Cigarette use in a number of developing countries may fall to zero in the next three decades as smokers quit or switch to alternative products, according to a new report.
Smoking will disappear by 2050 from the U.S., parts of Europe, Australia and large chunks of Latin America if the declining trend seen in the last decades continues, Adam Spielman, analyst at Citigroup Inc., wrote in a note published Tuesday.
The analysis shows how important it is for Big Tobacco to arm itself with competitive cigarette alternatives. The industry has been undergoing some of the biggest changes in its history: The number of children currently smoking has plunged by almost three-quarters in the last 20 years, tobacco use among men is on the decline for the first time on record and cigarette volumes have been falling in a straight line for decades.
Philip Morris International Inc., the maker of Marlboro and Chesterfield cigarettes, has also signaled cigarettes may start becoming obsolete within a decade. The company has taken a lead in smoking alternatives with its IQOS heated-tobacco device, and now already gets almost a quarter of its revenue from non-combustible products, prompting a race with rivals like British American Tobacco Plc to win over smokers to smoke-free products like vaping and oral nicotine pouches.
Altria Group Inc. is the biggest laggard in the report, as roughly 82% of its business comes from cigarettes, Spielman said. And even though it has investments in alternatives, the company isn’t always in control of those, given its vape technology is through a stake in Juul Labs Inc. and its exposure to the heat-not-burn category is only by marketing Philip Morris’s IQOS.
Still, next-generation products have slowed the decline of nicotine use in many markets and possibly reversed it in some, Spielman wrote.
In countries like China, France and Russia, cigarette smoking is likely to still be common in 2050.
“The current trends do not suggest a world without cigarettes,” Spielman said.
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