GUEST COLUMN: Doral's Nicotine Up Most, But Sales Down Most - By Bill Godshall

This special Labor Day edition of The Rest of the Story features a guest column, contributed by Bill Godshall, Executive Director of Smokefree Pennsylvania.

In this thoughtful piece, Bill presents a cogent analysis of the relationship between nicotine yields of one cigarette brand - Doral - and the brand's market share during the period 2000-2006. The analysis was prompted by the release earlier this week of a report by the Massachusetts Department of Public Health which found that nicotine yields of cigarettes uniformly increased by about 10% during the period 1998-2004.

This report was used by the Campaign for Tobacco-Free Kids to argue that the nicotine dose of consumers has increased, resulting in a greater level of addiction and adverse health effects. The Campaign for Tobacco-Free Kids has complained that the increase in nicotine yields of cigarettes necessitates legislation that would allow FDA to regulate tobacco products (although as I noted, to appease Philip Morris, the legislation would preclude FDA from eliminating nicotine from cigarettes).

Bill's analysis suggests that the Campaign for Tobacco-Free Kids has been too quick to jump to judgment. It is not so simple to conclude that increasing nicotine yield of cigarettes results in increased addiction and adverse public health effects. If anything, increased nicotine yields might reduce smoking and puffing consumption and intensity, decreasing tar intake and subsequent health effects.

The nicotine reductions that would likely come with FDA legislation supported by the Campaign for Tobacco-Free Kids and Philip Morris could actually harm the public's health. It's critical that tobacco control and public health organizations consider the rest of the story, as Bill nicely presents below.

Doral's Nicotine Up Most, But Sales Down Most
by Bill Godshall, Executive Director, Smokefree Pennsylvania

While many news stories have cited the MA Department of Public Health's report in claiming that increased nicotine levels in cigarettes have made them more difficult to quit smoking (since that's what the MDPH press release and fact sheets insinuated), cigarette sales data reveal that the cigarette brand (Doral) with the highest increase of nicotine since 1998 is also the cigarette brand that has lost the most market share since 2000.

As such, it appears premature to claim that increasing nicotine levels in cigarettes makes them more addictive or more difficult to quit.

According to the MDPH report, the three brands with the highest nicotine content increase were Doral 85 Filter Light Hard Pack (36%), Doral 85 Filter Light Soft Pack (33%), Doral Filter Full Flavor Soft Pact (33%).

There are 11 sub brands of Doral 85 and 9 sub brands of Doral 100 (note the number is the cigarette's length in mm), with Doral 85 comprising the overwhelming majority of Doral sales. It is also almost certain that Doral 85 Full Filter and Doral 85 Light have the highest market shares of all Doral sub brands, and that their combined market share represents the overwhelming majority of all Doral sales.

Yet, according to Rob Campagnino of Prudential Equity Group and cigarette sales data, Doral has had the following overall cigarette market share in the U.S.:

6.3% in January 2000

6.3% in January 2001

5.5% in January 2002

5.8% in January 2003

5.2% in January 2004

5.0% in January 2005

4.6% in January 2006

4.4% in July 2006

By dropping from 6.3% to 4.4%, Doral has lost far more market share (1.9%) than any other cigarette brand since 2000. The second largest declining brand was Winston, whose market share dropped from 5.0% in January 2000 to 3.8% in July 2006, a 1.2% decline.

And while Doral's advertising and promotional expenditures are not available, Doral's huge decline in market share doesn't appear to be due to price changes, as Doral price increase has been less than the industry average.

According to IRI pricing data (not including convenience store sales), the overall average price of Doral was:

$2.25 in January 2000

$2.35 in January 2001

$2.52 in January 2003

$2.52 in January 2004

$2.43 in January 2005

$2.42 in January 2006

$2.46 in July 2006

According to IRI pricing data (not including convenience store sales), the overall average price of cigarettes was:

$2.99 in July 2002

$2.98 in January 2003

$2.93 in January 2004

$3.08 in January 2005

$3.22 in January 2006

$3.27 in July 2006

According to the Tax Burden on Tobacco, the weighted average retail price of cigarettes in the U.S. was:

$2.93 in November 1999

$3.12 in November 2000

$3.37 in November 2001

$3.72 in November 2002

$3.71 in November 2003

$3.74 in November 2004

$3.89 in November 2005

Thus, while the average price of Doral (not including convenience store sales) increased by $.21 (from $2.25 to $2.46) since January 2000, the average price of all cigarettes (not including convenience store sales) increased by $.28 (from $2.99 to $3.27) since July 2002, and the average price of all cigarettes (including convenience store sales) increased by $.96 (from $2.93 to $3.89) since November 1999.