Ohio Ag Connection - Tobacco Demand to Fall 1.3 Percent Annually

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Tobacco Demand to Fall 1.3 Percent Annually
Ohio Ag Connection - 01/17/2017

US demand for tobacco products is forecast to fall 1.3% annually to 2020. A more pronounced retreat is expected for cigarettes, which represent the leading segment of the market, due to factors such as further increases in excise taxes and growing legal and social restrictions on smoking. The share of US adults who smoke cigarettes declined from 21% in 2005 to 15% in 2015.

While many other tobacco products have enjoyed lower tax and/or regulatory burdens relative to those of cigarettes, these advantages may evaporate under heightened regulatory scrutiny. In May 2016, the Food and Drug Administration (FDA) extended its authority, which had previously focused mostly on cigarettes, to cover all tobacco products. Under the new rule, all tobacco product manufacturers must submit to regulatory oversight for product ingredients and obtain approval for new products. The impact on many makers of premium and hand-rolled items, which were not exempted from the regulation, is expected to be particularly acute.

These and other key insights are featured in Tobacco Products: United States, a report recently released by Freedonia Focus Reports, a division of The Freedonia Group, Cleveland, Ohio.

The report forecasts US tobacco product demand and shipments in US dollars at the manufacturers' level to 2020. Total demand and shipments are segmented by product type.

Tobacco cultivation, stemming, and drying are excluded from the scope of the report.

To illustrate historical trends, total demand, total shipments, the various segments, and trade are provided in annual series from 2005 to 2015.

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