Global Industry Overview: Tobacco Products

The tobacco industry produces the world's cigarettes, cigars, smoking and chewing tobacco, snuff, and reconstituted tobacco. Certain industry firms are also involved in the industrial processing side of the business, which includes stemming and re-drying tobacco.

Industry Snapshot

The tobacco products industry in the early twenty-first century was one of contrasts. In many Western countries consumption was falling, as it had done through the 1990s. The United States, for instance, was characterized by a particularly vocal and effective antismoking movement that helped bring down smoking rates and lobbied for increasing restrictions on smoking in public. Tobacco companies in the United States also faced a growing number of lawsuits brought on behalf of smokers and victims of secondhand smoke who had become seriously ill or died. In addition, state and federal legislative proposals threatened to further restrict the industry. For example, the Master Settlement Agreement, signed on November 16, 1998, by various state attorneys general and leading U.S. cigarette makers, included the stipulation that cigarette makers pay US$206 billion to U.S. states over a 25-year period to reimburse costs associated with treating illnesses related to smoking. Analysts predicted that the settlement would increase the cost of cigarettes and thus contribute to a decrease in cigarette smoking throughout early twenty-first century. The U.S. Department of Agriculture (USDA) reported that cigarette consumption in the United States had fallen 7.5 percent between 1998 and 2000 as a result of increased prices, increased understanding of health risks, and bans on smoking in public places.