Exclusive extracts from this 124-page-long report:
- What is the business?
The tobacco industry is comprised of companies engaged in the growth, preparation, shipment and distribution of tobacco and related products. A handful of large multinationals dominate the international market, whose revenues are mainly generated by cigarette manufacturing. In 2015, the global tobacco market was worth approximately €695.8 billion, including €631.2 billion in cigarette sales (91% of the global tobacco market). About 5.6 trillion cigarettes were consumed worldwide in 2015. […]
- What are the main markets?
Since the 80s, tobacco giants have bought up thousands of local and state-owned tobacco enterprises to enlarge their manufacturing capacity and sales in developing markets, where health awareness is lower compared to the West and regulations softer. As cigarette consumption in the US and Western Europe have been declining over the past decades, companies have been keen to find new growth opportunities in countries with better market conditions and softer legal frameworks, particularly China, the world's largest producer and consumer of tobacco products, as well as other emerging countries.
- Who are the key players?
The “Big Four” private corporations dominate the international tobacco market: Philip Morris International, Imperial Brands, BAT and Japan Tobacco, which together accounted for 38.9% of the global cigarette market in 2016 (70.0% excluding China). On the other hand, some countries have large state-owned tobacco companies, which are usually highly protected from foreign supply. This is the case of China, whose government-owned tobacco company (CNTC) accounted for 44.2% of the global cigarette market in 2016. [...]
- How intense is competition?
Global competition in the tobacco industry is relatively moderate as the market is currently dominated by the “Big Four” companies which benefit from large capabilities, namely Philip Morris International, Imperial Brands, Japan Tobacco and British American Tobacco, which account for 70% of the global market (excluding China). In addition, ongoing consolidation – demonstrated by the recent merger of Reynolds American and British American Tobacco – leads to the emergence of increasingly competitive players which benefit from strong market positions and large market shares. This trend tends to hinder competition as potential new entrants find it more difficult to enter and compete in the market. [...]