Despite the well-publicized hazards of tobacco use, the tobacco industry trends toward growth. Tobacco companies continually search for innovations to reach new markets and satisfy the needs of existing consumers. They are also producing variations on long-standing options such as chewing tobacco.
Due to the addictive nature of the nicotine in tobacco products, demand remains resistant to economic downturns. You will also see some tobacco products presented as safer alternatives to traditional cigarettes. These include:
● Snus.
● E-cigarettes.
● Vaping.
● Nicotine pouches.
Companies particularly aim these variations toward younger and first-time consumers. Check out the following statistics to get a further handle on the industry’s current state.
According to MNI, compiler and publisher of the industrial data that powers IndustrySelect, the 118 tobacco companies provide 19,194 jobs. This is a negligible change of 0.01% from 19,195 jobs a year ago. The companies have average reported sales of $57 billion. Overseas sales are impressive, with 36% international distribution versus 29% for U.S. manufacturing as a whole. Women own less than 1% of tobacco companies compared to 2% ownership of all U.S. manufacturing. Public ownership is relatively high at 28% versus only 5% for all U.S. manufacturing.
As you might expect from a historical perspective, the majority of tobacco companies, 73%, make their homes in the South. The Northeast houses 14%, the West 8%, and the Midwest 6%.
The tobacco industry encompasses four subindustries, which may present varying sales opportunities.
Cigarettes
According to the latest available figures, the number of cigarettes sold by the largest cigarette companies in the U.S. is declining. Marketing of cigarettes to new smokers is difficult. Flavors that may attract them (with the exception of menthol) are prohibited under federal law. Menthol cigarettes comprise 36% of the market. Many states, however, prohibit the sale of menthol and other flavored tobacco products. Studies have shown that this limitation makes them less attractive to younger potential consumers.
Altria, a major cigarette manufacturer, is raising the price of some brands as part of a targeted pricing strategy. It doesn’t expect pressure from consumers of lower-priced products to impact these sales. You may find it an excellent strategy to approach manufacturers of brands still doing well in the marketplace.
Chewing and Smoking Tobacco
Predictions have the smokeless tobacco market surging at 4.67% annually through 2030. Chewing tobacco is an essential sector of this market. It serves as a less expensive and more convenient alternative to cigarettes. It is also available in flavors that are prohibited in cigarettes but are more attractive to some consumers.
Youthful consumers are increasing the demand for roll-your-own tobacco. Millennials also select it as a product of choice. Globally, the market is projected to grow at 3.8% annually. Still, a surge in lung disease is a restraint on sales.
Packaging, like cans for chew bags, plays an important role in the appeal of these products. If you provide packaging materials or services, this subindustry offers promise.
Cigars
Cigars can be hand-rolled or machine-rolled. While hand-rolled cigars lead the market, machine-rolled cigars are projected to grow 6.3% annually through 2030. This could present an equipment sales opportunity. As with other tobacco companies, the cigar subindustry is looking toward innovation and diversification to address smokers’ preferences.
Cigar sales can also pair with accessories such as cutters and humidors. Alcoholic beverages also serve as companion products to be sold to consumers. Associated offerings may be your opening to present collaboration proposals.
Tobacco Stemming and Redrying
Stemming and redrying are two steps in the production of tobacco products. Stems are removed by a process called threshing. Some threshing products are recycled into the machinery for further processing. Others move on to redrying to reduce moisture from 18-19% to 8-9%. Exposure to steam brings the moisture content up to 12%. Equipment marketing opportunities may exist in these facilities, along with the need for standard industrial services.
As the directions of some of the subindustries evolve, trends in the tobacco industry as a whole will change as well.
One major trend in tobacco usage is the change in nicotine delivery systems. One of the newest that you’ll find consumers embracing is eco-friendly vapes. Manufacturers approach environmental favorability in several ways, including using biodegradable or recyclable materials and reusable components. These include refillable e-cartridges and rechargeable batteries.
One industry trend very relevant to you as a sales professional is organic and responsible sourcing of materials. These are used to manufacture products aimed at more health-conscious consumers. Tobacco companies also employ this concept to tout themselves as leaders in sustainability.
As with many other manufacturers, the tobacco industry is integrating smart technology into its products. Innovative vapes incorporate sensors that feed information to mobile apps that track smoking behavior. Consumers can set limits and get alerts when they approach or go over them. The new tech also includes analytics that vapers can use to track their usage behavior. They can even form social networks with others who are using these products.
With the introduction of products designed to attract younger consumers, the tobacco industry must ensure compliance with regulatory age limits. This becomes particularly problematic with online and vending machine sales. Mobile apps that scan age verification documents are one tool applied to web-based purchases. Vending machines can also scan identification and may even use biometrics to establish customers’ ages.
Retail tobacco product sellers are also employing more robust identification strategies, such as uploading documents to verify dates of birth. Some are also subscribing to verification services.
All of these developments open doors for vendors of equipment and services. Your task will be reaching the individuals empowered to purchase them.
Whether you sell steamers or high-tech sensors, you must reach the right tobacco company contacts to make your pitch. IndustrySelect can help. Powered by an expert research team, an IndustrySelect subscription delivers industry profiles of with size, location, website, social links, executive positions, and, most crucially, the direct emails of qualified prospects. Access the entire U.S. industrial sector, or browse standalone databases by state, region, industry, and executive function. Just looking for tobacco industry contacts? Learn more about the Tobacco Products Industrial Database.
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