Global Tobacco Industry Trends and Challenges in 2023

In 2023, the world economy is experiencing slow growth, presenting several challenges for tobacco regulation. The tobacco industry is developing in a complex and rapidly changing environment. Sales of combustible tobacco products such as cigarettes, cigars, pipe tobacco, and hand-rolled cigarettes are declining overall. Worldwide legal cigarette sales, excluding mainland China, totaled 54.679 million boxes, a decrease of 2.1% compared to the previous year. Sales revenue for heated tobacco products and e-cigarettes continues to grow at a rate of over 10%, while nicotine pouches are experiencing high-speed growth.

The global distribution of tobacco product sales in 2023

World Cigarette Sales Volume and Growth Rate from 2019 to 2023

Development environment

1. The world economy is recovering.

In 2023, the World Health Organization announced that the COVID-19 pandemic no longer constitutes a "Public Health Emergency of International Concern". The world has finally emerged from the shadow of the pandemic, with the economy entering a recovery process and rapid advancements in technology innovation and application such as artificial intelligence. However, the international situation remains volatile, with trade protectionism on the rise and inflation still a serious concern. The ongoing negative impact of the pandemic on production and supply chains continues to hamper economic recovery, resulting in slow and uneven global economic growth.

2. Tobacco usage rate continues to decrease.

The World Health Organization's "Global Tobacco Use Trends Report 2000-2030" shows that in 2022, approximately one-fifth of the global adult population used tobacco, a significant decrease from one-third in 2000. There are a total of 1.25 billion tobacco users worldwide, with over 1 billion being male and over 200 million being female. The global tobacco use rate is 20.9%, with a rate of 34.4% for males and 7.4% for females. The Southeast Asia region has the highest tobacco use rate at 26.5%, followed closely by Europe at 25.3%, where female tobacco use is more than double the global average. 150 countries have successfully lowered their tobacco use rates, while some countries have seen no significant change since 2010. The tobacco use rates in countries such as Congo, Egypt, Indonesia, Jordan, Oman, and Moldova have been increasing.

3. Imbalance in e-cigarette regulation.

As new tobacco products such as e-cigarettes continue to innovate and rapidly gain popularity, their social impact and controversies are also growing, leading to increased calls for regulation. The 7th Conference of the Parties to the WHO Framework Convention on Tobacco Control in 2016 urged parties to consider implementing regulatory measures to prohibit or restrict the manufacturing, importing, distributing, displaying, selling, and using of e-cigarettes based on national laws and public health objectives. According to the World Health Organization's "Global Tobacco Surveillance Report 2023: Protecting people from tobacco smoke", sponsored by the Bloomberg Philanthropies, a total of 121 countries have some form of regulation on e-cigarettes, with 34 countries banning the sale of e-cigarettes covering a population of 2.5 billion. 87 countries have implemented one or more legislative measures to regulate e-cigarettes covering a population of 3.3 billion, with varying regulatory approaches taken by these countries. Currently, there is no globally accepted method to manage e-cigarettes. There are still 74 countries (7 fewer than in 2020) that have not enacted bans or regulations on e-cigarettes, covering a population of over 2 billion.

4. The regulation of the US FDA faces frequent challenges.

In 2009, the United States passed the Family Smoking Prevention and Tobacco Control Act, granting the FDA extensive regulatory powers over tobacco. However, more than a decade later, issues with the regulatory system have continued to emerge, the regulatory authority has faced ongoing challenges, and the effectiveness of regulation has been consistently questioned, leading to dissatisfaction from various parties. Recently, the FDA has encountered difficulties in advancing four regulatory measures.

Banning menthol cigarettes proves difficult to implement. As early as 2013, the FDA received a petition to ban menthol cigarettes, but took no action. The petitioners filed a lawsuit in 2020, prompting the FDA to announce in 2021 new product standards for public health reasons, planning to ban menthol cigarettes and flavored cigars in 2022. However, because menthol cigarettes account for a third of cigarette consumption in the United States, tobacco companies have vowed to fight the ban in court. Additionally, African Americans and other people of color have a higher proportion of menthol cigarette consumption, leading to delays in the ban. It is unlikely that a final decision will be reached before the presidential election.

