Tobacco Market Analysis
Spend growth of this market has the potential to touch a value of nearly USD 190 billion with spend momentum accelerate at a CAGR of over 4% between 2019-2024. The growing popularity of NGP products such as e-cigarettes, vapes, smokeless tobacco products, and other tobacco heating products will drive the momentum of spend growth in the tobacco market. To capitalize on such growing popularity of NGP products, most of the tobacco suppliers are participating in M&A activities to increase their market share and to increase their profitability in markets that are exhibiting a slowing demand. This will contribute to spend growth in the tobacco market during the forecast period.
Top Spending Regions in the Tobacco Market
A relaxed regulatory environment and availability of tobacco products at a much cheaper rate coupled with the emergence of NGP alternatives will drive spend growth in the tobacco market across regions.
APAC
APAC houses the fastest-growing tobacco market. Spend growth of this market will be favored by the lack of regulatory scrutiny of the tobacco market and the availability of tobacco products at cheaper rates. Currently, APAC houses more than 55% of the global smoking demography.
North America
The reduction in smoking demography has compelled tobacco suppliers in North America to increase the selling price of their tobacco products to maintain profitability. The prominence of NGP alternatives will contribute to the demand growth in the tobacco market in this region.
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What are the Key Price Trends in this Market?
- Regulatory bodies impose increased taxes on tobacco-based products to discourage young smokers. This is expected to increase the prices of tobacco products to meet the government tax obligations for tobacco products, which, in turn, will drive the tobacco price during the forecast period.
- Considering the increase in supplier's logistics expenditure owing to the volatile crude oil prices, tobacco suppliers are advised to procure fuel-efficient trucks that use hybrid engines to reduce carbon emissions. The adoption of such trucks can reduce fuel consumption by 25%, thereby reducing their logistics costs.
- The manufacturing of tobacco products is a highly labor-intensive process which will consequently act as a significant cost component in the supplier's cost structure. The labor cost is spread across multiple processes within the tobacco supply chain. For instance, tobacco leaves are cured to ensure that it retains the desired aroma, flavor, and nicotine content.
Download the free sample of this report to know what the key tobacco procurement best practices that you must adopt to address price dynamism in this market.
Insights Offered in this Tobacco Market Report
- Global and regional spend potential for the tobacco market for the period of 2019-2024
- Supplier relationship management practices in the tobacco market
- Supplier margins and selection criteria in the tobacco market
- Top tobacco suppliers and their cost structures
- Top tobacco suppliers in the US and their cost structures
- Tobacco market spend analysis in the US
- Tobacco price trends, and forecasts
- Cost drivers influencing the tobacco prices
Insights into Tobacco Supply Market
- The majority of tobacco production globally is controlled by big tobacco suppliers, such as British American Tobacco, Phillip Morris International, Japan Tobacco, China Tobacco, and Imperial Brands. These companies are strategically partnered with other regional tobacco manufacturers or have acquired them to gain additional market shares in high growth markets, such as Indonesia, Macedonia, Russia, China, India, Japan, and Canada
- Tobacco suppliers are observed to adopt drones for claim processing. The adoption of drones has helped them to record and document risks found and survey details on a larger scale with high-resolution optical cameras. This reduces suppliers' dependence on experts or claim adjusters. Drones also help claim adjusters in making decisions regarding the pay compensation by surveying the loss quickly and effectively.
- Buyers are advised to partner with suppliers who can help them minimize their inventory holding costs and avoid wastage through just-in-time procurement methodology. Tobacco suppliers are expected to have expertise in handling and storage as tobacco-based products require sensitive handling and storage conditions, particularly pertaining to temperature and humidity, to avoid wastage.
Insights into Some of the Leading Tobacco Suppliers
The supply market dynamics hint at a substantial hike in suppliers' OPEX which will drive the buyer's procurement spend. Keeping such dynamics in mind, strategic selection of suppliers and maintaining an effective supplier relationship management are observed to facilitate buyers with optimized procurement expenditure and better category management in the tobacco market. This tobacco market procurement intelligence report has enlisted the top suppliers and their cost structures, SLA terms, best selection criteria, and negotiation strategies for the top tobacco suppliers. The top tobacco suppliers highlighted in this report include:
- China National Tobacco Corp.
- British American Tobacco Plc
- Philip Morris International Inc.
- Altria Group Inc.
- Imperial Brands Plc
Criteria to select suppliers in this dynamic tobacco market is subject to change based on the day-to-day market outlook. Get a free demo of our procurement platform to gain immediate access into real-time insights to the changing suppliers selection criteria.
