Cigarette Unit — A Comprehensive Overview of the Competitive Landscape, Market Demand, and Forecast
With global revenues soaring at an all-time high (>USD 1000 billion), cigarette companies are reporting record profits. As this industry continues to grow, the need for companies with proven experience and longevity is apparent. This growth can be attributed to the global expansion of the use of cigarettes. What once was an accepted and growing part of the Western and European culture has been adopted by the rapidly expanding middle class of third-world nations.
Cigarettes are a highly convenient and reliable method for meeting individual consumer demand. From a production standpoint, cigarettes are relatively easy to make. They can be mass-produced, and because of their small size and shape, they are shipped efficiently. Despite the relatively low cost to produce a single cigarette, the global market commands top dollar for these addictive products. To that end, it’s noteworthy that cigarettes represent a significant percentage of government tax revenue around the world.
Current Market
Statista reports that the Asia Pacific region provides a good landscape for the cigarette units owing to the immense usage, especially in countries like China and India. As of 2021, India’s cigarette segment revenue constitutes a value of USD 13,505 million. The industry CAGR is moving at about 3.7% — enough to help the market reach a volume of 91,604 million pieces in the next four years. Compounded by the fact that a person, in this day and age, consumes 63.5 pieces on average, the cigarette units’ market shows a high degree of promise.
Drivers of Growth
1. Tobacco Consumption
Tobacco consumption has been an established custom in the West for years and has almost equally influenced people in the Asia Pacific. India alone accounts for 267 million tobacco users. Although the restrictions towards the use are stringent, tobacco remains prevalent the social changes.
2. Product Variety
From menthol cigarettes to light/ultralight, the global tobacco industry has seen many different products created for various demographics. Companies are invariably introducing new products to keep up with trends and remain at the forefront of consumers’ minds.
3. Abundant Raw Material and Strong Supply
Raw materials’ supply, such as tobacco leaves and rolling paper, is a key factor in driving the industry. During the emerging markets, these materials are readily available at a low cost, which translates to a high-profit margin for companies.
4. Shift from Traditional Smoking Products to Cigarettes
Rural populations are being drawn to the convenience of cigarettes, whereas traditional smoking products such as hukkah, kretek, and bidis are more or less the features of the urban markets.
5. Increasing Disposable Income
In the past, cigarettes have been seen as a luxury commodity. However, with the emergence of the middle class and increased disposable income levels, more and more market share is expected to go to cigarettes.
Market Challenges
1. Regulations Discouraging Smoking
Over the past decade, many countries have imposed strict policies against smoking. This has led to the introduction of numerous anti-smoking bills in India, among other countries. For instance, the legislation enacted in 2007 prohibits smoking in all enclosed public places and other workplaces.
2. Health Concerns
WHO reports that 10 million Indians die each year due to smoking.Besides, regular tobacco consumption is the prime contributor to the most lethal non-communicable diseases such as cancer and cardiovascular ailments.
3. Rising Anti-Tobacco Sentiments
Many countries have seen anti-tobacco sentiments rising among their citizens. This has dampened the prospects of companies making cigarette products and is expected to negatively impact their sales in the forthcoming years.
4. High Tobacco Tax
In some countries, tobacco products are subject to a high tax which reduces the demand for cigarettes. It also makes it highly challenging for the new entrants to engrave their foot in the industry.
5. Warning Signs
Smoking products are packaged with warning signs by the regulatory authorities to educate the people around the risks associated with intensive smoking.
What does the Future Hold?
While cigarette unit production and consumption have been experiencing rapid expansion, this industry is ripe with volatility and uncertainty. New regulations and public health concerns, coupled with the growing number of lawsuits surrounding cigarette use and advertising, have created an increasingly hostile business environment for traditional tobacco companies, and understandably so.
The private and public healthcare systems worldwide have invested enormous amounts of time and effort into reducing the incidence of smoking. As a result, tobacco products are being aggressively targeted by these organizations. Nevertheless, the question remains: With growing numbers of smokers, is there an opportunity for this industry?
Curious to know more? The tobacco industry has seen its share of expansion over the last two decades. However, the global market is still prone to challenges, and it’s essential to remain informed of these trends to make informed decisions. EIRI provides extensive information about the worldwide market, including size, forecasts, and relevant data points in the Cigarette unit report.
