Tobacco Market - Forecast(2024 - 2030)

Tobacco Market Overview

Tobacco Market Size reached $291.4 billion in 2021 and is poised to grow at a CAGR of 4.5% over the forecast period of 2022-2027. Tobacco is a natural plant native to America that was formerly one of the most important crops for American farmers. It is one of the world's most extensively used addictive substances. Tobacco is any of the Nicotiana species (particularly Nicotiana tabacum), which are native to tropical America and are widely farmed for their dried and processed leaves, and are used in pipes, cigarettes, and cigars. It is also used in chewing tobacco, snuff or dipping tobacco, and other less common formulations. Tobacco has a substantially higher nicotine content than other tobacco products. Unlike many other Solanaceae species, it lacks tropane alkaloids, often harmful to humans and other animals. Cigarettes, pipe tobacco, chewing tobacco, and snuff are all examples of tobacco products. Nicotine is also contained in non-tobacco goods, including gum, patches, and other quit-smoking aids. Nicotine from chewing tobacco has the potential to be both a stimulant and a depressant to the central nervous system. Hence it is classified as a stimulant. The neurotransmitters adrenaline and dopamine are released when users inhale nicotine. This chemical causes the "jolt" that smokers experience. Epinephrine increases feelings of relaxation and pleasure. 

According to the Center for Disease Control and Prevention (CDC), firms like Marlboro, Newport, and Camel spent the most money on marketing initiatives aimed exclusively toward teenagers. As a result, it became the most popular brand among teenagers. Tobacco has been a substantial stimulant in most people's lives over the past decade. This factor is predicted to drive the overall demand for tobacco boost market growth during the forecast period 2022-2027.

Tobacco Market Report Coverage

The report: “Tobacco Market Forecast (2022-2027)", by Industry ARC covers an in-depth analysis of the following segments of the Tobacco Market.

By Type: Virginia, Burley, Nicotiana rustica, Oriental, and Others.
By Product Type: Cigar, Cigarette, Kretek, Snuff, Electronic Cigarette, and Others.
By Packaging Type: Paper, Paper Boxes, Plastic, Jute, and Others.
By End Use: Smoking Tobacco, Smokeless Tobacco, Raw Tobacco, and Others.
By Distribution Channel: Supermarkets, Hypermarkets, E-commerce websites, and Others.
By Geography- North America (U.S., Canada, Mexico), Europe (Germany, United Kingdom (U.K.), France, Italy, Spain, Russia, and the Rest of Europe), Asia Pacific (China, Japan, India, South Korea, Australia, and New Zealand, and Rest of Asia Pacific), South America (Brazil, Argentina, Chile, Colombia, and Rest of South America), and Rest of the World (the Middle East, and Africa).

Key Takeaways

• Geographically, Asia-Pacific held a dominant market share in the year 2021 owing to people's growing preference for tobacco products such as cigarettes, oral nicotine, and others and rising stress levels, anxiety, depression, and societal impact.
• The increasing smoking prevalence due to societal influence such as peer pressure and stable demand for tobacco products are the key factors driving growth in the global tobacco market over the forecast period of 2022-2027.
• However, increasing government rules and regulations in many countries and awareness of the bad effects of tobacco on consumers' health are predicted to pose a challenge to the market's growth over the forecast period.
• A detailed analysis of strengths, weaknesses, opportunities, and threats will be provided in the Tobacco Market Report.

Tobacco Market Segmentation Analysis- By Product Type

The tobacco market based on product type can be further segmented into Cigar, Cigarette, Kretek, Snuff, Electronic Cigarette, and Others. In the year 2021, electronic cigarettes will dominate the market. The rising awareness that e-cigarettes are safer than traditional cigarettes, especially among the younger population, as a consequence of various studies undertaken by medical institutions and associations, is likely to push market expansion even further. According to the CDC, e-cigarette sales in the United States increased in general as product prices declined from 2014 to 2020. During this time, total e-cigarette sales climbed by 122.2 %. Furthermore, the makers' ability to customize features like temperature control and nicotine levels is predicted to increase product demand. Moreover, the market expansion is expected to accelerate manufacturers' continuous improvement in new product development.

