Tobacco packaging

Market size and evolution

The tobacco market has initiated sweeping changes on a long-term scale, shifting from combustible cigarettes to new generation smoking products or even to a non-smoking world. A change driven by the “big 4” world tobacco groups themselves.

The conventional cigarettes market is pretty contrasted with declining western countries and a still growing South-East Asia. The global volume is expected to remain stable around 5 000 billion sticks per year.

Among a global value expected to top $1 000 billion by 2023, alternative products still stand for a tiny portion, below $100 billion, but strongly growing.

Market segmentation

The combustible tobacco market is divided into conventional cigarettes, produced by worldwide actors, and regional products like Bidis in India or kreteks in Indonesia.

New Generation products, sometimes called RRPs (Reduced Risk Products), include e-cigs and HTP (Heated Tobacco Products) also called HnB (Heat not Burn). Water pipe tobacco falls in that category as well.

Oral tobacco, among which SNUS stands, represents another category, with varying success depending on the regions.

Cannabinoid products are attracting a great attention and represent great business opportunities.

Market legislation

The tobacco market in general is constantly under pressure from a legal and taxation perspective. The share of plain packaging is expected to reach 1 trillion sticks by 2030 (source TJI).

The sales of E-cigarettes (vapor) are restricted to adults over 21 in some countries. Flavors are banned in several places. The advertising of some brands has been challenged in court for attracting youngsters.

Marketing insights

In a very competitive market, being visible is crucial. Tobacco companies invest a lot in the identity of their brands and products, with strategic naming and color codes.

Fighting against counterfeiting is a growing concern for established brands. The packaging therefore includes multiple refinements so that customers clearly recognise genuine products.

Production constraints

Serialisation is a major production constraint, forcing manufacturers to reorganize the whole supply chain.

Organic tobacco is expected to expand. The packaging should reflect such expectations, with recycled board instead of the usual bleached, perfect finish boards traditionally used in the industry.

Context

The tobacco market remains extremely attractive and the global revenues of brands will grow thanks to high added value products. New generation products imply new packaging sizes and a high level of embellishment.

Some of the challenges for the converters:

• Invest in versatile production lines
• Guarantee flawless color consistency
• Reach high speed, especially when the added value is limited (plain packaging)
• Ensure a perfect creasing and cutting of blanks
• Integrate numerous identification marks + serialisation (traceability of cigarettes) in the packaging
• Manage recycled cartonboard uneven characteristics
• Meet shorter delivery targets with 0% defaults
• Handle the delivery of small blanks (HnB type for example)