The chaos in the e-cigarette market is difficult to control. On one hand, the FDA requires e-cigarette manufacturers to submit a Premarket Tobacco Product Application (PMTA) and obtain a Marketing Order (MGO) before selling their products, but the large number of PMTAs submitted has caused delays in the FDA's review process. Currently, only 23 tobacco-flavored e-cigarettes have been approved for sale, but these products are not popular among mainstream users, and unauthorized products are still being sold. On the other hand, illegal disposable flavored e-cigarettes have rapidly spread in the United States, especially among teenagers, prompting the FDA to issue warnings, fines, and conduct joint enforcement actions with customs officials against manufacturers, importers, and retailers. However, these efforts have not been able to effectively stop the proliferation of disposable e-cigarettes.

Graphic warning lawsuits over cigarette packaging have been ongoing. In 2011, the FDA issued the "Cigarette Labeling and Advertising Warning Requirements" regulation, leading to five tobacco companies suing the FDA for violating the First Amendment right to freedom of speech and violating federal administrative procedure law. After appeals, the case ended in 2012 with a ruling against the FDA. In 2019, the FDA proposed regulations requiring graphic warnings on cigarette packaging and tobacco advertising, resulting in another lawsuit by tobacco companies. In the initial trial, the FDA was found to have violated the First Amendment and ordered to revoke the regulation, but later achieved partial victory in subsequent appeals. It is expected that the legal disputes surrounding graphic warnings will continue.

The regulation of premium handmade cigars has been a continuous controversy. In 2016, the FDA introduced new regulations to include cigars, e-cigarettes, and other non-cigarette tobacco products under its supervision. Premium handmade cigar manufacturers strongly opposed this as it required them to submit a pre-market tobacco application (PMTA) before releasing their products. Premium handmade cigars account for less than 3% of total cigar sales in the US, with the industry being made up of dozens of small family-owned manufacturers and thousands of small independent retailers nationwide, making it difficult for them to bear the heavy regulatory costs and burdens. Three cigar associations sued the FDA in 2023, seeking an exemption from regulation, and they won the case. However, the FDA later appealed the ruling. Currently, several members of Congress have written to the FDA urging them to exempt premium handmade cigars, citing a 2022 study commissioned by the FDA and the National Institutes of Health from the National Academy of Sciences, Engineering, and Medicine (NASEM) titled "Premium Cigars: Patterns of Use, Marketing, and Health Effects." The report indicates that the majority of premium handmade cigar consumers smoke occasionally rather than daily, with only 1% of adults smoking premium handmade cigars and very few young people, therefore, premium handmade cigars should be treated as a separate category.

Various tobacco products

In 2023, the global sales of various tobacco products reached $645.65 billion, with cigarettes accounting for 78.5%, cigars and other combustible tobacco products for 9.6%, and heated tobacco products and e-cigarettes for 11.9%. (Data on various tobacco products is sourced from the Euromonitor International database and does not include data from mainland China)

1. Cigarettes

In 2023, the global legal cigarette sales volume was 54.679 million boxes, a decrease of 2.1% compared to the previous year. There were 15 countries with sales volumes exceeding a million boxes, accounting for 59.7% of the global market share. Among them, Indonesia (5.652 million boxes), Russia (3.644 million boxes), and the United States (3.557 million boxes) ranked as the top three in the world. Turkey had the highest growth rate in sales volume, with a 17.7% increase, while the United States saw the largest decline of 8.7%. The global legal cigarette sales revenue was 506.97 billion US dollars, a 1.5% increase year-on-year. There were 14 countries with sales revenue exceeding a billion dollars, representing 62.4% of the global market share. The United States (939.9 billion US dollars) held the undisputed leading position in the world, followed by Indonesia (357.7 billion US dollars) and Germany (250.0 billion US dollars). Turkey had the highest growth rate in sales revenue, with a 25.1% increase, while Russia saw the largest decline of 11.2%. Poland withdrew from the ranks of countries with sales volumes exceeding a million boxes and sales revenues exceeding a billion dollars in 2023.

In 2023, the global volume of illegal cigarette trade reached 9.336 million cases, marking a 7.8% increase compared to the previous year. Countries that traded over 500,000 cases include Brazil (988,000 cases), Pakistan (828,000 cases), India (664,000 cases), Indonesia (586,000 cases), and Russia (531,000 cases). The global illegal cigarette penetration rate (the proportion of illegal cigarette trade volume to total cigarette consumption) stood at 14.6%. Countries with a penetration rate exceeding 50% include Panama (84.5%), Ecuador (76.7%), Peru (58.5%), Uganda (57.9%), and Malaysia (55.6%).

In 2023, the market for cigarettes surpassed sales of over one million cases, with revenues exceeding one hundred billion US dollars.

