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Cigarettes Aren’t Coming Back to Life—Manufacturers Switch Gears

Facing a long-term decline in smoking rates exacerbated by COVID-19, Philip Morris, owner of major cigarette brands like Marlboro, is pivoting towards a "smoke-free future" by heavily investing in healthcare alternatives and inhalable pharmaceuticals—such as acquiring OtiTopic and shares in Vectura—with the goal of increasing revenue from smoke-free products to 50% by 2025, signaling a major industry shift away from traditional cigarette advertising towards new inhalable drug promotions.

The cigarette industry has faced a declining customer base for years—and COVID didn’t help.

As more people quit smoking, cigarette producers are shifting their strategies.

Philip Morris, owner of six of the world’s 15 top cigarette brands including Marlboro, is now changing course and pursuing a “smoke-free future.” In doing so, it is investing heavily in healthcare alternatives and respirable pharmaceuticals.

‘Mad Men’ era smoking is gone and not coming back

The most recent CDC data found that 14% of Americans were regular smokers in 2019. But a recent Gallup poll found that though this percentage has remained steady, 72% of smokers would like to give it up.

This is a far cry from the height of cigarette smoking in the 1950’s, where nearly half of Americans smoked.

A big cause of the decline of smoking was the banning of cigarette promotion on TV in the 1970’s and the rise of anti-smoking campaigns.

The biggest recent change in the industry took place earlier this summer when Philip Morris announced they would be going after a “smoke-free future.” Philip Morris currently brings in nearly a third of its revenue from smoke alternatives. It aims to boost this to 50% by 2025.

As it moves towards its “smoke-free future,” the company is heavily investing dollars in alternative health R&D and inhalable healthcare acquisitions.

It recently bought OtiTopic, developer of an inhalable heart attack drug, and 22.6% of shares of respiratory drug developer Vectura.

As it moves into new sectors, it will be a large account to keep watching. Moving into advertising for inhalable pharmaceuticals will allow Philip Morris to advertise new products on television. Meanwhile, their cigarette brands will be promoted via print and perhaps digital.

MediaRadar Insights

With one of the biggest players in the tobacco industry making new moves, what do the overall cigarettes and inhalable pharmaceuticals landscapes look like?

In 2021 there have been 29 cigarette advertisers spending $36.6 million so far, which is up 141% from 2019. (When comparing it to the slump of 2020, spending is up 270%.)

Where most industries have started increasing their digital advertising, this has not been the case for cigarettes.

96% of ad spending in 2021 by cigarette companies has been invested in print.

And looking at inhalable pharmaceuticals, we found that asthma prescription drugs stood out as a growing sector. This category invested $152.9 million so far this year. This is up 128% from 2020 where the category invested $67.1 million across print, TV and digital formats.

Cigarette brands are spending more—but the number of American smokers is remaining steady. Asthma prescription drugs are advertising more at the same time. Which brands will be a prime prospect?

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

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