Organic tobacco is less harmful than regular tobacco and is cultivated without the use of any chemicals and fertilizers. They have organically certified tobacco since they are free from any pesticide residue. They are used for smoking and smokless applications. Smoking includes cigars and cigarillos, cigarettes, and pipes whereas smokeless tobacco comprises tobacco, snuff, and vapor.
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.
Organic tobacco provides benefits to the farmers due to its sale at a premium price to the manufacturer which is projected to fuel the market growth of organic tobacco. According to the Coherent Market Insights analysis, organic tobacco growers earn more profit over conventional tobacco growers; around twice the amount of a regular crop. Organic farmers can earn up to US$ 4.5 per pound, as compared to US$ 2.2 for traditional tobacco.
Increasing launch of new flavors in organic tobacco by manufacturers is projected to offer lucrative opportunities to the market of organic tobacco. For instance, in January 2018, Japan Tobacco Inc. announced that it has launched "Natural American Spirit Organic Mint" nationwide in late February 2018. The main features of the Natural American Spirit brand are "100% additive-free tobacco leaf," the use of only carefully selected and high-quality tobacco leaf" and "densely packed tobacco leaf.
Strict rules and regulations for eliminating tobacco cultivation and consumption are expected to restrict the market growth. For example, USDA has made it mandatory for farmers to obtain a certification for cultivating organic tobacco. Moreover, the government has imposed heavy taxation on tobacco products, which has led to reducing tobacco consumption in recent years.
Asia Pacific accounted for a significant share of in 2019. This is attributed to its increasing consumption of smoking organic tobacco products such as cigarettes, cigars and cigarillos. According to World Health Organization (WHO), India accounted for 84% of the world’s consumption of smokeless tobacco in 2015. Furthermore, the smoke from organic tobacco is considered as environmentally friendly, which is propelling growth of market.
Among applications, smoking dominated the global organic tobacco market in 2019 and was valued at US$ 12,772 Mn in 2019. The increasing consumption of cigarettes in emerging economies such as China and India, is expected to propel the growth of this segment. According to The World Health Organization, nearly 5.6 trillion cigarettes were consumed in 2013. China and Russia are the countries consuming cigarette owing to high smoking prevalence and high smoking intensity.
Increasing spending by the manufacturer on R &D programs for developing less harmful tobacco products is expected to be a major trend in the market. Growing consumers' awareness regarding the benefits of organic tobacco is also expected to foster market growth. Moreover, the growing popularity of flue-cured product forms among the young population is projected to foster the market growth of organic tobacco over the forecast period.
Merger and acquisitions among key players is a major trend in the market and this trend is projected to augment the market growth of organic tobacco. For instance, in January 2017, Reynolds American announced entry into 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.
Global Organic Tobacco Market - Impact of Coronavirus (Covid-19) Pandemic
Covid-19 has drastically impacted the organic tobacco market due to a decline in demand for tobacco products. Some countries such as India and South Africa have banned the sale of tobacco products during lockdown. Robust evidence suggests that several mechanisms might increase the risk of respiratory tract infections in smokers. On 29th April 2020, the World Health Organization stated that smokers are likely to develop severe disease with Covid-19, compared to non-smokers.
Regulation on the manufacturing of organic tobacco
It has been made mandatory for the farmers to obtain a certification from USDA (U.S. Department of Agriculture) for the production if organic tobacco. Only certified farmers have the right to manufacture tobacco. There are numerous constraints like the land to be cultivated should be free from pesticides and other chemicals for at least 3 years, use of specific seeds, a limit on additives, etc.
Key players are operating in the global organic tobacco market are Santa Fe Natural Tobacco Company, Hi Brasil Tobacco, Bigaratte & Co., Vape Organics and Mother Earth Tobacco