 However, Cigarette is estimated to be the fastest-growing, with a CAGR of 5.1% over the forecast period of 2022-2027. Owing to the varying kinds of cigarettes available on the market, such as filter cigarettes, menthol cigarettes, clove cigarettes, and so on, cigarette users have a wide range of options. In rural areas of developing countries such as India, China, Pakistan, and others, cigarette smokers have traditionally preferred tobacco products such as hookah, beedi, and others to cigarettes. However, it has been noticed that, in recent years, due to increased product awareness, a considerable portion of the rural tobacco-using population has shifted to cigarette use. As a result of the rising consumption of cigarettes, the industry is poised to increase over the forecast period.

Tobacco Market Segmentation Analysis- By Packaging Type

The tobacco Market based on packaging type can be further segmented into Paper, Paper Boxes, Plastic, Jute, and Others. The paper box segment held a dominant market share in the year 2021. In the packaging sector, paper box packaging is becoming more popular. It is both environmentally friendly and cost-effective, and as a result, it is gaining favor in a number of areas. Manufacturers highly prefer paper box packaging due to rising concerns about the non-biodegradable nature of plastic and metal packaging. For example, Prairie Industries Holdings, a Wisconsin-based packaging company, agreed to buy Sonaco's Europe contract packaging business for $120 million in cash in October 2020. The firm was able to improve its customer offers as a result of this transaction.

However, Paper Packaging is estimated to be the fastest-growing, with a CAGR of 5.9% over the forecast period of 2022-2027. For its capacity to roll or hold tobacco blends in cigarettes. The porosity of cigarette paper must match the type of tobacco blend since it determines how quickly the cigarette burns. Paper is also used to make the cigarette tip, which is the component of the cigarette that forms the mouthpiece and holds the cigarette filter. Furthermore, depending on the size of cigarette products, these sheets come in various forms and sizes. This aid in market expansion throughout the forecast period.

Tobacco Market Segmentation Analysis- By Geography

The Tobacco Market based on Geography can be further segmented into North America, Europe, Asia-Pacific, South America, and the Rest of the World. Asia-Pacific held a dominant market share of 41% in the year 2021. This is attributable to various causes, including prominent market competitors and their product innovations, technical advancements, high discretionary incomes, hectic lives, and peer pressure. Millennials and Generation Z boost demand for tobacco-based products, largely owing to peer pressure. There is also potential for the tobacco market in this region owing to enhanced urbanization and work culture, as well as the growing craze for smoking among the young generation and women.

However, North America is estimated to be the fastest-growing over the forecast period of 2022-2027. This is owing to long working hours and the hectic lifestyles of individuals, and it is one of the significant causes driving up cigarette demand in the North American region. Smoking has recently become more popular as a result of recent trends in adult pubs and parties, as it has been fashionable to do so. Companies are also responding to changing consumer demand by expanding their product offerings and increasing tobacco usage in North America. According to the 2020 National Youth Tobacco Survey, more than 23.6 % of students in the United States use at least one tobacco product, including e-cigarettes. In October 2019, Altria Group Inc. launched a novel cigarette device in the United States, which is currently awaiting FDA approval (FDA). The machine warms the tobacco rather than burning it, preventing the dangerous chemicals produced by the chemical reaction that occurs when smoking a cigarette. Over the projection period, rising tobacco-based product consumers and leading firms' innovation drive market expansion.

