Lights Cigarettes in the USA

A Look at the USA as a Country

A Summary of the USA Cigarette Market Evolution

Throughout American history, cigarettes have played many roles in the lives of the US population. In times of war, cigarettes were used to alleviate battle-related stress. As women waited to receive word from the battlefronts about male relatives, they used cigarettes to calm their fears and pass the time. There was little backlash from the press because cigarettes were perceived as providing a social benefit.

The cigarette business in the Early '30s Presented the Following Characteristics:

■ Only plain (no filter) and Full Flavour cigarettes were marketed.

■ Tar deliveries were 19 mg. up to 37 mg.

■ Two price segments existed: premium and cheap. Premium priced was associated with additional perceived benefit, i.e., a new technology, flavour or a quality/side effect improvement.

■ Consumers' attitude to try new products impacted positively the sales of new or improved products during the launch phase.

The introduction of tobacco filters, casing and flavoring, new materials and ventilation technology made it possible to produce different styles of cigarettes, so the industry entered a constantly changing environment.

The following segments developed in the market:

■ The filter cigarettes introduced in 1931.

■ The mentholated cigarettes launched in 1933 by SPUD and Kool.

■ The low tar category initiated by Kent Micronite in 1952 and later named Lights category when Marlboro Lights was introduced in 1971.

■ The Mild cigarettes launched in 1972 to react to the Marlboro Lights launch (Kool Milds, Viceroy Extra Mild, Raleigh Extra Mild, Pall Mall Milds, etc).

■ The Ultra Lights category initiated by Carlton 2.4 mg. in 1964 and reactivated in 1974.

■ The one-milligram cigarettes introduced by Carlton 1 mg. in the late '70s.

■ The medium category initiated by Marlboro Medium in 1991.

The anti-smoking pressure, restrictions on advertising and trade, the 1971 broadcast ban, as well as restrictions to smoking in public places, impacted negatively the industry growth. Demand peaked at 626 billion cigarettes in 1981, the year the market initiated the continuous decline that persists to date.

In 1996 the industry's sales were 483 billion sticks. The demand has declined at an average rate of 1.04% per year in the last 5 years. Currently, non-Full Flavour cigarettes represent 51% of the market (244 billion sticks).

The most recent introductions in the USA cigarette business have been:

■ The first smokeless cigarette, Premier, tested by RJR in 1988 and withdrawn.

■ Eclipse, a second attempt of a smokeless cigarette from RJR, introduced in 1996.

■ Addictive-free Winston introduced to test markets in 1996 and rolled out in 1997.

■ The recently announced electronic cigarette to be tested by Philip Morris. The press described it as a specially designed cigarette and an electronically controlled lighter that allows the cigarette to burn only when the smoker puffs and eliminates the smoke and ashes.

With the growing anti-tobacco sentiment, the tobacco industry continues the search for innovative products. Manufacturers' efforts focus on developing innovative technologies to reduce and, if possible, eliminate non-tobacco additives and visible smoking side effects like staining and odour.

For sure more changes are expected. The current regulatory environment, as well as the potential for a federal and state-based settlement, will have an important impact regarding the industry's future and its commitment to satisfy consumer demands.

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