Shane MacGuill, Global Lead, Nicotine and Cannabis at Euromonitor International, said it was a tale of two tobacco markets in 2022 as a flat overall global cigarettes market was balanced by growth in only two regions, Asia Pacific and Latin America.
Developed markets saw significant falls in volume terms. Western Europe saw its largest cigarette declines in a decade at -4.4% and North America at -8.5% suffered the largest volume drop on record.
MacGuill said: “This represents an acceleration of pre-pandemic contraction in mature tobacco environments which means that according to our latest research, the global cigarette market excluding China will have shed one-third of its volumes in the two decades between 2008 and 2027.”
Euromonitor says one of the key drivers of cigarettes volume decline is the ongoing emergence of a range of reduced risk products (RRPs) – e-vapour, heated tobacco and nicotine pouches.
“Heated tobacco, worth USD32 billion in 2022, is the largest of the reduced risk categories worth nearly double e-vapour’s USD19 billion in the same year. Heated tobacco saw sustained double digit growth last year, crucially expanding in Western Europe, Middle East and Africa beyond its traditional Asia Pacific and East European heartlands.”
It was the disposables sector that witnessed stunning levels of growth, “up 91% in value terms and nearly 1000% in its key Western Europe region.”
Euromonitor says the demand has been fed by consumers switching on to the combination of affordability, convenience, bold flavour profiles and levity.
“However, single use vapes are highly vulnerable to regulatory threat due to their perceived success with younger consumers, and from sustainability considerations as the product’s lithium battery, electronic components and plastic casings are discarded with every use unlike existing vapour devices which are reused, often for several years”, Euromonitor states.
“Single use vapes, already banned in New Zealand face similar restrictions in a range of other markets including Germany, France and the UK and will be de facto prohibited by the EU’s impending Batteries Directive.”
MacGuill commented: “E-vapour continues to wobble at a global level dragged down by the ongoing product licensing issues in the US, its largest market, but buoyed by the rapid and controversial emergence of single use vapes. This success now looks likely to be short-lived.
“Nicotine pouches grew 51% year-on-year but the category is struggling to achieve escape velocity beyond the US which accounts for 85% of sales with limited pockets of success internationally, such as its triple digit expansion in Pakistan.
“In forecast terms, regulatory vulnerability and affordability concerns exacerbated by ongoing macro-economic jitters mean that our projected Compound Annual Growth Rate for each RRP category is considerably muted.
“A key issue for the industry moving forward is the extent to which RRP categories are or are not caught up in the generational bans which will becoming increasingly prevalent over coming years.”
More details about Euromonitor’s market analysis can be forum here: https://www.euromonitor.com/