World Market for Tobacco

August 2021

Having experienced varied but ultimately relatively moderate impact from COVID-19 disruption, as the tobacco industry begins to tentatively emerge from the pandemic, the question is to what extent pre-existing patterns of advancing secular decline in cigarettes and migration to reduced risk products will be re-established, or even accelerated.

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Headline market movements for 2020

Cigarettes volume (-4.2%)

Excluding China, the global cigarettes market experienced the largest volume decline in its modern history in 2020, at 4.2%. However, given the unprecedented conditions this was arguably a relatively robust performance with some markets significantly outperforming their secular decline run rates

Average pack price (USD2.77)

Average pack price growth accelerated marginally in 2020 with the global average up by 1.8% (versus 1.4% growth in 2019) to reach USD2.8 (USD3.50, excluding China). Excluding China however, this amounts to growth of 4.1% significantly ahead of previous years and reflective of the fact pricing in China was flat and that volume loss internationally was skewed to lower price markets.

Cigarettes value (2%)

Real terms value growth, excluding China, decelerated somewhat in 2020 but remained within the realms of established value growth in the category over recent years. The relative stability of value is likely in part a function of the fact that some developed markets, such as the US and South Korea, saw strong performance through the pandemic, while volumes were lost through lower value emerging markets.

Illicit trade volume (-6%)

Absolute volume growth of illicit volumes contracted by almost 6% (excluding China) in 2020 to 370 billion sticks. This represents the largest single year decline in illicit volumes in decades (following the largest single year growth in 2019), driven by pandemic border closures and restrictions on movement which prevented consumer access to the product. Economic difficulty could again spur future growth however.

Heated tobacco volume growth (+30%)

The heated tobacco category continued to growth through the pandemic in 20200 with 30% year-on-year volume expansion, only moderately down from the 38% recorded in 2019 as access restrictions and disruption to the face-to-face user acquisition model used in some markets was balanced by increase in e-commerce and heightened awareness of the category.

 

Scope of the Report

Scope

Global Outlook

The tobacco market in 2020
Headline market movements for 2020
Category growth comparisons over 2015-2020: cigars lead
Tobacco products market outlook over 2020-2025
Reduced risk products outlook 2020-2025
Where (total) cigarettes growth and decline came from 2014-2019

Global outlook

Heated tobacco’s place in driving cigarette declines becomes clear
Prospects for global top 15 markets over 2020-2025
Top 15 fastest growing global cigarette markets over 2020-2025
Regional trends in illicit trade: Return to growth expected

Category and Geographic Focus

Cigarette price and revenue growth 2020-2025
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
Competition and regulation to moderate e-vapour growth
Strong growth prospects for heated tobacco
Expansion to fuel nicotine pouch growth but outlook uncertain
OTP set to resume normal service following pandemic disruption

Competitive Landscape

Trends in tobacco use by region
Forecast prevalence declines are steep and broad-based
Top 10 companies: How they performed in 2020
Company regional share comparisons 2020
Brands: How they performed in 2020
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
Future of vapour legislation: Three scenarios
EUTPD 3: Flavoured vapour and slim cigarettes under the spotlight
Modified risk claims: Snus and heated tobacco take the lead
In regulation, the only certainty is increased restrictions

Key Drivers Shaping the Industry

Examining five drivers shaping cigarettes
Tobacco must reckon with pandemic fallout
Declining visibility - the opposite of critical mass
Nicotine universe broadens as fragmentation advances
How modern regulation sunders identity relationships
Beyond nicotine - natural actives and the “new core”
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