The tobacco industry is facing many headwinds. The industry is still dominated by tobacco giants such as Philip Morris International but companies are being forced to diversify their investments in order to remain relevant in the future.
Cigarette sales have been on the decline for years. Younger consumers are more aware of the dangers of cigarettes and are increasingly either switching to electronic cigarettes or not smoking at all. Coupled with the increasing number of populations with access to legal cannabis, tobacco manufacturers are focusing more on marketing their own e-cigarettes, and investing in other e-cigarette and cannabis companies in order to mitigate the loss of revenue from declining cigarette consumption.
Despite declining cigarette sales, the value of the global tobacco market is set to continue growing. Revenue is expected to reach over 888 million U.S. dollars by 2025, a nearly 16 percent increase compared to 2020.
The majority of the industry's cigarette sales are derived from Asia and e-cigarettes represent a small, but growing revenue stream.
Cigarettes made up the vast majority of tobacco product sales in convenience stores in the United States at 56.1 billion U.S. dollars in 2020. The least purchased tobacco product was roll-your-own tobacco with sales of just 50 million dollars in that year.
While still the most common means of nicotine ingestion, cigarette use is declining year over year while non-combustible methods such as vaping are growing at a continuous rate.
E-cigarettes still represent a comparatively small share of the overall tobacco industry, but the segment is growing rapidly. Sales are set to double their 13.6 billion U.S. dollar value from 2017 to 27 billion dollars by 2025.
While cigarette consumption has been declining for years, e-cigarette use has seen a swell of support, particularly among younger consumers.
The tobacco industry is still lead by power houses like British American Tobacco and Philip Morris International, makers of such well known cigarette brands like Camel and Marlboro.
In 2020, British American Tobacco was the largest tobacco company on Earth, with net sales totaling 33 billion U.S. dollars. Philip Morris international was a close second and Imperial Brands trailed in third.
The majority of today’s tobacco consumers are in Asia. This should come as no surprise as Asia is also home to the largest share of the world’s population. China is the single biggest country consumer of cigarettes in the world, by far. After Asia, Europe is the next greatest consumer of cigarettes, much of which is concentrated in Eastern Europe. Africa currently has the lowest amount of smokers, but use is growing with increases in population and purchasing power.
Smoking in the U.S.The tobacco industry encompasses the manufacturing and selling of all products derived from tobacco, smokable and non-smokable. The segments within these categories can be further subdivided into the smokable products of cigarettes, cigars, and loose tobacco for rolled cigarettes, pipes, and waterpipes. Smokeless products include those such as chewing tobacco, snuff and snus. The newest tobacco innovation is vaping or e-cigarettes which heats a liquid to a temperature below combustion and turns the liquid into a gas which can be inhaled.
The biggest players in the tobacco industry are companies such as British American Tobacco and Philip Morris International which produce many of the world's most recognized brands of cigarettes. As cigarette consumption rates continue to fall, manufacturers have begun to embrace e-cigarettes as a means to maintain revenue while touting their harm-reduction benefits when compared with traditional tobacco smoking.
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