Tobacco is still popular around the world ©stockbksts/123RF
Tobacco is still popular around the world ©stockbksts/123RF

Global focus on… tobacco

There is no doubt smoking can seriously damage your health, but alternatives to cigarettes have enabled the tobacco industry to stage a dramatic turnaround

Health

Tobacco products are made of leaf tobacco as a raw material, which is smoked, sucked, chewed or snuffed. According to the FDA, more than 480,000 deaths in the US are caused by tobacco each year.

Big tobacco

The largest global tobacco companies are: Philip Morris International, British American Tobacco, Imperial Brands, Japan Tobacco International and China Tobacco.

Plant types

Tobacco grows in two varieties: cultivated tobacco and wild tobacco. Native to the western hemisphere, the plant is now widely grown in countries such as China, India, Brazil, Turkey and the US.

Flying high

Boeing and partner South African Airways have teamed up to produce renewable jet fuel from Solaris, a nicotine-free tobacco plant’s seed, which produces oil that when converted into fuel can reduce carbon emissions by 80%.

Cigarettes

Cigarettes are the most popular form of tobacco, making up nearly 90% of  world tobacco sales. According to IMARC group, the global cigarette market was worth $816bn in 2016.

Next generation

Smokers are turning away from traditional tobacco products. In 2016 vapour products (closed and open liquid nicotine vaping systems) and heated tobacco grew 34% to $12.3bn. E-cigarettes accounted for $10.2bn, while heated tobacco represented $2.1bn. The category is forecast to grow to $34bn by 2021.

Taxing times

Excise duty and VAT raised through the sale of tobacco products contributes around £12bn annually for the UK government. The UK has one of the highest taxes on tobacco products in the world. A typical pack of 20 cigarettes has a tax burden of around £6.98 (82% of the £8.50 RRP).

What They Say

“By transitioning the cigarette business to the nicotine business, companies ensure profitability amid increasingly strict regulations, while renormalising nicotine use.”

Yogi Hale Hendlin & Colleagues, Researchers at the National Institute of Health & the University of California

“Taxation on tobacco has increased by 50% over the last five years and increasing it further will simply encourage people to buy from the black market, and take business away from legitimate trade.”

Giles Roca, Tobacco Manufacturers’ Association

“Many countries have not recognised the value of tobacco taxation. The industry has argued on the economic value of tobacco but the health cost and economic burden (in total $1.4m) are far in excess of the contribution from the tobacco industry.”

Dr Vinayak Prasad, Head of WHO’s Tobacco Control Unit

Analysis

Concerns regarding the negative health effects of tobacco usage have led to a steady decline in demand for tobacco – particularly cigarettes – in the developed world. The industry is also dealing with ever-tightening regulations, and governments have placed limitations on how companies can market products. However, continued growth in vapour products – in particular, the emergence of heated tobacco as an alternative mode of consumption – has helped drive industry growth. Combined cigarette and heated tobacco value sales are forecast to grow 1%.

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