San Francisco, 21 March 2024: The Report Tobacco Market Size, Share & Trends Analysis Report By Product (Cigarettes, Kretek), By Distribution Channel (Supermarket/Hypermarket, Online), By Region, And Segment Forecasts, 2024 - 2030

The global tobacco market size is expected to reach USD 1049.87 billion by 2030, expanding at a CAGR of 2.5% from 2024 to 2030, according to a new report by Grand View Research, Inc. The growing demand from developing nations, coupled with the rising proliferation of next-generation products across the globe is driving the demand for tobacco. Furthermore, the high expenditure on the marketing and discounting of products undertaken by major tobacco companies is further driving the industry growth.

Consumption of tobacco through cigarettes has been the predominant factor driving market growth. According to WHO’s 2022 report, there are more than a billion smokers globally and more than 80% of the smokers live in middle-income countries. Government cessation policies have also not been able to cut down the smoking habits of the people. The tobacco demand is inelastic and therefore, a major factor driving the market growth. Furthermore, the introduction of next-generation products by major tobacco companies is another factor expected to fuel the market during the forecast period.

The industry segmented based on product was led by cigarettes. However, the next-generation products (NGPs) are projected to be the fastest-growing segments during the forecast period. The introduction of products such as e-cigarettes, vape, and oral nicotine products is witnessing an increased proliferation, especially among youths and millennials. Furthermore, major tobacco companies are also stepping up their strategies to incorporate the growing trend of NGPs. For instance, in November 2022, Philip Morris International introduced a tobacco heating system known as BONDS by IQOS, which utilizes heat instead of combustion to release the flavors of tobacco. This innovative technology significantly reduces the emission of harmful chemicals, boasting a remarkable 95% reduction when compared to traditional cigarettes. The product is now available in the Philippines and is specifically designed to cater to adult smokers, offering them a range of tobacco tastes to choose from.

The supermarket/hypermarket segment accounted for the largest market share in 2023 and is expected to maintain its dominance over the forecast period. The offline category which includes supermarkets and hypermarkets, smoke stores, and convenience stores among others has accounted for the largest share in the market due to the large volume of stores spread across the world, as well as the convenience they offer. Asia Pacific dominated the tobacco industry globally, primarily due to its huge population. Furthermore, the incremental growth of the working class and the stress associated with their jobs are also driving the consumption of tobacco.

The market for tobacco is characterized by the presence of major global players and fewer small regional players. The key market participants 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., and ITC Limited among others.

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The excessive marketing campaigns run by the major companies have also been a significant factor in 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 market continues to thrive due to various influential factors, persisting despite ongoing endeavors to diminish tobacco consumption and address its detrimental effects. A prominent force behind its resilience lies in the addictive properties of nicotine, a substance inherently present in tobacco products.

Tobacco Market Report Highlights

• Next-generation products are projected to grow at a CAGR of 5.1% from 2024 to 2030 in the forecasted period owing to all the major companies diversifying their product portfolios to include more smoke-free and heated tobacco offerings
• Supermarket/hypermarket channels held the market share of 50.3% in 2023. Consumers prefer these stores as they offer considerable discounts and offers and are present in close proximity to the users
• Asia Pacific held the largest market during the forecast period. The rising number of the working population and the resultant addition of tobacco consumers are driving the market growth

Nicotine engenders a formidable combination of physical and psychological dependence, thereby fueling an enduring demand for tobacco among its existing users. A major factor contributing to the market's resilience is the significant global consumer base. Despite increasing awareness of the health risks associated with the product use, there are still millions of people worldwide who either choose to start smoking or struggle to quit. This large consumer base provides a consistent demand for tobacco products. In 2020, the World Health Organization reported that tobacco usage was prevalent among 22.3% of the global population. Specifically, it was found that 36.7% of men worldwide and 7.8% of women across the globe were tobacco users.

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 several intriguing methods in the advertising strategy has resulted in considerable advancements 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 Centers for Disease Control and Prevention (CDC) estimates, 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 youth. Most people have seen tobacco as a significant part of their life, over the previous decade. The companies are spending huge amounts on marketing campaigns to offset the negative impacts faced by the tobacco industry due to increased health awareness among consumers. According to the Federal Trade Commission’s most recent Cigarette Report in 2021, the expenditure on cigarette advertising and promotion saw a slight rise from $7.84 billion in 2020 to $8.06 billion. The two most significant expenditure categories in 2021 were price discounts given to cigarette retailers, amounting to $6.01 billion, and price discounts provided to wholesalers, which totaled $917 million.

Tobacco Market Report Scope

When these two categories are combined, they represent a substantial 86 percent of the overall spending in the industry. 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 adverse effects of its consumption. To maintain demand in such countries, companies are introducing new products that are significantly less harmful than conventional products. The market has witnessed 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 (NGPs) by the tobacco control community.

Major companies have diversified their strategies to develop new product ranges under the NGP category. 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 2030. The product already accounted for 23.8% of the company's revenue in 2020. IQOS is a line of heated products developed by the corporation as part of its "heat-not-burn" promotion. Furthermore, Marlboro, a well-known cigarette brand, maintains its status as Philip Morris' best-selling product and accounts for an astounding 80% of the company's global sales each year

List of Key Players in the Tobacco Market

• 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