Tobacco Market Drivers

Smoking Pattern Roses Among Adults That Have Readily Aided The Market Growth

Since their low cost and accessibility, cigarettes are predominantly utilized by millennials and adults. Furthermore, many adults are addicted to cigarettes and smoke them daily, and cigarette consumption is increasing cigarette demand. The need for cigarettes has been fuelled by workers' hectic schedules, tight deadlines, and long office hours. Adults regard cigarettes as a stress reliever and believe that smoking is the sole way to fix any problems. Cigarette sales soared as a result of this misunderstanding among adults. According to the tobacco-atlas organization, approximately 5.7 trillion cigarettes were smoked globally in 2016, and it is predicted to climb. The tobacco business in China generates about 2.3 trillion cigarettes every year. Cigarette production in China accounts for 40% of global cigarette output. The increasing smoking pattern among adults is therefore fuelling the growth of the Tobacco Market during the forecast period 2022-2027.

Growing Availability Of Various Tobacco Products Is Set To Drive The Market Growth

Tobacco usage is on the rise worldwide, and businesses are focusing on supplying various products, such as smokeless tobacco and electronic cigarettes, enticing individuals to consume tobacco. The demand for smokeless tobacco is increasing as a result of many people's inability to quit smoking. Smokeless tobacco items include gum, powder, vaporizers, and chewable tobacco. According to a study published in 2021, menthol cigarettes were responsible for the addition of 1.5 million new smokers. Electronic cigarettes are growing more popular as a substitute for traditional cigarettes or to differentiate oneself. The usage of e-cigarettes has increased as a response to rising health concerns about traditional tobacco-based cigarettes. As a result of these factors, manufacturers are generating a plethora of products to attract customers, resulting in market expansion from 2022 to 2027.

Tobacco Market Challenges

Tobacco Smoking's Disadvantages Are Limiting The Tobacco Market's Growth

Nicotine, which is found in tobacco smoke, is a stimulant that causes a solid physical and physiological chemical dependency. Nicotine is a neurotoxin and a vasoconstrictor, and it is classified as a class I pesticide. When tobacco smoke is breathed into the lungs, the effects are the most severe. According to numerous studies, nicotine is generally eliminated from the body within 2-3 days. On the other hand, physical and psychological symptoms have been shown to last for more extended periods. Tobacco has poisons in it. Tobacco contains about 4000 compounds, 100 of which are known toxins and 63 of which are known cancers. Nicotine is widely regarded as the most hazardous component in tobacco. According to the (CDC), smoking-related sickness costs the United States more than $300 billion each year, with more than $225 billion spent on direct medical care for adults. Arsenic, cyanide, carbon monoxide, formaldehyde, and ammonia bromide are others. Tobacco use has been linked to lung cancer. As a result, the Tobacco Market's expansion is being hampered by the downsides of tobacco smoking.

Tobacco Industry Outlook

Product launches, mergers and acquisitions, joint ventures, and geographical expansions are key strategies adopted by players in the Tobacco Market. The top 10- Tobacco Market companies are-

1. Altria Group Inc.
2. Reynolds American Inc.
3. British American Tobacco p.l.c. (BAT) Ltd.
4. Japan Tobacco Inc
5. Imperial Brands PLC
6. Philip Morris International Inc.
7. China National Tobacco Corporation
8. ITC Limited
9. Imperial Tobacco Group
10. Hongyunhonghe Tobacco (Group) Co

Recent Developments

• In February 2022, Reynolds American Inc. - a subsidiary of BAT group and U.S. parent company R.J. Reynolds announced a partnership with the National Association of Convenience Stores (NACS) and Conexxus as a sponsor of TruAge – a new digital solution that helps to enhance the current age-verification system with keeping users privacy at mind.
• In July 2021, Japan Tobacco Inc. (JT) declared the official introduction of Ploom X, its next-generation heated tobacco device, on August 17, 2021. Ploom X will steadily be made accessible across Japan, inclusive of convenience stores and chosen tobacco retail stores. It was reported that Ploom X would also be accessible for pre-launch sale at the CLUB JT online shop from July 26, 2021.
• In May 2021, Altria Group Inc. announced to continue its investment in non-combustible tobacco products and acquired the remaining 20% of the Burger Sohne Holdings AG, Oral nicotine pouch global business, for approximately $250 million. Altria entered the oral nicotine pouch category in June 2019 with 80% of Burger Sohne Holdings AG.

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