Tobacco Market by Product (Cigarette, Smoking Tobacco, Cigar & Cigarillos, and Smokeless Tobacco), Sales Channel (Stored Based Retailing and Non-store Retailing), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021-2028

Tobacco Market Analysis

The tobacco market is predicted to garner $901,361.8 million in the 2021-2028 timeframe, growing from $744,167.8 million in 2020, at a healthy CAGR of 2.5%.

Market Synopsis

Inclination of millennials towards the consumption of tobacco products is expected to accelerate the growth of tobacco market.

However, increased awareness regarding harmful effects of consuming tobacco is likely to hinder the market growth.

According to the regional analysis of the market, the Asia-Pacific tobacco market is anticipated to grow at a CAGR of 3.0%, by generating a revenue of $453,385.00 million during the review period.

Tobacco Products Overview

Tobacco products are manufactured from the processed leaves obtained from a plant known as ‘nicotiana’. There are various types of tobacco products available in the market like cigarette, cigar, snuff, and more. These products are widely available in convenience stores, retail shops, and more. Tobacco consumption is hazardous for health as it leads to cancer and various other organ damages like lungs and liver. Therefore, governments across the world have started imposing restrictions on its sale.

Impact Analysis of COVID-19 on the Tobacco Product Market

Prevalence of COVID-19 pandemic, since 2019, has had a negative impact on the growth of the tobacco products market. As the government of the countries across the world have imposed strict travel and transportation restrictions, the tobacco manufactures are unable to procure raw materials for tobacco products manufacturing. This factor has decreased the market of tobacco products. Also, sales of tobacco products have been seriously affected due to the complete shutdown of several shops and convenience stores. Moreover, the production of tobacco products has witnessed a decline due to the shutdown of various companies amid the pandemic. This has further led to a major decline in the market shares of tobacco products. Apart from this, many researchers have also claimed that consumption of tobacco will increase the risk of COVID-19 infection in the people. This factor is likely to impede the market growth in the future.

Inclination of People towards Tobacco Products is projected to the Drive Tobacco Market

Increasing consumption of tobacco products such as cigarettes, cigars, and oral nicotine among the millennials owing to prevalence of social influence, anxiety, depression, and inferiority complex is expected to drive the market of tobacco in the predicted timeframe. Trends of smoking cigarettes and consuming oral nicotine are increasing at a fast pace. Many people smoke under the influence of their surroundings and friend circle, and soon they become addicted. For instance, according to an article published by Center for Disease Control and Prevention, national public health agency, in 2019, approximately 14 of every 100 adults aged 18 years or older in the U.S smoked cigarettes. This means nearly 34.1 million adults in the United States smoke cigarettes. This factor is anticipated to boost the market growth in the coming years.

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Rise in Health Awareness about the Ill-Effects of Tobacco to Restrain the Market

Adoption of a healthy lifestyle and increased awareness about the harmful effects of tobacco consumption are expected to restrain the market growth of tobacco products in the forecast timeframe. Various plays, campaigns, advertisements, road shows, and skits are organized by non-profit organizations, government, local authorities, and clubs to highlight the adverse effects of tobacco on the consumer’s health. Owing to this, many people have stopped consuming tobacco and quit smoking. For instance, according to a report published by Center for Disease Control & Prevention, national public health agency, in 2019, a major decline was observed in the number of smokers from 20.9% in 2005 to 14.0% in 2019. Thus, this initiative is estimated to severely affect the market growth.

Increasing Demand for New Flavors of Tobacco may Serve Various Opportunities for the Manufacturing Industries in the Market

Continuous innovation and launches of new tobacco products and flavors are expected to provide a boost to the growth of the market soon. Tobacco manufacturing companies are spending on their research and development activities to meet the demands of their customers and introduce new textures and flavors for tobacco products. Also, many new tobacco sales outlets have been opened at various places which is also projected to flourish the market of tobacco products in the forecast time period. For instance, according to a news published on Sentinel Source, southwestern New Hampshire media enterprise, on May 31, 2021, a new smoking lounge, cigar shop, and a bar are expected to open at various places in Keene, the US. Such factors are likely to propel the market growth in the coming years.

