Global tobacco manufacturing market: $556.1 billion industry by 2018

Consumption of tobacco products has lit up worldwide during the recession, as the stress of layoffs, foreclosures and a tumbling stock market drove many people to seek relief via smoking. However, the performance of the global tobacco manufacturing market began to burn out as economic recovery eases stresses and lessens the need to smoke for stress relief. Nevertheless, according to the World Health Organization, the rising smoking rates in emerging countries have surpassed smoking rate declines in developed nations, which can be attributed to expanding excise taxes, growing regulations and health-conscious lifestyles.

The combination of these factors will boost revenue for the Global Cigarette and Tobacco Manufacturing industry, which is expected to grow at an annualized rate of 2.3% over the five years to 2013 to total $503.2 billion. In 2013, revenue is expected to grow at a slower rate of 0.7% due to an expected hike in the price of tobacco.

Although demand for industry products grew quickly during the recession, so did the price of major commodities. For example, the price of tobacco grew at an annualized rate of 4.6% over the past five years, increasing production costs. Government-mandated excise taxes also expanded consistently. While manufacturers usually pass on these cost increases to consumers through higher prices, price-conscious consumers restricted this, allowing firms to pass on only part of the cost, thus squeezing profit in 2009. 

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