World Market for Tobacco

July 2022

The global tobacco industry bounced back from the early impact of the COVID-19 pandemic to record strong volume growth in its key category, cigarettes. At the same time, the harm reduction narrative returned to the fore in some markets, as heated tobacco, in particular, continued to attract consumers migrating from other categories.

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Key Findings

Cigarettes volume robust

At the overall level, the cigarettes industry bounced back definitively from the historic lows of 2020, with 0.5% volume growth in 2021 (-0.3% excluding China) representing its strongest performance in a decade. However, some markets, notably the US, returned to established rates of decline, and other markets are expected to follow suit over the forecast period.

Cigarettes value falters

Value expanded by just over 1% in 2021, as robust volumes were not matched by strong price growth. The average pack price at a global level grew by just 0.7% in 2021, to reach USD2.99 (USD3.71 excluding China). This presages further struggles that the industry will have over the forecast period in generating revenue growth from a down-trading category.

Illicit volume static

Illicit trade volumes subdued by the lingering impact of the pandemic in 2021, albeit with a moderated 1% (excluding China) volume decline (versus an 8% decrease in 2020). Penetration remained static at just under 12%, but is predicted to rise to just under 14% by 2026, as the economic impact of the pandemic unwinds.

E-vapour grows again

Global e-vapour value returned to growth in 2021, up by 10% on a sluggish 2020, driven in particular by a strong performance by the closed systems category. However, for the second year in a row, the category’s largest region, North America, was a drag on growth, as regulatory uncertainty and low public confidence constrained the market.

Heated tobacco rumbles

Heated tobacco retained its solid momentum in 2021, with growth of 33% in stick volumes, representing a slight increase on 2020’s 29%. Category growth will, however, slow substantially, as expansion in Asia Pacific moderates to just 7%, and the disruption caused by Russia’s invasion of Ukraine substantially reduces growth in that region in comparison to 2021.

Introduction

Scope

Global outlook

2021 tobacco market in key figures
Headline findings for 2021
Category growth comparisons 2016-2021
Category growth comparisons 2021-2026
Heated tobacco continues to cement place as largest RRP category
Where total cigarettes growth and decline will come from over 2021-2026
Deconstructing historic cigarette volume loss: alternatives playing large role in places
Mixed prospects for the top 15 global markets over 2021-2026
Top 15 fastest growing global cigarette markets over 2021-2026
Unwinding of pandemic pressures will return illicit volumes to growth

Category and geographic focus

Excise increases in Australia to increasingly decouple it from other global markets
China: positioning and restrictions on alternatives support cigarette volumes
US: only certainty is return to cigarette declines
Russia : i ncreased isolation likely to support cigarettes and curb RRP
Indonesia: potential for resilience in cigarettes volumes
Japan: e ngine of industry transformation continues to purr
Philippines: excise measures impact cigarette volumes
E-vapour forecast growth heavily concentrated in closed systems
Leading disposable brands here for a good time, but maybe not a long time
HTP growth becoming increasingly broad-based
Perception and regulatory restrictions remain challenges for heated tobacco expansion
A growing international presence with promise
Rapid US expansion to fuel nicotine pouch growth but regulatory outlook unclear
All OTP categories except cigarillos predicted to grow over the forecast period

Competitive landscape

Trends in tobacco use by region
Only 4% of markets forecast to see any growth in smoking prevalence
Global company share displays significant consolidation
Cigarette company share by region
Top 15 brand ranking shows benefits of wider exposure
Legislation: birth year bans enter the spotlight
Legislation: nicotine reduction has potential to shift the industry’s trajectory
Legislation: increased scrutiny of cigarette alternatives
Key drivers
Pandemic ripples expected to influence the industry for years to come
Diminishing resonance of tobacco use is self-reinforcing
Nicotine universe expands but format fragmentation happening in slow motion
Additional regulation in both character and degree facing the industry
Substitutes for tobacco in the spotlight

Tobacco

Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.

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