Tobacco Product Manufacturing Industry Overview

Excerpt from Tobacco Product Manufacturing Report

The US tobacco manufacturing industry includes about 80 companies with combined annual revenue of about $38 billion. Major companies include Altria (owner of Philip Morris USA and UST), Lorillard, Reynolds American, and Vector Group. The industry is highly concentrated: the eight largest companies generate about 90 percent of revenue.

Competitive Landscape

Demand is driven by discretionary consumer spending and awareness of the health effects of smoking. The profitability of individual companies depends on effective marketing. Large companies enjoy economies of scale in manufacturing and in their ability to offer wider ranges of products. Small companies can compete effectively through heavy discounting, through clever branding and packaging, and by exploiting niche categories such as pipe tobacco and additive-free cigarettes. The industry is capital-intensive: average annual revenue per worker is more than $2 million.

Products, Operations & Technology

Cigarettes account for more than 80 percent of industry revenue. Other products include chewing tobacco, snuff, and cigars.