Global Market Outlook on Cigarette paper
Cigarette paper market in North America is highly consolidated and competitive. Alternatives to cigarette; e-cigarette market has seen significant growth, due to health and environmental awareness in the recent years. Demand and prices of virgin pulp grades have increased, which, in turn, continued to pressure margins in the cigarette paper industry.
- Growth: The cigarette paper market is estimated to undergo a negative CAGR growth of 0.3%, due to decreased demand from the cigarette over the next five years, whereas the cigarette market is expected to grow from USD 139,538 million in 2018 at the rate of 0.4% annually until 2021
- Demand Driver: This is due to the falling volume of cigarettes in the developed market, due to increasing awareness of the harmful effects of smoking
- Regulations: Sale of cigarette is shifting from developed markets, like Western Europe and the US, where demand is decreasing and manufacturer’s operations are more restricted by government policies to emerging markets, like Africa and Asia, where manufacturers can utilize to their full advantage lax regulatory environments, growing population, and increasing income
- According to the EU Tobacco Products Directive, menthol cigarettes will be banned in the European Union by May 2020. The US, the European Union, and several other smaller jurisdictions have mandated the use of LIP papers
North America – Cigarette Paper Market Dynamics
- Market Growth: Cigarette market revenue amounts to USD 104,412 million in 2018 and is estimated to grow annually by 1.3% until 2021. Strict government regulations regarding tobacco production, distribution, and marketing may slow down the market growth of cigarette and cigarette paper
- Pulp price Increases: Demand for virgin pulp has increased, causing pulp prices to remain high, and the Chinese ban on imported recycled paper has obviously helped the upswing in demand for pulp. Major suppliers, like SWM, have informed that higher pulp costs and other inflationary pressures continued to pressure margins
- Growing alternatives: Cigarette paper market is highly competitive, in which, alternative supplies and technologies may attract customers away. Due to growing health concerns over the usage of conventional tobacco-based cigarettes and environmental concerns over the disposing of cigarette filters, the e-cigarette market has witnessed a significant growth over the past decade
- North America has the largest share in the e-cigarette market, in terms of revenue, and is forecasted to reach USD 20.49 billion by 2025
Europe – Cigarette Paper Market Dynamics
European cigarette paper market has been declining in the recent years and flattened out in 2017. The cigarette paper demand is forecasted to decline from 2018 to 2021, due to the government taxation policies and consumers shifting to cigarette alternatives, due to health awareness and sustainability.
- The European cigarette paper market, along with other specialty paper, have seen decline in the recent years though this has recently stabilized
- Cigarette growth rate: Cigarette market in Europe has declined in 2017 by 7% when compared to 2005. It is estimated that the cigarette market is expected to grow at the rate of 1.1% between 2018 and 2021
- Demand drivers: Government entities in Western Europe have taken or proposed actions, such as efforts to regulate, restrict or prohibit the sale, advertisement and promotion of tobacco products and their components, to limit smoking in public places, to control or restrict additives that may be used in tobacco products and to increase taxes on such products might affect the growth of European Cigarette paper
- Russia is one of the five largest cigarette consuming countries in the world, where sales by volume have decreased by about 25% between 2013 and 2017
Asia – Cigarette Paper Market Dynamics
Asia’s Cigarette paper market is expected to decline at the rate of 1–2% during 2018–2021. Demand of cigarette in Southeast Asia declined by 3% in 2017 and is expected to continue the declining trend by about 2% until 2023.
- Asia is the top cigarette paper consuming industry in the world. Though most of the cigarette paper manufacturers have automated their mills, many machines are still small, which is expected, given the low volume demand. Overcapacity of cigarette paper is inevitable in the coming years, partly because of repurposing
- Cigarette demand growth: China’s demand for cigarette declined by 2% in 2015 and has continued so. The combined cigarette volume of Indonesia, Philippines, Thailand, Vietnam, Malaysia, and Singapore went down by nearly 3% to 500 billion sticks in 2017
- Drivers: Strong government regulations contributed to this declining trend and is also a key reason for the reduced outlook of Southeast Asia’s cigarette industry, with a forecasted negative volume CAGR of 2% to 2023