Tobacco Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 114 firms in the US produce a range of tobacco products including cigarettes, cigars, chewing tobacco, snuff, and pipe tobacco. The tobacco manufacturing industry is engaged in tobacco leaf processing and aging, stemming and redrying, and manufacturing finished cigarettes or other tobacco products. The industry does not include the manufacturing of electronic cigarettes or electronic cigarette vapor liquids.
Regulations and Compliance
Tobacco companies must comply with a multitude of regulations from the Food and Drug Administration (FDA) regarding registration, product listings, labeling requirements, nicotine levels, flavored products, sales, and distribution.
Litigation
Companies are involved in litigation related to their tobacco and nicotine products, often holding the companies responsible for adverse health effects associated with smoking and exposure to environmental tobacco smoke.
Industry size & Structure
A typical tobacco manufacturer operates out of a single location, employs 86 workers, and generates about $350 million annually.
- The tobacco manufacturing industry consists of about 114 companies which employ about 11,700 workers and generate about $47.5 billion annually.
- The industry is highly concentrated with the 4 largest firms representing 91% of industry revenue.
- Large companies include Philip Morris (owned by Altria), Swisher International, and ITG Brands (subsidiary of Imperial Brands). Other major players include Reynolds America and Natural American Spirits (both owned by British American Tobacco), General Cigar Company (subsidiary of Scandinavian Tobacco Group), and JTI USA (subsidiary of Japan Tobacco Group, JT Group).
- The tobacco manufacturing industry is global; large manufacturers often have international operations.
- Leading states for tobacco manufacturing include North Carolina, California, Florida, New York, Texas, and Virginia.
Industry Forecast
Tobacco Manufacturers Industry Growth
Recent Developments
Sep 24, 2024 - Prices, Employment Up
- Producer prices for tobacco manufacturing rose 10.4% in July 2024 compared to a year ago, according to data from the Bureau of Labor Statistics (BLS). Prices have increased 51% since the pandemic. Employment by beverage, tobacco, and leather and allied product manufacturing grew almost 2% in August 2024 compared to a year ago, per the BLS.
- A new rule from the US Food and Drug Administration (FDA) has raised the age for photo verification needed for tobacco products, according to Reuters. The new regulation requires that retailers verify the age of anyone under 30 buying tobacco products, three years older than the previous mandate. The requirement is part of a rule finalized by the FDA in late August. The FDA has also updated rules around the sale of tobacco products via vending machines. Retailers are not permitted to sell tobacco products via vending machines in places where individuals under 21 are present or permitted to enter, an increase from 18 years previously. The changes are part of a directive from the Further Consolidated Appropriations Act, signed into law in 2019, which increased the federal minimum age for the sale of tobacco products from 18 to 21 in the US. The FDA says the new rules help protect the youth in the US from the health risks of tobacco products. According to Brian King, the director of the FDA's Center for Tobacco Products, "Decades of science have shown that keeping tobacco products away from youth is critical to reducing the number of people who ultimately become addicted to these products and suffer from tobacco-related disease and death."
- RJ Reynolds has launched a new non-nicotine vapor product called Sensa to the growing market for alternatives to cigarettes, according to CSP Daily. The new zero-nicotine and tobacco-free vapor product will feature a variety of flavors such as Berry Fusion and Mint Frost and have a locking feature to prevent unintended usage. According to company executives, adult tobacco and nicotine customers sometimes want the experience and flavors of vaping but don’t always want nicotine. Sensa launched in July 2024 in 22 US states.
- US manufacturing activity contracted in August 2024 for the fifth consecutive month after a brief expansion in March, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 47.2% in August, up 0.4 percentage points from the 46.8% recorded in July. A reading above 50% indicates manufacturing expansion. Prior to the uptick in March, US manufacturing activity had fallen below the baseline for growth for 16 consecutive months. August’s New Orders Index was in the contraction zone at 44.6%. The August Production Index was 44.8%, a decrease from July’s 45.9%. Five manufacturing industries tracked by the ISM reported growth in August: Primary Metals; Petroleum & Coal Products; Furniture & Related Products; Food, Beverage, and Tobacco Products; and Computer & Electronic Products. The industries reporting contraction in August were Textile Mills; Printing & Related Support Activities; Nonmetallic Mineral Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Wood Products; Machinery; Paper Products; Chemical Products; and Miscellaneous Manufacturing.
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