To know more about tobacco market opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The cigarette sub-segment is predicted to have a dominating market share in the global market and register a revenue of $794,145.20 million during the forecast period. This growth is projected to the increased number of smokers owing to factors such as high stress level. Also, easy availability of cigarettes at the convenience shops is another factor contributing towards the growth of the sub-segment.

The cigar & cigarillos sub-segment is predicted to have the fastest growing market share in the global market and register a revenue of $42,057.70 million during the forecast period. This growth is attributed to the fact that the manufacturing companies are constantly launching new cigar products with different flavors like clove and chocolate in the market to attract the customers. Also, many new cigar shops are set to open at various places which is likely to boost the market growth of the sub-segment in the coming years.

Source: Research Dive Analysis

The non-store retailing sub-segment of the market is projected to have the fastest growth and surpass $75,865.50 million by 2028, with an increase from $57,694.70 million in 2020. This growth is attributed to the increased preference for online purchasing. Online shopping has become a popular trend as it is very convenient to shop while staying at a place. Also, varieties of tobacco products are easily available online with huge discounts which are otherwise available at special stores in expensive range. This feature is expected to drive the sub-segment market in the projected time period.

The store based retailing sub-segment of the market is projected to have the dominating market share and reach $826,183.20 million by 2028 in a time frame of 2021-2028. This growth is attributed the fact that, for most people living in the middle and low-income countries, purchasing tobacco products at the stores is more convenient compared to buying online. Also, many small shops are present at various places which has increased the reach of tobacco products to the customers. Thus, this factor is likely to boost the sub-segment’s growth in the coming years.

Source: Research Dive Analysis

The Market for Tobacco Products in Asia-Pacific to be the Most Dominant and Fastest

The Asia-Pacific tobacco market accounted $359,433.10 million in 2020 and is projected to register a revenue of $453,385.00 million by 2028. This growth is due to rising population and increased consumption of tobacco among the millennials due to social influence. Also, low taxation on tobacco products in low-income countries is likely to boost the market growth. Government in countries like Indonesia, highly supports the emergence of tobacco industries as they provide employment to the people in the country. Therefore, they do not impose strict laws and taxations against tobacco products. For instance, according to an article published on Tobacco Free Kids, on August 5, 2020, excise taxes on tobacco in Indonesia are well below the numbers recommended by World Health Organization (WHO). Such factors are likely to flourish the market growth in the future.

Competitive Scenario in the Tobacco Product Market

Product launches and acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

The companies involved in the tobacco product market are British American Tobacco, Japan Tobacco International, China Tobacco International, Altria Group, Imperial Brand Plc., ITC Group, Phillip Morris International, Swedish Match, and Universal Corporation.

Porter’s Five Forces Analysis for the Tobacco Market

• Bargaining Power of Suppliers: Since there are strict government regulations on tobacco leaves cultivations, and the products, the manufacturing companies are bound to set the selling price of their tobacco products based on government rules and norms.
  Hence, the bargaining power of suppliers is moderate.
• Bargaining Power of Buyers: Buyers, in case of tobacco market, have to compromise on the cost of the products as the suppliers present in the market are liable to mark their products at optimum range. 
  Hence, the bargaining power of buyers is moderate.
• Threat of New Entrants: Startups entering market face a tough competition with already established brands in the market in terms of quality product and loyal customers. Also, strict government policies regarding the tobacco product manufacturing make it difficult for the companies to generate a huge revenue.
  As a result, the threat of the new entrants is low.
• Threat of Substitutes: Quick product manufacturing along with the best quality being offered in the market by companies attract customers. Since, tobacco products are very harmful for the body, many manufacturing companies are introducing alternatives that pose less threat to the consumer’s health. 
  Therefore, the threat of substitutes is high.
• Competitive Rivalry in the Market: The manufacturing companies are launching their products with alternative strategies and less harmful products. 
  Therefore, competitive rivalry in the market is high.