In 2021, the global market value of heated tobacco products (HTP) was $4.16 billion (approximately RMB 28.6 billion). By 2027, the market value is expected to increase to $7.97 billion (approximately RMB 54.9 billion).
In 2021, the global capacity of heated tobacco products (HTP) market was 4180.37 tons. By 2027, the global capacity of the heated tobacco products market is expected to grow to 7452.80 tons.
Heated tobacco products (HTP), also known as "heat-not-burn" products, are used to heat processed tobacco without igniting it, producing an aerosol or smoke that allows users to inhale nicotine, non-tobacco additives, and other chemicals through their mouths. HTP is based on the principle that burning tobacco is unnecessary for releasing nicotine.
Heated tobacco products (HTP) are a hybrid of e-cigarettes and traditional cigarettes, as they are equipped with a device that heats the product to produce aerosol without combustion, while using tobacco instead of nicotine-containing liquid.
Personal income growth, increased health awareness, the rise of retail e-commerce, and increased research and development investments are expected to drive overall market growth during the forecast period. The value and quantity of the market are expected to grow at a compounded annual growth rate of approximately 11% and 10%, respectively, during the forecast period of 2022-2027.
Market segmentation analysis.
By product type, the market is divided into two segments: Leaf and Stick. In 2021, the Stick segment has the largest market share. Additionally, the heated tobacco product market is the fastest-growing part of the global market value of heated tobacco products, due to the high adoption of HTP as a premium product and the ease of use of tobacco sticks compared to traditional cigarettes.
In terms of distribution channels, offline sales dominated the global heated tobacco product market in 2021. However, the online heated tobacco product market is the fastest growing segment within the overall market, driven by the rise of ecommerce platforms and companies having their own online channels and websites offering a wide range of products and new designs, encouraging a gradual shift of consumers towards online purchasing of heated tobacco products.
The heated tobacco products market is analyzed by regions, namely North America, Europe, Asia-Pacific, Middle East and Africa, and Latin America. North America is the dominant market. The US is at the forefront of the market due to government initiatives and reputable brands promoting HTP as a premium product. This has attracted young adults and smokers with a strong preference for branded products and tobacco to enhance social image. The North American HTP market is split into offline and online distribution channels, with offline accounting for the majority of market share.
Germany holds the highest market share in Europe, while the United Kingdom is expected to be the fastest-growing heated tobacco market within the forecast period.
The heated tobacco products market in the Asia-Pacific region is divided into five regions based on geography, namely China, Japan, India, South Korea, and the rest of the Asia-Pacific. Among them, China has the largest market share in the heated tobacco products market in the Asia-Pacific region due to the diverse range of HTP brands available locally, a large smoking population, and favorable government policies.
Market trends
The global market for heated tobacco products has been growing steadily in recent years, thanks to factors such as rising personal incomes, increased awareness of health issues, increased investment in research and development, and government initiatives. Higher incomes have enabled people to access information about better alternatives available in the market, and afford higher-quality products. As a result, with increasing incomes, people are turning away from traditional cigarettes and towards higher-quality tobacco products such as HTPs, which are seen as less harmful and offer convenient choices in terms of type, style, and flavor.
The Challenges Ahead
However, the market growth will be negatively impacted by various challenges such as the increasing popularity of alternative tobacco products, lack of scientific evidence, and strict regulations. The global market of heated tobacco products (HTP) faces competition from other smokeless tobacco products such as snuff, chewing tobacco, moist snuff, and electronic cigarettes. Additionally, each country/region has its own local variants of smokeless tobacco products.
Development trend.
The market for heated tobacco products is expected to experience rapid growth during the forecast period due to various latest trends, including the emergence of retail e-commerce, the increasing influence of party and pop culture, and the rise of digital advertising. E-commerce platforms offer personalized shopping assistance, discounts, valuable feedback through previous customer reviews and ratings, and recommendations on product design, size, and nicotine content when smoking. These benefits increase demand for heated tobacco products, and therefore, the rise of retail e-commerce has a positive impact on the market for these products.
Forward Direction
With the emergence of COVID-19, people's lives around the world have undergone significant changes, including changes in lifestyle, the adoption of mask-wearing habits, longer periods of lockdowns, and loss of livelihoods.
As the death toll increases and causes severe destruction, people are prohibited from leaving their homes unless obtaining basic necessities and medical care. The lockdown policy has caused significant stress and anxiety for individuals.
The COVID-19 pandemic has had a positive impact on the global heated tobacco products (HTP) market, as people experiencing anxiety and panic symptoms due to the closure of bars, casinos, pubs, restaurants, and other public places have turned to HTP to alleviate stress and anxiety.
Furthermore, during the period of confinement, hardcore smokers who find it difficult to obtain other addictive substances (such as weed, marijuana, alcohol, etc.) have turned to HTPs as these devices are more easily accessible in stores and online shopping sites.
The heated tobacco products market has solidified. The main players in the heated tobacco products market are:
The British American Tobacco company (BAT), Philip Morris International Inc. (PMI), Japan Tobacco Inc. (Japan Tobacco International), Altria Group Inc. (Altria), Korea Tobacco & Ginseng Corporation (KT&G), and Imperial Brands PLC (3T Organic) are all tobacco companies.
Philip Morris International (PMI) has the largest market share in the global heated tobacco products market. The market for heated tobacco products is dominated by major companies that hold a significant portion of the global economy. Despite few players, the market is highly competitive, with these large companies competing primarily on product quality, brand recognition, brand loyalty, taste, research and development, innovation, packaging, customer service, marketing, advertising, and retail price, with a growing base of adult smokers willing to switch to PMI's HTP products.
In 2022, British American Tobacco (BAT) will launch their new heat-not-burn tobacco product "glo hyper X2" in Tokyo, while Philip Morris International (PMI) will terminate their agreement with Altria Group to gain full rights to commercialize their own heat-not-burn tobacco product "IQOS" in the United States.
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