The top 15 countries with highest cigarette consumption in the world amass over 70% of the global cigarette market, which makes them very attractive regions for large cigarette manufacturers like Philip Morris International Inc. (NYSE:PM), or British American Tobacco PLC (ADR) (NYSE:BTI). According to a report by the Campaign for Tobacco-Free Kids, the total value of the cigarette market reached $683.4 billion, as over 5.5 trillion cigarettes were sold to over one billion smokers around the world.
Between 2002 and 2016, the market value of the cigarette industry advanced by 27.6%, although the sales volume inched up by just 1.3%. However, as cigarette prices go up, governments impose restrictions on smoking in public places and the population becomes more aware of their health, analysts estimate that the amount of cigarettes sold worldwide will decline by 8.2% by 2021.
Such trends are already seen in high-income countries, where cigarette consumption is declining, partly because of higher cigarette prices (see 10 most expensive countries to buy cigarettes in the world). However, in low- and middle-income countries, smoking is on the rise, and tobacco companies are focusing their attention on emerging markets in order to take advantage of growing population, increasing income and fewer government regulations regarding smoking.
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Because in many regions cigarette consumption has been on the decline and industry experts anticipates global drop in smoking in the future, the tobacco industry has been going through a consolidation phase. In 2014, Reynolds American acquired Lorillard Tobacco Company for $27 billion and earlier this year, it agreed to be purchased by British American Tobacco PLC (ADR) (NYSE:BTI) for $49 billion (the deal was closed in July).
Between 2005 and 2016, Asia-Pacific’s position on the global cigarette market expanded to 64% of the total sales from 55%, while Middle East and Africa saw an increase to 9% from 7%. It should be noted that seven of the top 15 countries with highest cigarette consumption in the world are from the Asia-Pacific region. On the other hand, Western and Eastern Europe accounted for 9% and 10% of the global cigarette sales in 2016, down from 12% and 13%, respectively, in 2005. North America’s share of the market slid by three percentage points to 5% during the same period.
By the way, you can watch the video below to find out 7 cigarette brands that contain the lowest tar and nicotine.
In this way, the global cigarette market is currently dominated by a handful of companies, according to the Campaign for Tobacco-Free Kids citing Euromonitor International data. There is China National Tobacco Company, which has a global share of 42% due to its large presence on the Chinese market. It is followed by Philip Morris International Inc. (NYSE:PM), with a share of 14%. Philip Morris International Inc. (NYSE:PM) sells its products in 180 markets outside the United States, including most of the top 15 countries with highest cigarette consumption in the world, and owns six of the top 15 brands, including Marlboro, which is the most popular cigarette brand in the world.
On the third spot is British American Tobacco PLC (ADR) (NYSE:BTI), which controls 11% of the market and has operations in over 200 markets with top brands like Kent, Dunhill, Lucky Strike, and Pall Mall. Japan Tobacco, Inc. controls 8% of the market and Imperial Tobacco Group has a share of 4%. Other companies, such Altria Group Inc (NYSE:MO), control the remaining 20% of the global tobacco market.
With this in mind, let’s take a closer look at the top 15 countries with highest cigarette consumption in the world, most of which, surprisingly are not among the countries that have the most smokers in the world. The data for the cigarette sales (in billions of sticks) is taken from the Campaign for Tobacco-Free Kids report and from Philip Morris International Inc. (NYSE:PM)’s last 10-K report.
15. Spain
Market size (billion sticks): 46.7
Let’s start the list of the top 15 countries with highest cigarette consumption in the world with the smallest market, Spain. Spanish cigarette market has been pretty flat in the last couple of years, despite the economic growth. Similar to many European countries, the cigarette market continues to be severely affected by sales of contraband cigarettes that are smuggled from countries that are outside the EU and have much lower prices. According to Euromonitor International, nearly 90% of the cigarette market is dominated by three big tobacco companies which are present on the market through their subsidiaries: Philip Morris Spain, Altadis (a subsidiary of Imperial Tobacco), and Japan Tobacco International Iberia.
14. Italy
Market size (billion sticks): 72.1
Similar to Spain, the Italian cigarette market is controller by three major tobacco companies: Philip Morris International Inc. (NYSE:PM), Japan Tobacco Inc, and British American Tobacco PLC (ADR) (NYSE:BTI), which in aggregate have a market share of around 89%. According to Euromonitor, the Italian cigarette market was helped by the influx of refugees, which helped offset the decline caused by the smoking bans in bars and restaurants.
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13. Ukraine
Market size (billion sticks): 72.7
In Ukraine, the cigarette market has been affected by increases of some taxes on cigarettes by 40% and stricter control on tobacco products from the government. However, a major factor that affects retail sales of cigarettes in Ukraine is the smuggling of cigarettes in the EU countries, mainly bordering Poland, which have been on the rise on the back of growing cigarette prices in the EU.
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12. South Korea
Market size (billion sticks): 73.6
South Korea is also among countries with highest cigarette consumption in the world. In South Korea, the market is led by Korea Tobacco & Ginseng Company, which controls 57% of the market, followed by Philip Morris Korea with a 21% share and British American Tobacco Korea with a 14% share. As Koreans become more conscious about their health, they have been switching more frequently for ultra-low tar cigarettes. KT&G currently derives more than half of its sales from cigarettes with ultra-low tar content.
