Smoke Screen: Global Tobacco Manufacturing Industry Market Research Report Now Available from IBISWorld

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Tobacco consumption has increased on a global basis over the past five years, although smoking rates have declined in several markets, including the United States, Australia and Japan. However, price increases have offset lower smoking rates in several cases, and increased demand for higher priced premium brands from developing countries has driven revenue growth over the past five years. As global economic conditions improve, demand for higher priced, premium products is expected to increase, boosting industry profit. The world price of tobacco leaf, the major raw material for tobacco product manufacturers, is expected to increase overall over the five years through 2017. However, manufacturers are likely to be able to pass on such increases. Factors such as litigation may have a negative effect on profit over the next five years. For these reasons, industry research firm IBISWorld has added a report on the Global Tobacco Manufacturing industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Smoking rates are likely to continue declining in high-income countries, hampering demand.

According to the World Health Organization, consumption of tobacco products has increased globally as rising smoking rates in the developing world and emerging countries has surpassed the decline in smoking rates for higher income countries. Falling consumption in high-income countries is generally attributed to a mix of increasing excise taxes in several countries (according to the World Health Organization, a 10.0% increase in taxes results in a 4.0% fall in demand); increasing regulations; and greater health awareness, says IBISWorld industry analyst Steven Connell. Overall, these factors combined will contribute to a 2.9% annualized increase in Global Tobacco Manufacturing industry revenue over the five years to 2012, totaling $491.4 billion. This figure includes excise taxes (which represent about 50.0% of revenue). The major product manufactured by the industry is cigarettes, which account for about 80.0% of industry revenue.

The Global Tobacco Manufacturing industry has a medium level of concentration. According to Connell, “Industry concentration has been increasing as the major players have been increasing their market shares, primarily by mergers and acquisitions.” For example, British American Tobacco's US division, Brown and Williamson, merged with RJ Reynolds Tobacco Company in 2004 to become Reynolds American Inc. Altria Group acquired cigar manufacturer John Middleton in 2007. Another acquisition was Japan Tobacco's purchase of Gallaher Group PLC. Altria spun off its Philip Morris International division in 2008 and acquired smokeless tobacco manufacturer UST Inc. in 2009.

Global tobacco manufacturers can expect revenue, employment and tobacco consumption trends from the past five years to persist over the next five years. Smoking rates are likely to continue declining in high-income countries, given the expected increase in antismoking legislation, antismoking campaigns and greater awareness of smoking health risks. Overall tobacco consumption will increase, however, driven by the overwhelming increase in consumption in developing countries. Excise taxes will also rise over the next five years, which will boost overall prices for tobacco products as manufacturers and retailers pass the tax burden on to consumers. Rising prices for cigarettes and other tobacco products are expected to compensate manufacturers for declines in volumes sold in some countries and will help companies to maintain profit margins. For more information, visit IBISWorld’s Global Tobacco Manufacturing industry report page.

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IBISWorld industry Report Key Topics

Companies in this industry manufacture cigarettes, cigars, smoking and chewing tobacco, and other tobacco products such as snuff and bidis. The industry also includes tobacco stemming and redrying establishments. These establishments buy tobacco leaf from farmers and prepare the leaf for use by cigarette manufacturers, which may be separate enterprises or under the same ownership.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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