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.
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.
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.