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11. Germany
Market size (billion sticks): 78.1 Billion
Germany is the only EU country, where cigarette advertising is allowed outdoors and if you ever visit the country you will most likely see the abundance of cigarette vending machines on street corners or in bars. Similar to other countries, the German cigarette market is consolidated, with big tobacco companies controlling the market. Moreover, as the government pushes for pack redesigns to provide more health warnings and reduce branding, smaller companies as well as big multinationals are expected to reduce their portfolios of brands in the country.
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10. Philippines
Market size (billion sticks): 79.1
In Philippines, currently over 25% of the population smoke, including 11% of minors. However, these numbers might change, as the country’s president Rodrigo Duterte, has installed a strict public ban on smoking earlier this year. Moreover, the cigarette sales in the country have been on the decline since 2012, when sales reached 102.5 billion sticks, according to Euromonitor. The decline was driven by higher prices. The cigarette market in Philippines is dominated by Philip Morris Fortune Tobacco Corp, which controls 65% of the sales volume.
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9. India
Market size (billion sticks): 84.9
Indian cigarette market is led by the domestic ITC Ltd, which has a market share of nearly 80%. In recent years, the governments in different states have been enforcing stricter regulations on smoking and raising taxes. Earlier this year, the Goods and Services Tax council raised the tax on cigarettes above 28%, which led to increases in cigarette prices by 4% to 8%.
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8. Bangladesh
Market size (billion sticks): 86.1
Smoking in Bangladesh has declined dramatically in the last 16 years or so, but it still is among the top 15 countries with the highest cigarette consumption in the world. In 2005, Bangladesh saw its government adopt the Smoking and Using of Tobacco Products Act, which led to a ban on smoking in some public places and in public transport, as well as a ban on advertising of tobacco products. With the installation of the bans, the percentage of adults (over 15 years) smoking slid to 20% from 34.6% between 2013 and 2000.
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7. Egypt
Market size (billion sticks): 90
On the seventh spot among the top 15 countries with highest cigarette consumption in the world is Egypt. In Egypt, there currently are 20.9% of adults that are smoking tobacco, including 46.4% men and just 0.2% women. The cigarette market in the country is controlled by a single company, Eastern Co. State-owned Eastern Co. has monopolized the cigarette market in Egypt as it is the only official licensed manufacturer and other companies have to produce their cigarettes at Eastern’s facilities.
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6. Turkey
Market size (billion sticks): 105.5
The growth of adult population in Turkey has helped offset the drop in cigarette sales caused by the government’s crackdown on smoking, which included higher excise taxes and nation-wide media campaigns against smoking. Turkey cigarette market is dominated by four large multinationals, Philip Morris International Inc. (NYSE:PM), British American Tobacco PLC (ADR) (NYSE:BTI), Japan Tobacco, and Imperial Tobacco. In addition, a domestic company, European Tobacco, has a market share of 2%.
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5. Japan
Market size (billion sticks): 173.9
The Japanese cigarette market is controlled by the government, which holds a 33% stake in the leading company on the market, Japan Tobacco. Moreover, Japan Tobacco is the only company that is allowed to produce cigarettes in the country and both prices and volume are controlled by the government. Nevertheless, the cigarette market in Japan has several players, with Philip Morris International Inc. (NYSE:PM) and British American Tobacco PLC (ADR) (NYSE:BTI) also controlling significant shares.
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4. USA
Market size (billion sticks): 263.4
In the US, there are around 15.1% of adults that smoke and around 8% of high school students. Smoking in the US results in over 480,000 deaths each year and 16 million people who suffer from illnesses caused by smoking. In the US the cigarette market is dominated by RJ Reynolds, a subsidiary of British American Tobacco PLC (ADR) (NYSE:BTI) and Philip Morris, a subsidiary of Altria Group Inc (NYSE:MO). Philip Morris controls 47% of the cigarette market in the US, with Marlboro being the leading brand (when Altria Group spun of Philip Morris International it maintained control of its brands in the US), and cheaper L&M brand also gaining popularity as cigarette prices go up.
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3. Russia
Market size (billion sticks): 278.4
The Russian cigarette market is controlled by Japan Tobacco International, which has a market share of 33.5%. Other players, such as Philip Morris International Inc. (NYSE:PM) and British American Tobacco PLC (ADR) (NYSE:BTI) also have a big presence. These three leading companies amass around 82% of the cigarette market in Russia. Between 2013 and 2016, the value of the cigarette market in Russia surged by 26.3% to $21.7 billion, although the sales volume slid by 19.6%.
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2. Indonesia
Market size (billion sticks): 316.1
Indonesia is the second-largest cigarette market in the world. However, traditional cigarettes are not the most popular tobacco product in the country. Instead, people prefer kreteks, which are a type of cigarettes made from tobacco and cloves. To adapt to this preference, Philip Morris International Inc. (NYSE:PM) acquired Sampoerna, the leading Indonesian manufacturer of kreteks, in 2005. Sampoerna still is the dominant market player, outperforming all cigarettes, with a 23% share.
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1. China
Market size (billion sticks): 2,350.5
Finally, there’s China, which is by far the largest cigarette market in the world, as it is also the country with the highest population. Last year, the cigarette market in China was worth $206.3 billion, with high tar cigarettes amassing the largest share of sales. The market is controlled by China National Tobacco Company, which is owned by the government and amasses nearly 42% of the global market. However, the majority (around 99%) of cigarettes manufactured by China National Tobacco Company are sold in the country.
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These are the top 15 countries with highest cigarette consumption in the world. These countries have the largest share of the global cigarette market and as you can see, most the countries in the list have only a few major players that control the markets, which highlights that the global cigarette market is very consolidated.
