Columbia spend less than 25% of what CDC recommends.
• Nineteen states spend less than 10%.
• Ten states spend less than 5%.

For every $1 states invest to reduce tobacco use, tobacco companies spend about $12 promoting its use.5

Tobacco-related spending

Tobacco manufacturers spent about $8.6 billion on advertising and promoting cigarettes and smokeless tobacco products in the United States in 2022.67 This amount translates to nearly $1 million spent every hour.5

• Cigarette advertising and promotional expenses totaled about $8.01 billion in 2022.6
• Smokeless tobacco advertising and promotion expenses totaled $572.7 million in 2022. Smokeless tobacco products include dry snuff, moist snuff, plug/twist, loose-leaf chewing tobacco, snus, and dissolvable products.7

Cigarette companies spend a large share of their advertising and promotional dollars on price discounts paid to cigarette retailers. Price discounts reduce the consumer cost of cigarettes. In 2022, price discount expenses totaled $5.7 billion, almost 72% of companies' advertising budget.6

Information on spending for marketing and promoting electronic products, such as e-cigarettes, e-cigars, and e-pipes, is limited because there is information available only for a few manufacturers. The 2024 Federal Trade Commission (FTC) report on e-cigarettes found that:8

• In 2021, e-cigarette advertising and promotion expenses totaled $859.4 million.
• Disposable product advertising and promotion expenses were less than $500,000 in 2021.

Tobacco sales

Cigarette sales

• During 2015–2021, annual U.S. sales of cigarette packs declined about 27%, from 12.5 billion packs to 9.1 billion.9 Parent companies of the major manufacturers of cigarettes sold in the United States are Altria Group, Inc.; ITG Holdings USA, Inc.; Reynolds American, Inc.; and Vector Group Ltd.6
• In 2024, the average state tobacco tax was $1.93 per pack. State tobacco taxes range from a high in New York of $5.35 per pack to a low in Missouri of 17 cents per pack. The federal tax rate on a pack of cigarettes was $1.01.10
• The industry has promoted itself as a leader in the fight to eliminate smoking (but not the use of other tobacco products). Even so, the industry heavily relies on revenues from the sale of cigarettes (including menthol cigarettes) and other combustible tobacco products. Specifically:11
  • Altria—which makes Marlboro cigarettes and Black & Mild cigars and had a significant minority stake in e-cigarette brand JUUL until March 2023—revealed in its 2021 earnings report that it made 87% of its total revenues from combustible tobacco products (Altria Group 2021).
  • British American Tobacco (2022)—which owns the Newport and Camel menthol cigarette brands through its Reynolds American Inc. and R.J. Reynolds Tobacco subsidiaries—reported that 86% of its 2021 revenue was from combustible tobacco products.

Other tobacco and nicotine product sales

• During 2016–2020, monthly U.S. cigarillo unit sales grew from $131 million to $190 million, and the price remained unchanged. The sales of large and little cigars declined while the price of large cigars increased, and little cigars remained unchanged.12
• In 2022, manufacturers sold about 113.3 million pounds of smokeless tobacco. This amount was a decrease from the high of 131.4 million pounds sold in 2016.7
• In 2022, five companies—Altria Group, North Atlantic Trading, Reynolds American, Swedish Match, and Swisher International Group—accounted for almost $5 billion in U.S. smokeless tobacco sales.7
• U.S. sales of nicotine lozenges, pucks, and pouches more than doubled—from $452.76 million in 2020 to $1.06 billion in 2022.7

E-cigarette sales

From January 2017 to March 2022, U.S. monthly e-cigarette sales increased from $75 million to $469 million.13 The percentage of monthly sales of e-cigarette products that contained more than 5% nicotine strength also increased:.13

• From about 6% to 80% of total dollar sales overall among all e-cigarette products sold.
• From 0% to about 94% of total dollar sales of disposable e-cigarettes.
• From about 7% to 73% of total dollar sales of refilled cartridges.

Effects of increased prices

Increasing the price of tobacco products is an effective way to reduce demand.3

A 10% increase in the average price of a pack of cigarettes is estimated to reduce cigarette sales per person by an average of 7.0%.14