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Current and Future Trends in Cigarette Manufacturing

September 2017

The report follows the strategic production decisions of big tobacco companies in the light of the changing industry dynamics. The decline in cigarette volumes along with the growing importance of vapour products already play a vital role in closing and opening factories. Other topics that are discussed include illicit plants and the latest trends in manufacturing equipment. Finally, a forward-looking section explores the possible future directions that tobacco production can take.

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Machine productivity will rise significantly

Increasingly important in a market showing growing commoditisation and rapid technological innovation. Vital for consolidation of production in fewer manufacturing sites in strategic locations. 

95+% efficiency rates and quick format changes will be the norm

Producing centrally for consumers in different markets calls for quick format change functionalities. Existing technology already allows for time efficient adjustments.

Export hubs will continue to grow in importance

Export hubs are becoming central to strategies of big tobacco companies. The overcapacity issues and decline in cigarette volumes reinforces the need for factory consolidation.

Plain packaging will become the norm; opportunities for ultrafast production lines

Plain packaging is already getting on track in several key markets around the world. Along with the apparent threat to tobacco companies, this can lead to the use of efficient ultrafast production lines.

Heat not burn devices will play a bigger role in shaping the future of manufacturing

Heat not burn products are projected to grow significantly in the future. Heating devices and heat sticks are produced in different ways and require different focus.

Splitting up of brands and production; third party manufacturing

With plain packaging, branding and marketing can decline in importance. This opens up opportunities for third parties entering the production process. 

3D printing

3D printing can play a crucial role in manufacturing vapour devices. Acquiring and adapting the technology in-house or consumers using it directly could shape the future of the industry.

Changing dynamics in global tobacco and manufacturing
Snapshot of wholly-owned factories by tobacco multinationals
The importance of closing and downsizing factories
Forecast value CAGR to turn negative in four out of seven regions
Case study: Imperial Brands affected by market contractions
New regulations affect the manufacturing process in two ways
Cost reductions and greater efficiencies lead to factory closures
Opening and upsizing factories: A move to the East
Entering new markets and building export hubs is critical
Examples: Tobacco multinationals investing in export hubs
The progress of next-generation products is key for new plants
Building capacity for next-generation products: PMI leading the way
Preparing for next-gen products: BAT and JTI are also taking action
Illicit cigarettes factories are a growing concern in the Netherlands
Illicit cigarettes factories are also on the rise in the UK and Spain
Trends in manufacturing equipment
Case study: Hauni Maschinenbau GmbH
A look into the future
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