ORGANIC TOBACCO MARKET ANALYSIS

Organic tobacco does not contain any harmful chemicals and pesticides and has fewer side-effects as compared to the conventional one. They are available in different forms such as semi processed, chewing, snuff, homogenized, and tobacco extracts.

The global organic tobacco market is estimated to account for US$ 165.2 Mn in terms of value and 14,631 Tonnes in terms of volume by the end of 2019.

Drivers:

An increasing number of smokers around the globe is predominantly propelling the market growth of organic tobacco. According to the U.S. Department of Health & Human Services, in 2018, nearly 14 of every 100 U.S. adults aged 18 years or older (13.7%) smoked cigarettes. Therefore, a growing number of smokers is a major factor augmenting the market growth of organic tobacco over the forecast period.

Rising health-conscious consumers is raising demand for organically farmed tobacco. Moreover, rising awareness regarding organic products due to its various health benefits is projected to augment the market growth of organic tobacco. Organically grown tobacco contains fewer chemicals and harmful products such as fertilizers and pesticides. Thus rising health-conscious consumers is augment the market growth of organic tobacco. 

North America region dominated the global organic tobacco market in 2019, accounting for 47.3% share in terms of value, followed by Europe and Asia Pacific, respectively.

Figure 1. Global Organic Tobacco Market, Revenue Share (%), By Region, 2019

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Market Restraints

High cost and low yield of organic tobacco as compared to conventional tobacco are projected to hinder the market growth. Organic tobacco is twice the rate as compared to conventional tobacco and around 20-30% less yield is obtained from organic tobacco. Thus the high cost of tobacco is expected to hinder the market growth of organic tobacco.

Adverse effects associated with carbon monoxide, heavy metal, and tar released by organic tobacco as they lead to various chronic disease is expected to limit the market growth of organic tobacco.

Market Opportunities

Increasing use of hookah around the globe is projected to serve major growth opportunities to the market of organic tobacco. It is widely used in the hookah and rising consumption of hookah is expected to foster market growth. Increasing income level of the consumer coupled with the changing lifestyle of the consumer is further expected to propel the market growth of the organic tobacco over the forecast period.

The growing adoption of organic farming among farmers due to growing concern over health due to the use of pesticide residue is projected to provide enormous opportunities. According to the Organic Without Boundaries, in 2017, a total of 69.8 million hectares of land were organically farmed which shows twenty percent growth from 2016 numbers. Thus growing adoption of organic farming practices is anticipated to foster market growth. 

Figure 2. Global Organic Tobacco Market – Opportunity Analysis

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Market Trends/Key Takeaways

Consumption of organic tobacco products in the form of cigarettes and cigars to quit conventional smoking is a major trend in the market. The rising trend of smokeless tobacco consumption is expected to expand the scope of organic tobacco as they are eco-friendly and smokeless alternatives. All these factors are projected to accelerate the market growth of organic tobacco over the foreseeable timeframe.

Various manufacturers are introducing organic tobacco with low sugar content and this is expected to expand the application of the product. This factor is augmenting the market growth of organic tobacco. Moreover, a growing number of party-goers coupled with the increasing focus of manufacturers to adopt effective marketing and promotional activities to create brand awareness is further expected to fuel market growth.

Regulations:

Regulation on the launch of new products

Under the Family Smoking Prevention and Tobacco Control Act the U.S. Food and Drug Administration (FDA) has authority to regulate the tobacco products. They have the right to decide whether a new product could be introduced in the market.

Global Organic Tobacco Market - Impact of Coronavirus (Covid-19) Pandemic

The covid-19 pandemic has immensely affected organic tobacco market, owing to decreasing demand for tobacco products. The tobacco industry has become standstill due to lockdown. Several countries have banned tobacco sales as a part of their efforts to limit the spread of covid-19 but also as it is considered as a nonessential product. Hence, the pandemic results in declining the sales of tobacco products such as smoking and smokeless.

Competitive Section:

Key players operating in the global organic tobacco market are Santa Fe Natural Tobacco Company, Hi Brasil Tobacco, Bigaratte & Co., Vape Organics and Mother Earth Tobacco

Few Recent Developments

In January 2017, Reynolds American a subsidiary of Santa Fe Natural Tobacco Company announced entry into a merger agreement with British American Tobacco. The goal of this Acquisition is to Create Stronger, Truly Global Tobacco Company with Strong Portfolio of Iconic Brands and Next-Generation Products.