Driven by the rapid expansion of heated tobacco in Japan and the emerging use of non cig-a-like closed systems, growth in vapour products re-accelerated in 2017. Regulation and innovation will determine the near-term shape of the global category while in the longer term vapour continues to be an agent of transformation for tobacco businesses.
The total global vapour products market reached a value of USD18 billion in 2017. Continued rapid uptake of iQOS (and newer entrants) ensured that Japan overtook the US as the largest vapour market (though US remains leader in e-vapour). Vapour products is rapidly eclipsing more well-established tobacco categories, and by 2020 will be the single largest category, outside cigarettes.
Growth of 51% globally in 2017 meant that growth in vapour accelerated again compared to the moderate 37% experienced in 2016. This increase in the pace of growth was driven by the speedy expansion of heated tobacco as a category (though closed vaping systems also saw faster growth in 2017 vs 2016).
Once again, the highest single rate of growth within vapour products in 2017 was recorded not by heated tobacco products, but by non-cig-a-like closed systems. Driven primarily by the success of JUUL and other pod mods brands in the US, growth is expected to expand internationally in the coming years.
An estimated 35 million people were regular dual or sole users of e-cigarettes and vapour products globally in 2017. It is likely that a small majority of consumers remain dual users (especially in emerging markets), although over time sole users will account for a greater proportion of the consumer base.
Driven by iQOS, but buttressed by increasing numbers of new launches, the heated tobacco category virtually matched 2016’s 200% rate of growth (albeit from a larger base) and is almost certain to become the single largest vapour category in 2018.
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