The Global Heated Tobacco Products Market size was valued at USD 7.53 billion in 2020 and is estimated to expand to USD 58.36 billion at a CAGR of around 28.0% over the forecast period from 2020 to 2027. It is driven by the steady decrease in cigarette sales with rising demand for potentially reduced-risks products. Presence of low level of nicotine and chemicals Heat-Not-Burn (HNB) products is anticipated to further fuel the demand. HNB tobacco devices do not produce smoke and can be used multiple times.
The health risks associated with cigarettes and chewing tobacco are anticipated to drive the adoption of Heated Tobacco Products (HTPs), especially by young population. The low risks and high demand are expected to encourage global manufacturers to invest in the market. Moreover, easy approval from the U.S. Food and Drug Administration (FDA) and equivalent regulatory bodies from Europe and Asia are anticipated to bode well for the growth of the market. For instance, in 2018, Philip Morris International Inc. received FDA approval for its heated tobacco products to be sold in the U.S.
Stick segment held the largest market share of about 74.23% in 2018, attributed to high adoption of HTPs as a premium product. Moreover, its high price and rising demand due to ease of use is anticipated to drive the revenue growth in near future. Philips Morris International and Japan Tobacco International are some of the leading manufacturers operating in this segment. Availability of flavors and additives other than combustible cigarettes products is anticipated to further fuel the demand.
Leaf product segment is projected to register the fastest CAGR of around 56% from 2020 to 2027. Rising demand of loose leaf due to its low and effective pricing is anticipated to drive the growth. The market is also driven by easy manufacturing of leaf products as compared to the stick variants in expected to boost the demand. Moreover, availability of options such as tobacco leaves and marijuana among others is also anticipated to impel the demand.
Offline channel held the largest heated tobacco products market share of around 91.62% in 2018, easy availability, and convenience of buying the products. Provision of separate smoking zones and stores by private organizations and clubs is anticipated to positively influence the growth. Availability of variety of flavors and attractive packaging are projected to contribute to offline sales.
Online segment is expected to expand at the fastest CAGR of around 58% from 2019 to 2025. The growth is driven by rise in sales by manufacturers through their own online channels offering a wide range of products. Availability of deals and offers, discounted items offered through online stores along with rising number of online distributors, especially in developed countries such as U.S. and Canada is projected to bode well for the growth of the segment.
The Heated tobacco products market is segmented on the basis of product, distribution channel and region. On the basis of product the market is segmented Stick, Leaf. On the basis of distribution channel Online, Offline.
Asia Pacific held the largest heated tobacco products (HTPs) market share of about 73% 2018. It is driven by rise in consumption of iQOS brand heated tobacco products in countries such as Japan and Korea. However, stern regulations regarding the use of e-cigarettes may hinder the regional growth.
Europe is anticipated to register the fastest CAGR of around 57% over the forecast period. Higher penetration of leading manufacturers such as Philips Morris International, Japan Tobacco International, and British American Tobacco in countries such as Italy, Russia, Poland, Croatia, and Germany is projected to drive the regional growth. In January 2018, British American Tobacco invested around USD 400 million to expand its area of operation in Croatia.
Key players such Philips Morris International, Japan Tobacco International, and British American Tobacco.