World tobacco market
The world cigarette market is broadly stable with around six trillion cigarettes consumed globally each year.
Industry Overview
The world cigarette market is broadly stable with around six trillion cigarettes consumed globally each year, including China which accounts for around a third of total global consumption.
Excluding China, the four largest international tobacco companies, Philip Morris International, British American Tobacco, Japan Tobacco and Imperial Tobacco, hold 69 per cent of the total cigarette market.
Smoking incidence is expected to continue to decline in developed mature markets, as the percentage of smokers within total populations reduces. However, this is offset by growth in emerging market regions, as the number of adults in those regions is expected to grow.
Consumer demand will continue to evolve, with ongoing downtrading in mature markets as well as uptrading in emerging markets.
The last decade has been characterised by increasing regulation, particularly in mature western markets where legislation on tobacco advertising, health warnings and smoking in public places is commonplace. Regulation is also rapidly developing in emerging markets.
Excise duties have also increased, especially in developed markets and, as prices have increased, consumers seeking value have downtraded to value brands both within cigarette and into other tobacco products. As a result, the other tobacco products sector has grown and this trend is expected to continue.
The cigar market is broadly stable and is concentrated in the developed markets of Western Europe and the USA, with growth in the emerging markets of Eastern Europe and Asia.
Industry Growth Opportunities
While the tobacco industry is mature, we believe that there are still many opportunities to grow profits organically and potential further bolt-on acquisitions.
Organic growth opportunities include volume development across emerging markets and product categories, market share gains from competitors, entry into new markets, new brand launches and the introduction of additional products in existing markets. In the context of broadly stable global market volumes and subject to specific market dynamics, we anticipate that price increases will increase industry revenues and profits.
