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World Market for Cigarettes

July 2020

Like every other CPG industry, the recent history and short-term future evolution of the global cigarettes industry will be dominated by the ongoing fallout of from the Coronavirus pandemic. Coming out of a moderately improved volume and value performance in 2019, the industry is likely to suffer disruption in 2020 with high single-digit volume declines expected and intensifying commoditisation up to 2024.

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Key Findings

Cigarettes volume

2019 represented a strong year in relative terms for the global cigarettes industry. Volume decline, excluding China, of 1.9% was the best performance since 2016 and made 2019 the third best year in the last decade. However, 2020 is expected to be considerably worse as global cigarettes faces the impact of Coronavirus (COVID-19).

Average pack price

Average pack price growth accelerated marginally in 2019 with the global average up by 1.5% (versus 1.1% growth in 2018) to reach USD2.6 (USD3.30, excluding China). However, this uptick still represents the second slowest unit price growth on record since 2008 and despite some short-term respite in 2020 year-on-year unit price expansion is expected to slow to just over 1% by 2024. 

Cigarettes value

At 2.7%, cigarettes value decelerated slightly in 2019 with more sluggish growth in developed markets such as Western Europe and North America balanced by quicker expansion in China, rest of Asia Pacific and Eastern Europe. In constant terms, revenue remains challenging for the industry to deliver - particularly in the context of the disposable income pressures that will follow the COVID-19 pandemic.

Illicit trade volume

Absolute volume growth of illicit volumes surged by almost 7% (excluding China) in 2019 to reach 400 billion sticks globally. This represents the largest single year growth in illicit volumes in decades, even ahead of the upcoming COVID-19 effect and was driven by a significant shift in the Russian market which accounted for 45% of the additional volumes

E-vapour value growth

E-vapour value growth decelerated in 2019 (albeit relatively marginally from 2018) as regulatory action and the EVALI crisis in the world’s biggest e-vapour market, the US dented consumer confidence there and internationally. While existing users largely appear to have stuck with the category, the lingering impact of the crisis (and reduced access through COVID-19) may constrain new outswitching from cigarettes.

Introduction

Scope

Global Outlook

The tobacco market in 2019
Headline market movements for 2019
Category growth comparisons over 2014-2019: cigars lead
Tobacco products market outlook over 2019-2024
Where (total) cigarettes growth and decline came from 2014-2019
Prospects for global top 15 markets over 2019-2024
Top 15 fastest growing global cigarette markets over 2019-2024
Regional trends in illicit trade: forecast

Pricing and Geographic Focus

Cigarette volume and value forecast by region
The struggle for revenue growth: pricing 2019-2024
COVID will amplify consumer price sensitivity and downtrading
Selected market attractiveness by revenue and affordability
China: COVID-19 offers short-term disruption
US: COVID-19 and e-cigarette regulation disrupt the trajectory
Russia: significant downtrading cemented by COVID-19
Indonesia: volume losses continue but value robust
UK: COVID-19 to amplify significant commoditisation
India: hostility to tobacco evident in COVID-19 policy approach
Bangladesh: a clear growth proposition

Competitive Landscape

Trends in smoking prevalence by region
Forecast prevalence declines are steep and broad-based
Top 10 cigarettes companies: How they performed in 2019
Company regional share comparisons 2019
Brands: how they performed in 2019
Key cigarettes new product development and innovation focus areas
Legislative restrictions on the global tobacco industry
Could COVID-19 establish a new normal for tobacco control?
The public holds generally conservative views on regulation
Drivers of flavour restrictions
In regulation, the only certainty is increased restrictions

Key Drivers Shaping the Category

How key megatrends are impacting cigarette consumption
Examining five drivers shaping cigarettes
Cigarettes cannot escape COVID disruption
Declining visibility: the opposite of critical mass
Nicotine universe broadens as consumers embrace harm reduction
How modern regulation sunders identity relationships
Beyond nicotine: the search for natural actives
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