By 2021 global cigarette sales will have dropped to just 86% of total tobacco sales costing the industry $7.7 billion in losses Euromonitor data has shown.
In 2016 cigarettes dropped to 89.8% of the total tobacco market, marking the first time in decades that cigarette sales have dropped below 90%.
And Euromonitor has said that the pace of change is accelerating:
“According to our newly released forecasts, the share of cigarette value in 2021 will reach 86%. Not a vertiginous drop in its own right but given the previous decline of a comparable magnitude (from 93% to 90%) took more than 15 years to occur it seems clear that the pace of change is accelerating.
Vaping Helps Acceleration in Cigarette Decline
“The drivers of this (albeit currently) mild disruption to the cigarettes category’s dominant position within the global balance of tobacco and nicotine consumption are an increasingly potent mixture of the established (and amplified), in the form of volume losses and the emerging, in the form of new nicotine delivery products.”
The report goes on to say that the single greatest driver behind combustible tobacco’s decline is the use of heated tobacco products as a realistic alternative.
In 2016, vapour products and heated tobacco grew at 34%, to a value of $12.3 billion.
The latest data also shows evidence of growth in use of vapour products as a whole but also of further changes consumption preferences within the segment.
In 2014, open vaping systems accounted for 71% of category value with closed systems at 29%. In 2016 the share of open vaping systems had shrunk to 59% with closed systems on 24% and heated tobacco on 17%.
According to the Center for Disease Controls in 2014, tobacco companies spent more than $9 billion marketing cigarettes and smokeless tobacco in the United States. This amount translates to nearly $25 million each day, or about $1 million every hour.
Cigarette advertising and promotional expenses totalled approximately $8.49 billion in 2014—down from $8.95 billion during 2013. In 2014, about 80% (nearly $6.8 billion) of this was spent on price discounts paid to cigarette retailers or wholesalers to reduce the cost of cigarettes to consumers. Manufacturers spent a total of $600.8 million on smokeless tobacco advertising and promotion during 2014—up from $503.2 million in 2013.