2. Cigars and other combustible tobacco products

Sales of traditional cigars declined by 9.1% to 6.95 billion in 2023. Countries with sales exceeding 1 billion include the United States (5.27 billion), Cuba (310 million), Spain (280 million), Italy (180 million), Germany (150 million), France (140 million), and the Netherlands (110 million). The United States accounted for approximately 75.8% of global sales, with a 11.4% decrease compared to the previous year. The total sales revenue for traditional cigars was $17.92 billion, marking a 1.8% decrease. Only the United States ($11.02 billion) and Cuba ($1.27 billion) had sales revenue exceeding 1 billion. The United States accounted for 61.5% of global sales revenue, with a 7.7% decrease compared to the previous year.

Mini cigars. In 2023, sales of mini cigars decreased by 13.6% to 19.34 billion units. Countries with sales exceeding 1 billion units include the United States (6.06 billion units), Japan (3.2 billion units), Germany (2.51 billion units), and Spain (1.58 billion units). The sales revenue of mini cigars amounted to 7.23 billion US dollars, a decrease of 5.9% compared to the previous year. The only country with sales revenue exceeding 1 billion US dollars is the United States (2.71 billion US dollars).

Hand-rolled cigarettes. In 2023, hand-rolled cigarette sales volume reached 99,000 tons (approximately 2.827 million boxes of cigarettes), a decrease of 3.8% compared to the previous year; sales revenue was $29.8 billion, an increase of 3.7% compared to the previous year. Countries with sales revenue exceeding $1 billion include the United Kingdom ($6.41 billion), Germany ($4.55 billion), Australia ($3.46 billion), France ($3.26 billion), Italy ($1.82 billion), and Spain ($1.37 billion).

In 2023, pipe tobacco sold 129,000 tons (approximately 668,000 boxes of cigarettes) with a year-on-year decrease of 1.1%. The sales revenue reached 70.8 billion US dollars, representing a year-on-year increase of 1.1%. Countries with sales revenue exceeding 1 billion US dollars include Saudi Arabia (18 billion US dollars) and the United States (15.2 billion US dollars).

3. Smokeless Tobacco Products

Heated tobacco products. In 2023, the sales volume of heated tobacco products reached 40.4 million units, an increase of 18.2% compared to the previous year, with sales revenue totaling $2.12 billion, a growth of 13.3%. Japan led in sales volume with 1.132 million units, followed by Russia (0.473 million units), Italy (0.291 million units), South Korea (0.244 million units), Poland (0.142 million units), and Ukraine (0.114 million units). Japan accounted for 35.4% of global sales volume, with a year-on-year growth of 12.3%. As for sales revenue, heated tobacco products reached $34.44 billion in 2023, an increase of 11.6% compared to the previous year. Japan again dominated the market with sales revenue of $11.49 billion, followed by Italy ($4.55 billion), Russia ($2.58 billion), South Korea ($2.48 billion), Germany ($1.47 billion), Poland ($1.27 billion), and Czech Republic ($1.1 billion). Japan accounted for 33.7% of global sales revenue, with a year-on-year growth of 11.6%.

In 2023, e-cigarette sales measured by e-liquid reached 161.19 million liters, an increase of 6.9% compared to the previous year. The total sales of e-liquid and vaping devices amounted to $20.88 billion, showing a 15.6% increase. The countries with sales exceeding $1 billion were the United States ($5.96 billion), the United Kingdom ($3.3 billion), Canada ($2.14 billion), and France ($1.26 billion). Looking at e-cigarette categories, open system sales requiring e-liquid additives reached $7.66 billion, a 7.5% increase, accounting for 36.7% of e-cigarette sales. Closed system e-cigarette sales amounted to $13.22 billion, a 20.8% increase, representing 63.3% of e-cigarette sales. Among these, disposable e-cigarettes continued to grow rapidly, with a 54.9% increase to $5.37 billion.

Traditional smokeless tobacco. In 2023, sales of traditional smokeless tobacco products, including chewing tobacco, American nasal snuff, and Swedish nasal snuff, continued to decline, dropping by 1.8% year-on-year to 116,000 tons; however, sales revenue continued to grow, increasing by 2.2% year-on-year to $13.83 billion, with the United States accounting for 75.3% of global sales.

Nicotine pouches. In 2023, as one of the rapidly emerging tobacco products in recent years, nicotine pouches continue to maintain high growth, with sales volume increasing by 43.5% to 15.51 billion pouches year-on-year, and sales revenue increasing by 61.1% to 7.86 billion US dollars year-on-year. The United States accounts for 75.8% of the world's nicotine pouch sales.