Tobacco Market: Asia Pacific Is Expected To Continue Leading With The Largest Revenue Share
Tobacco Industry Overview
The global tobacco market size was valued at USD 849.9 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 2.4% from 2022 to 2030. The demand has been sustained by the growing number of smokers in the developing regions of Asia and Africa. The extensive marketing campaigns run by the major companies have also been a significant factor sustaining the industry. The industry is witnessing a trend of new product launches which intrigues consumers to consume tobacco and thereby drive market growth.
The COVID-19 pandemic has had a significant effect on the consumption of tobacco. Smoking is perceived to be extremely deadly, as COVID-19 is a respiratory disease, and smoking only aggravates the situation. However, trends across the globe revealed that lockdown-induced stress only led to increased consumption. The addition of new smokers remained relatively low during this period. However, the industry is expected to benefit from the consumers who resorted to excessive smoking during the pandemic, as it is expected to have cultivated a new habit among them.
Gather more insights about the market drivers, restrains and growth of the Global Tobacco market
The addition of a new range of tobacco products shows a moderate increase in both the number of individuals who smoke and the percentage of people who try the new products. The use of intriguing advertising strategies has produced considerable results and has proven to be a means of remaining competitive and sustaining market dominance. For instance, specific products are promoted and advertised more intensely to specific demographic or racial groups.
According to the Centre for Disease Control and Prevention (CDC) estimates, companies such as Marlboro, Newport, and Camel, whose marketing campaigns specifically targeted the youth, were the highest marketing spenders. This led to them being the most preferred brand by the youths. Most people have seen tobacco as a significant part of their life over the previous decade. This factor is expected to drive the overall product demand in the forthcoming years.
The companies are spending huge on marketing campaigns to offset the negative impacts faced by the tobacco industry due to increased health consciousness among consumers. According to the CDC data, in 2019, USD 8.9 billion was spent by large companies on marketing smokeless tobacco and cigarettes in the U.S. This amount breaks down to USD 22.5 million per day or almost USD 1 million per hour. The companies have spent extensively on discounts, thereby increasing their market penetration and sustaining growth.
Tobacco consumption has been on the decline in developed and wealthy countries across the globe, due to the higher level of awareness among the population regarding the ill effects of its consumption. To maintain demand in such countries, the companies are introducing new products that are significantly less harmful than conventional products. The market has witnessed the introduction of new nicotine products and this category has been dubbed as new, alternative, or novel tobacco. These items are now referred to as Next-generation Products (NGP) by the tobacco control community.
Major companies have diversified their strategies to develop NGPs. Phillip Morris International, for instance, has carried out several investments in heated tobacco products. The company is strongly focused on delivering smoke-free heated tobacco products, as it envisions this category to be a game-changer in the industry. The IQOS technology is an integral part of Philip Morris's efforts to disrupt itself and become a smoke-free company by 2025. The product already accounted for 23.8% of the company's revenue in 2020. IQOS is a line of heated products developed as part of its "heat-not-burn" promotion. According to IQOS's 2020 Annual Report, the company has 17.6 million users, with 12.7 million of them switching to IQOS and quitting smoking.
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- Roll-Your-Own Tobacco Products Market - The global roll-your-own tobacco products market size was valued at USD 30.7 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 4.1% from 2022 to 2030. The growing preference for hand-rolled or handmade cigarettes as they are relatively less expensive compared to Factory-made (FM) cigarettes has been driving the demand for Roll-Your-Own (RYO) tobacco products across the world.
- Smoking Accessories Market - The global smoking accessories market size was valued at USD 64.4 billion in 2021 and is anticipated to expand at a compound annual growth rate (CAGR) of 4.0% from 2022 to 2030. The growth of the market is attributed to the increasing number of smokers around the world coupled with the rising trend of launching new and innovative products to intrigue more users.
Tobacco Market Segmentation
Grand View Research has segmented the global tobacco market based on product, distribution channel, and region:
Tobacco Product Outlook (Revenue, USD Billion, 2017 - 2030)
- Smokeless
- Cigarettes
- Cigar & Cigarillos
- Next Generation Products
- Waterpipes
Tobacco Distribution channel Outlook (Revenue, USD Billion, 2017 - 2030)
- Offline
- Online
Tobacco Regional Outlook (Revenue, USD Billion, 2017 - 2030)
- North America
- Europe
- Asia Pacific
- Latin America
- Middle East & Africa (MEA)
Market Share Insights
- September 2021: the company announced market testing of its heated tobacco products through a national rollout in Greece. The testing is part of the company’s new strategy of building a targeted and sustainable Next Generation Product (NGP) business. The valuable consumer insights gained from the pilot initiatives in Greece and the Czech Republic were instrumental to the scale and pace of further market rollouts
- March 2021: Phillip Morris International announced its strategy to derive 50% of its revenue from its smoke-free product portfolio. The company aims to achieve this through its heated tobacco products.
Key Companies profiled:
Some prominent players in the global tobacco market include
- Scandinavian Tobacco Group A/S
- Swedish Match AB
- Altria Group, Inc.
- KT&G Corp.
- Imperial Brands
- Philip Morris Products S.A.
- British American Tobacco
- Japan Tobacco Inc.
- China Tobacco.
- ITC Limited
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