The global market

Trends affecting our industry

While more than one-fifth of the world’s adult population smokes, the global Next Generation Products market is predicted to more than double between 2016 and 2021.

Recent estimates for the global tobacco market indicate it is worth approximately US$760 billion (excluding China).

More than US$680 billion of this comes from the sale of conventional cigarettes, with around 5,500 billion cigarettes consumed per year.

The tobacco industry remains a substantial contributor to the economies of many countries and the livelihoods of millions of people across the globe, including farmers, retailers and those employed in the tobacco supply chain.

Overall industry volume is estimated to have declined in 2017, and this is expected to continue as the sale of illicit cigarettes continues to rise, regulation increases further and alternative, potentially reduced-risk products continue to develop.

Restrictions on the manufacture, sale, marketing and packaging of tobacco products are in place in nearly all countries and markets.

These restrictions include the introduction of plain packaging, product-specific regulation, graphic health warnings on packs, tougher restrictions on smoking in enclosed public places and bans on shops displaying tobacco products at the point of sale.

Sound regulation is important in the tobacco industry and, where it is developed with all stakeholders involved, can help to ensure an orderly marketplace that serves the interests of both consumers and governments.

However, excessive regulation may have unintended consequences. For example, sudden increases in excise rates can distort competition among tobacco companies and may result in consumers switching to cheaper, illegally trafficked products.

The illegal market for tobacco products is a growing problem that governments and the industry across the world are struggling to control. It is estimated that over 480 billion cigarettes are sold illegally worldwide, depriving national treasuries of billions in tax revenue.

Efforts to tackle the issue of illicit tobacco at industry and government levels have seen some success in recent years. However, relatively benign punishments in proportion to the profits for illegally selling tobacco products makes them an appealing prospect for criminals.

The growth of potentially reduced-risk products

The global tobacco and nicotine market is increasingly diversifying beyond traditional combustible tobacco with the growth of Next Generation Products (NGPs), such as vapour and tobacco heating products, as well as the oral tobacco and nicotine market (e.g. snus and moist snuff).

The NGP market was estimated to be worth US$12.3 billion in 2016, a 34% increase on the previous year, while the oral tobacco and nicotine market is worth an estimated US$12.5 billion.

The global NGP market is predicted to more than double between 2016 and 2021, with growth coming from a diverse array of products. Since 2012, we have invested more than US$2.5 billion in building our Next Generation Products (NGP) business and, alongside our conventional tobacco products, making available a range of new products that meet the evolving preferences of different consumers.

We believe our strategy and Transforming Tobacco commitment positions us to capture a significant share of this exciting market and will contribute substantially to our future growth.

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