SMOKING’S DECLINE FORCING BIG CHANGES IN BIG TOBACCO

The situation

Cigarette use in a number of developing countries may fall to zero in the next three decades as smokers quit or switch to alternative products, according to a new report. Smoking will disappear by 2050 from the U. S., parts of Europe, Australia and large chunks of Latin America if the declining trend seen in the last decades continues, Adam Spielman, analyst at Citigroup, wrote in a note published this week.

Next- generation products have slowed the decline of nicotine use in many markets and possibly reversed it in some, Spielman wrote.

What it means

The analysis shows how important it is for Big Tobacco to arm itself with competitive cigarette alternatives. The industry has been undergoing some of the biggest changes in its history: The number of children currently smoking has plunged by almost three- quarters in the last 20 years, tobacco use among men is on the decline for the first time on record and cigarette volumes have been falling in a straight line for decades.

More details

Philip Morris, the maker of Marlboro and Chesterfield cigarettes, has taken a lead in smoking alternatives with its IQOS heated- tobacco device and now already gets almost a quarter of its revenue from noncombustible products, prompting a race with rivals like British American Tobacco to win over smokers to smoke- free products like vaping and oral nicotine pouches.

Altria Group is the biggest laggard in the report, as some 82% of its business comes from cigarettes, Spielman said. And although it has investments in alternatives, the company isn’t always in control of those, given its vape technology is via a stake in Juul Labs Inc., and its exposure to the heat- not- burn category is only by marketing Philip Morris’s IQOS.

AJC FILE