Global market

Combustibles

While combustible cigarettes remain the largest global tobacco category, their volumes have seen a gradual fall over many years driven by increased regulation and changing societal attitudes. Total tobacco consumption, including illicit, declined 2% from 2018 to 2019; this decline rate is forecasted to remain between 2%-3% over the next three years, while the retail value of tobacco sales is expected to increase by between 2%-4% each year, driven principally by pricing. The most recent estimates for the legal global tobacco market (2018) indicate that sales are worth approximately US$814 billion. More than US$700 billion of this comes from the sale of conventional cigarettes, with over 5,300 billion cigarettes consumed per year by over 19% of the world’s population. A contributing factor to the decline of legal tobacco volumes is the continued rise in the consumption of illicit products.

Cigarettes are a reliable source of tax revenue for governments worldwide, and price differentials between markets, regulatory changes and broader macroeconomic pressures have driven the establishment of a significant and growing illicit cigarette trade, now estimated to account for 11.2% of the global tobacco market. It is generally accepted that there is a direct correlation between steep and ad hoc increases in taxes and an increase in illicit sales, with the current sanctions in many countries doing little to deter criminals for whom profits from the illegal sale of tobacco remain an appealing prospect.

New Category Products

The combustible market is likely to be the mainstay of the industry’s profits for some years to come, but New Category Products, such as Vapour Products (e-cigarettes) and Tobacco Heating Products, are constantly advancing, both in terms of technology and market growth.

Growth in these products continues to be strong. In 2015, globally, sales of Vapour Products are expected to have grown to US$6.1 billion, up from US$3.9 billion in 2014, according to data from Euromonitor International. That growth trend is expected to continue through to 2020. Vapour Products (e-cigarettes) are estimated to account for the majority of that growth.

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