The tobacco market has seen a significant uptick in smoking habits due to changing lifestyles and the addictive nature of cigarettes. Despite facing scrutiny from ESG standards, tobacco stocks have proven to be a lucrative investment over the years.
In this piece, I have evaluated why investors are vying for these fundamentally sound tobacco stocks, namely, Altria Group, Inc. (MO – Get Rating), Japan Tobacco Inc. (JAPAY – Get Rating), and Vector Group Ltd. (VGR – Get Rating).
While cigarette sales were impacted by high inflation, the recent easing of inflationary pressures suggests a potential rebound in sales. In 2023, the tobacco products market is expected to generate $106 billion in revenue, with cigarettes being the largest segment at $83 billion.
Moreover, the global tobacco market is expected to expand at a 3% CAGR to a whopping $1.25 trillion by 2028 owing to the growing number of smokers across countries.
On the other side, rising health consciousness and stern government regulations against cigarette smoking have pushed many consumers toward low-risk, reduced-risk products such as e-cigarettes, vaping, and heat-not-burn variants.
E-cigarettes have gained traction among youngsters as an alternative to traditional smoking with potentially reduced harm. According to a new report from the US Centers for Disease Control and Prevention, over 1 in 10 young adults in the United States regularly use e-cigarettes. Launching disposable e-cigarette products with fruit and candy flavors that appeal to younger audiences has flared in popularity.
Moreover, the global e-cigarette and vape market is expected to reach $182.84 billion by 2030, registering a CAGR of 30.6%. Consumer awareness of smokeless, safe, and ashless tobacco is predicted to drive industry growth.
MO, JAPAY, and VGR look…
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