SIC 5194 Tobacco and Tobacco Products

SIC 5194

This category covers establishments primarily engaged in the wholesale distribution of tobacco and its products. Leaf tobacco wholesalers are classified in SIC 5159: Farm-Product Raw Materials, Not Elsewhere Classified, and establishments primarily engaged in stemming and redrying tobacco are classified in SIC 2141: Tobacco Stemming and Redrying. Items handled by establishments in this business include: chewing tobacco, cigarettes, cigars, smoking tobacco, and snuff.

NAICS CODE(S)

422940

Tobacco and Tobacco Product Wholesalers

The wholesale distribution of tobacco and tobacco products in 2001 was a relatively small but profitable industry, employing about 57,261 workers and bringing in about $50.3 billion in sales. 374 companies in this classification were small—employing fewer than five persons. 212 had between five and nine employees; 193 had between 10 and 19 employees; 270 had 20 to 99 employees; 69 had 100 to 499 employees; and about 35 establishments with 500 or more employees. In 2003, total annual sales dropped to $27.7 billion. The total number of employees decreased to 28,898. The average sales per establishment were about $20 million.

Wholesalers of tobacco and tobacco products benefited from the explosive growth of the cigar trend in the United States in the late 1990s. The cigar emerged as a symbol of success and even celebrity. After cigar sales fell five percent annually for three decades until the mid-1990s, the industry surged on the strength of the endorsement by celebrities and pop culture generally. Glossy magazines like Cigar Aficionado featured movie stars and athletes sporting cigars on its famous covers. Moreover, the industry moved to acquire premium product placement in motion pictures. Premium cigars sold 370 million units, valued at $1 billion, in 1997, an almost 400 percent increase from 1992.

Continued success was not assured, however. Health concerns have intensified the examination of the cigar industry, leading to possible mandatory health-warning labels on their products, a series of printed advertisements warning against the dangers of cigar smoking, and calls from the Federal Trade Commission to prohibit cigar advertising on radio and television.

At any rate, despite the high profile of cigars, they still constitute a miniscule market sector next to cigarettes and smokeless tobacco. Throughout the entire industry, heightened regulatory scrutiny has...