Tobacco Market Size, Share & Trends Analysis Report By Product (Smokeless Tobacco, Cigarettes, Cigars & Cigarillos, NGPs, Kretek), By Distribution Channel (Supermarket/Hypermarket, Online), By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global tobacco market size was estimated at USD 867.55 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 2.1% from 2023 to 2030 due to the rising tobacco consumption in the developing regions of Asia and Africa. 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.

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 Centre 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.

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 a number of 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 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.

Product Insights

The cigarettes segment accounted for the largest share of 81.6% of the overall revenue in 2022. Cigarette consumption has remained stable due to the introduction of flavored and menthol cigarettes. It can also be attributed to the availability of small cigarettes that facilitate smaller amounts of tobacco consumption for smokers who wish to cut down on their smoking habit. Cigarettes have an inelastic demand, which is a major factor that has driven the segment growth despite the heavy taxation that has been levied across the globe.

The rising popularity of partying and pub culture among millennials and working-class communities has especially fueled the demand for flavored and unflavored cigarettes around the world in recent years. Furthermore, emerging economies, such as India and Thailand, are seeing a significant increase in cigarette demand as a result of the rising youth population in these countries. The market is expected to benefit greatly from the launch of NGPs, which is also expected to become the fastest-growing segment over the forecast period.

Major companies are investing heavily in the development of NGPs as they see this category to overpower other products in the market. For instance, in March 2023, Aquios Labs developed AQ30, a water-based technology for vaping that offers a smoother experience, reduces harm, and produces more natural flavors. Innokin Technology has launched disposable devices and reusable pod systems using AQ30, with the INNOBAR C1 pod system winning the "Biggest Breakthrough Innovation" award in 2022.

Distribution channel Insights

On the basis of distribution channels, the global industry has been further categorized into supermarkets/hypermarkets, convenience stores, tobacco shops, online, and others. The supermarkets/hypermarkets segment led the market and accounted for the largest share of 50.4% in 2022. Consumers prefer these stores as they offer considerable discounts and offers and are present in close proximity to the users, this facilitates immediate demand fulfillment. The online distribution channel segment is forecasted to register the fastest growth rate of 2.8% from 2023 to 2030.

This is owing to the accessibility and convenience offered by online channels. Purchasing tobacco products online allows customers to browse through a wide range of options, compare prices, and make purchases from the comfort of their own homes. This convenience factor has significantly contributed to the popularity of online channels, especially among busy individuals or those residing in remote areas with limited access to physical tobacco retailers.

Regional Insights

Asia Pacific held the largest share of nearly 60.9% of the overall revenue in 2022. Offline infrastructure improvements and extensive brand marketing campaigns by prominent companies in key markets, such as India, Bangladesh, China, and Philippines, are likely to support market expansion in this region. In addition, companies are focusing on customers by introducing flavored cigarettes, which are widely popular among consumers, particularly youth and millennials. North America is expected to grow at a CAGR of 2.9% over the forecast period owing to the availability and accessibility of tobacco products. The well-established distribution network ensures that these products are widely available in retail outlets, making it convenient for consumers to purchase them.

According to the 2022 National Youth Tobacco Survey, approximately 16.5% of high school students in the U.S. are consumers of at least one tobacco product, which includes e-cigarettes. According to Healio, in 2022, West Virginia had the highest smoking rate in the U.S., at 23.8%. Europe is projected to have a steady growth rate of 2.2% in the projected period due to the presence of the target population. Middle East & Africa is also expected to be another lucrative region for manufacturers and is estimated to showcase a CAGR of 2.5% over the forecast period. According to data published by the American Cancer Society and Vital Strategies in its sixth edition of The Tobacco Atlas, the Middle East consumed an estimated 400 billion cigarettes per year. The survey reveals considerable rises in use in Bahrain, Lebanon, Egypt, Oman, and Saudi Arabia.

Key Companies & Market Share Insights

The market is competitive due to the presence of major comprises. These companies focus on strategies, such as launching and developing next-generation products. For example, in April 2023, Scandinavian Tobacco Group (STG) acquired the brand XQS from Swedish company XQS International AB, a premium cigarette brand that is sold in Sweden, Norway, and Finland. The brand has a strong market share, and STG expects the acquisition to be accretive to its earnings. Some of the key players operating 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 Ltd.

Tobacco Market Report Scope

Global Tobacco Market Segmentation

This report forecasts revenue growth and provides an analysis of the latest trends in each of the sub-segments from 2017 to 2030. For this report, Grand View Research has segmented the tobacco market based on product, distribution channel, and region:

• Product Outlook (Revenue, USD Billion, 2017 - 2030)

  • Smokeless Tobacco

  • Cigarettes

  • Cigars & Cigarillos

  • Next Generation Products

  • Kretek

  • Others

• Distribution channel Outlook (Revenue, USD Billion, 2017 - 2030)

  • Supermarket/Hypermarket

  • Convenience Stores

  • Tobacco Shops

  • Online

  • Others

• Regional Outlook (Revenue, USD Billion, 2017 - 2030)

  • North America

    • U.S.

    • Mexico

    • Canada

  • Europe

    • Germany

    • UK

    • France

    • Italy

    • Bulgaria

    • Spain

    • Scandinavia

  • Asia Pacific

    • China

    • Japan

    • India

    • Indonesia

    • Malaysia

  • Central & South America

    • Argentina

    • Brazil

  • Middle East & Africa

    • UAE

    • South Africa

    • Egypt

    • Lebanon