Tobacco Manufacturing Industry Profile

Companies in this industry stem and redry tobacco and manufacture cigarettes and other tobacco products. Major companies include Altria, Philip Morris International, and Reynolds American (based in the US); China National Tobacco; British American Tobacco and Imperial Brands (both based in the UK); and Japan Tobacco.

Cigarettes are the most popular tobacco product; about 5.2 trillion were sold to more than 1 billion smokers worldwide in 2020. The global tobacco market is expected to reach about 900 billion by 2025, according to Statista. China, Indonesia, the US, Russia, and Turkey are the five largest cigarette consuming nations. Asia Pacific, Western Europe, North America, Middle East, and Africa are the world's largest cigarette markets in terms of volume sold, according to Euromonitor International.

The US tobacco manufacturing industry includes about 170 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $50 billion.

COMPETITIVE LANDSCAPE

Demand is driven by discretionary consumer spending and mitigated by awareness of the health effects of smoking. The profitability of individual companies depends on effective marketing. Large companies enjoy economies of scale in manufacturing and in their ability to offer wider ranges of products. Small companies can compete effectively through heavy discounting, through clever branding and packaging, and by exploiting niche categories such as pipe tobacco and additive-free cigarettes. The US industry is highly concentrated: the eight largest companies generate about 95% of ...