The global heated tobacco products (HTP) market was valued at US$4.16 billion in 2021. The market value is projected to grow to US$7.97 billion by 2027. The volume of the global heated tobacco products (HTP) market, was at 4180.37 tons in 2021. The volume of the global heated tobacco products market is projected to grow to 7452.80 tons by 2027. Heated tobacco products (HTPs), also known as “heat-not-burn” products are used to heat processed tobacco without reaching ignition to create an aerosol or smoke, allowing users to inhale nicotine, non-tobacco addictives and other chemicals through their mouth. HTPs are based on the principle that burning tobacco is unnecessary to liberate nicotine. Heated tobacco products (HTPs) are hybrids between electronic and conventional cigarettes as they are equipped with a device that heats the product without reaching combustion to generate aerosol while using tobacco instead of nicotine-containing liquids.
The factors such as the rising income of individuals, growing health awareness, rising retail e-commerce, increased investment in research and development etc. are expected to drive the overall market growth in the forecasted period. The value and volume of the market is expected to grow at a CAGR of approx. 11% and 10% respectively, during the forecasted period of 2022-2027.
Market Segmentation Analysis:
- By Product Type: The report provides the bifurcation of the market into two segments based on the product type: Leaf and Stick. In 2021, the stick segment held the largest share of the market value. Also, stick heated tobacco products market value is the fastest growing segment of global heated tobacco products market value owing to the high adoption of HTPs as a premium product and the ease of use of tobacco sticks in comparison to conventional cigarettes.
- By Distribution Channel: The report further provides the segmentation based on the distribution channel: Online and Offline. In 2021, the offline segment held the major share of the global heated tobacco products (HTP) market. On the other hand, the online heated tobacco products market is the fastest growing segment of the heated tobacco products market owing to rising e-commerce platforms and companies having their own online channels and websites, offering a wide range of products and new designs, incentivising a gradual shift among consumers towards online purchase of heated tobacco products.
- By Region: The report provides insight into the heated tobacco products market based on the regions namely North America, Europe, Asia Pacific, Middle East & Africa, and Latin America. North America held a major share of the market. Within North America, the US is leading the market owing to positive government initiatives and advertisement of HTP as a premium product by recognized brand names, attracting both the young population and adult smokers who carry a strong preference for branded products and smoking tobacco to boost their social image. The North American heated tobacco products market, in terms of volume, is also divided into two segments on the basis of distribution channels, namely, Offline and Online, where the offline segment accounted for the major share of the market.
- Within Europe, Germany held the highest share of the market, whereas the UK is expected to be the fastest-growing heated tobacco products market in the forecasted period.
- Asia Pacific's heated tobacco product market is divided into five regions based on geographical operations, namely, China, Japan, India, South Korea, and the Rest of Asia Pacific, where China held the largest share of the Asia pacific heated tobacco products market owing to huge variety of HTP brands released locally, high smoking tobacco population and favourable government initiatives.
Market Dynamics:
- Growth Drivers: The global heated tobacco products market has been growing over the past few years, due to factors such as the rising income of individuals, rising health awareness, increasing investment in research and development, government initiatives etc. Higher-income makes people more aware of better alternatives available in the market and allows them to afford high-quality products. So, with rising income, people will shift from conventional cigarettes to better quality tobacco products like HTP which are considered to be less harmful and provides the convenience of choice in terms of type, style and flavour.
- Challenges: However, the market growth would be negatively impacted by various challenges such as the rising popularity of alternative tobacco products, lack of scientific proof, stringent regulations etc. The global Heated tobacco products (HTP) market faces competition from other smokeless tobacco products like snus, chewing tobacco, moist snuff, and vaping products. Also, each country has its local variants of smokeless tobacco products.
- Trends: The market is projected to grow at a fast pace during the forecast period, due to various latest trends such as rising retail e-commerce, the rising influence of partying and pop culture, the rise in digital advertising etc. E-commerce platforms offer personalized shopping assistance, discounts, valuable feedback on products through reviews and ratings of previous customers and suggestions in terms of product design, size, and capacity to eject nicotine content while smoking. These benefits boosts the demand for heated tobacco products and therefore, rising retail e-commerce has positively impacted the heated tobacco product market.
Impact Analysis of COVID-19 and Way Forward:
With the advent of COVID-19, there was a drastic change in the lives of people all around the world whether be it in terms of changes in lifestyle, getting used to masks, lockdowns of longer durations or the loss of livelihood. With the rising number of deaths creating havoc and people forbidden to leave their homes except to obtain basic necessities and healthcare, lockdown policies created a lot of stress and anxiety in the minds of people. The global impact of COVID-19 on the heated tobacco products (HTP) market turned out to be positive as with the closure of bars, casinos, pubs, restaurants, and all other public places, individuals with anxiety and panic attack symptoms started using heated tobacco products to relieve stress and anxiety. Also, hardcore smokers who faced obstacles in obtaining other addictive substances during confinement like weed, marijuana, alcohol etc. shifted toward HTPs as these devices were more easily accessible in stores and online purchasing sites.
Competitive Landscape:
The market for heated tobacco products has been consolidated. The key players of the heated tobacco products market are:
- British American Tobacco P.L.C. (BAT)
- Philip Morris International Inc. (PMI)
- Japan Tobacco Inc. (Japan Tobacco International)
- Altria Group Inc. (Altria)
- Korean Tobacco and Ginseng Corp. (KT&G)
- Imperial Brands PLC
- Vapor Tobacco Manufacturing LLC (3T Organic)
Philip Morris International Inc. (PMI), held the largest share of the global heated tobacco products market. The global heated tobacco product market is consolidated with key companies holding a major share of the economy. Even with few players, the market is highly competitive and these major companies compete primarily on the basis of product quality, brand recognition, brand loyalty, taste, R&D, innovation, packaging, customer service, marketing, advertising and retail price and increasingly, adult smoker willingness to convert to companies HTP. For instance, In 2022, British American Tobacco p.l.c. (BAT) launched a new heated tobacco product “glo hyper X2” in Tokyo and Philip Morris International Inc. (PMI) ended the agreement with Altria Group, Inc. (Altria) to get full rights to commercialize their heated tobacco product “IQOS” in the US.
Table of Contents
1. Executive Summary
Companies Mentioned
- British American Tobacco P.L.C. (BAT)
- Philip Morris International Inc. (PMI)
- Japan Tobacco Inc. (Japan Tobacco International)
- Altria Group Inc. (Altria)
- Korean Tobacco and Ginseng Corp. (KT&G)
- Imperial Brands PLC
- Vapor Tobacco Manufacturing LLC (3T Organic)
Methodology
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