National Summit on Smokeless and Spit Tobacco

Madison, WI ● September 21, 2009

Point-of-Sale Tobacco Advertising and Promotion

Agenda

1. Point-of-sale tobacco advertising and promotion: definition and types

2. Regulation3. Contracts4. Promotion $$$5. Why we care6. Research findings7. Policy

Point-of-Sale Advertising and Promotion

• Point-of-sale tobacco advertising and promotion (POS) has increasingly become a key strategy for the tobacco industry

What is POS?

• Signage at the point-of-sale

What is POS?

• Price promotions:– Value-added (buy-one-get-one free,

etc.)– “Buy-downs”

Retailers sell products at discounted rate, tobacco company cuts a check for the amount “lost” by retailer at the end of buy-down period

What is POS?

• Promotional allowances paid to retailers– Allowances given to retailers to facilitate sales

• Shelving• Stocking• Displaying merchandise• Volume rebates

• POS is largely unregulated by the: – Master Settlement Agreement (1998)– Smokeless Master Settlement Agreement (1998)

• These settlements are legal agreements between the largest tobacco companies and Attorneys General across the country; they restrict the type of marketing that these companies can participate in.

Regulation

Contracting• Usually (but not always) POS is set-up

and enforced through contracts with retailers– Makes it difficult to work with retailers on

voluntary POS reduction policies– Often negotiated at highest corporate level

Contracting• In the past, POS contracts have focused

primarily on cigarette marketing. However, higher taxes and increasing smoke-free laws have forced the industry to begin focusing on “OTP”- Other Tobacco Products

• RJ Reynolds acquired Conwood (Kodiak, Grizzly)- 2006

• Altria acquired UST (Skoal, Copenhagen)- 2009

Cigarette Companies Enter Smokeless Market

POS:

How much money are we talking about?

Cigarette Promotion

• From 1998 to 2006, the U.S. cigarette advertising and promotions budgets nearly doubled growing from $6.7 billion to $12.5 billion– In 2006, approximately 84%, or $10.5 billion, of this

was spent advertising and promoting cigarettes at the point-of-sale

Source: Federal Trade Commission. Federal Trade Commission Cigarette Report for 2006. Washington, DC; 2009.

Smokeless Promotion

• From 1998 to 2006, the U.S. smokeless tobacco advertising and promotions budgets more than doubled growing from $145.5 million to $354.1 million

– In 2006, approximately 65%, or $230 million, of this was spent advertising and promoting smokeless tobacco at the point-of-sale

Source: Federal Trade Commission. Federal Trade Commission Smokeless Tobacco Report for 2006. Washington, DC; 2009

Smokeless Promotion

Dollars Spent Advertising and Promoting Smokeless Tobacco

$251

$354

$203.7

$16 $13.7

$99.7

$12.7 $13.4$0

$50

$100

$150

$200

$250

$300

$350

$400

Total Price discountspaid to retailers

Promotionalallowances

Retail value-added

Mill

ion

s

2005

2006

Why is POS Important?

• Past research has shown that POS has been more prevalent in stores where adolescents shop frequently

• Exposure to higher levels of POS increases the likelihood that adolescents will start smoking

Henriksen L, et al. Tobacco Control 2004;13(3):315-8.Slater SJ, , et al. Archive of Pediatric Adolescent Medicine 2007;161(5):440-5.

Why is POS Important?

• Communities with disadvantaged socioeconomic profiles tend to have the most tobacco advertising

• Smokers of mentholated brands (typically youth & minorities) are more likely to take advantage of promotional offers

Laws MB, et al. Tobacco Control. 2002;11 Suppl 2:ii71-3.Barbeau EM, et al. Preventive Medicine. 2005;40(1):16-22.White VM, et al. American Journal of Preventive Med. 2006;30(3):225-31.

Ramsey Tobacco Coalition (RTC) Research

• Summer 2007- attempted to collect POS data from all licensed tobacco vendors in Ramsey County, W. St. Paul, and S. St. Paul– 652 licensed vendors total– Gathered complete (interior and exterior) POS

data on 491 vendors; gathered data on just exterior POS on 52 vendors

2007 Research Findings

• Mean number of ads per store: 14

• Median number of ads per store: 8

• Range of ads found in an individual store:

0-81

Percent of Total Ads Found by Vendor Type (n=543)

6%

0%

2%

14%

4%5% 4%

65%

Gas/ convenience

Supermarket

Restaurants/ bars

Misc

Small grocery/ market

Tobacco shop

Liquor shop

Drug store

Smokeless Tobacco Findings

• Interior advertisements for smokeless tobacco were found in 20% of stores

• Chain stores were more likely than non-chain stores to display ads for smokeless tobacco

(35% vs. 8%)

Findings from 2009

Total Number of Ads by Brand (n=543)

1017

1332

641

11670 67 60

604

37

192207 167

1012

0

200

400

600

800

1000

1200

1400

Most Advertised Brands in Study Area

• Marlboro, Camel, Newport

• These three brands are also the most commonly preferred brands among youth aged 12-17; 81% of smokers in this age group report preferring one of these brands

Source: Centers for Disease Control, 2009

Stores in block groups with a larger proportion of the population that was African American or living below the poverty line were more likely to have more tobacco ads (p< 0.01).

Research to Action

Policy Options• How other states are taking action

– Reduce Remove (CA): Voluntary removal of tobacco advertisements

– Media literacy (NY): Educate public about POS effect on young people

– Petition for legislature to pass a resolution to reduce tobacco ads in stores (NY)

– Tobacco ad teardown: Youth ask stores to remover advertising in exchange for youth clean up store/grounds (WY)

– Legislature banning advertisements in pharmacies (San Francisco and Boston)

Before After

Policy Options• Enforcement of sign code

• Enforcement of vending machine laws

• Imitation tobacco ordinance

• Prohibit sale of “loosies”

• License fees

Ramsey Tobacco Coalition work on imitation tobacco products ordinance– Grew out of POS assessment

Policy Based Youth Programming

Policy Example Youth met with key decision makers in St. Paul, shared findings

and asked for change Introduction and passage of a St. Paul ordinance banning

imitation tobacco products aimed at kids, recommended by World Health Organization.

Policy Options

• http://link.brightcove.com/services/player/bcpid1870915446?bctid=18332839001

FDA Regulation

• FDA Regulation of advertising– wait and see what happens here– Starting in Sept 2012, regulates

point-of-sale tobacco advertising

(tombstone)– Allows states and local governments to

regulate promotional activities (coupons, value-added, buy-downs, etc.)

FDA Regulation Highlights• Requires larger more visible, and more informative health warning

labels, including color graphics

• Local and Federal government can restricts the advertising at the local level as long as it is related to TIME,PLACE and MANNER

• Bans outdoor advertising 1,000 feet from schools and playgrounds

• Limits ads to black and white visuals

• Bans brand sponsorship of sports and entertainment events

• “Light”, “ Low” and “Mild” descriptors removed

Cigarette pack now Cigarette pack under FDA Regulation

Front

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WARNINGLABEL

WARNINGLABEL

Start Noticing…Educate…Advocate

• Betsy Brock, MPH Director of Research

bb@ansrmn.org or 651.646.3005

• Katie Engman, CHES Tobacco Programs Manager

tobaccoke@yahoo.com or 651.646.3005