It’s not exactly a secret that the vaping industry is growing by leaps and bounds right now. According to a recent report released by Forbes, the industry as a whole is worth almost $4 billion at this point in time. But it’s expected to experience even more growth over the course of the next five to ten years.
How much more growth? Well, Reseach and Markets is predicting that, by the time 2022 rolls around, the vaping industry could be worth an astounding $27 billion. That is still well below the $92 billion that the tobacco industry is worth right now, but it’s obviously a huge step in the right direction for vaping companies.
It’s bad news for those in the tobacco industry, though. Because part of the reason the vaping industry is growing so quickly is that many former smokers are turning their backs on tobacco once and for all and vaping instead. This has reportedly led to a huge decline in sales for tobacco companies, and it’s actually even worse than many of them expected it might be.
The global market research company Euromonitor International released some new research in late June that suggests the tobacco industry could face a huge loss in revenue over the next five years. So huge that it could force tobacco companies to rethink the way they are doing business. Let’s take a closer look at the loss that is expected and analyze why it might be good news for the vaping industry.
How Much Money Is the Tobacco Industry Going to Lose?
There’s really no way to predict exactly how much money the tobacco industry will lose between now and 2021. It depends on a number of different factors. For example, the FDA deeming regulations could strike a big blow to the vaping industry and help Big Tobacco out. But if the regulations happen to get shot down, things could get even worse for the tobacco industry than predicted by Euromonitor International.
But after taking a look at all of the research that is available to them right now, Euromonitor International is predicting that the cigarettes market will post a $7.7 billion loss over the next five years. In 2016, Euromonitor International found that, for the first time in a really long time, cigarette sales accounted for less than 90 percent of tobacco product sales. And that doesn’t bode well at all for the tobacco industry.
Of course, that $7.7 billion figure could go up or down, depending on a bunch of different things. But if nothing else, it appears as though the tobacco industry is going to post a huge loss over the next five years. It’s just a matter of how huge that loss ends up being.
Why Is the Tobacco Industry Losing So Much Money?
As we just mentioned, there are fewer people buying cigarettes today than at almost any point in the last few decades. Many people have quit smoking altogether, and there are some who have managed to cut back quite a bit by using vaping as an alternative. This is having a profound effect on the tobacco industry.
The rise in vaping as a whole is also cutting into Big Tobacco’s products. According to Euromonitor International, the vaping industry is going to grow to at least $15 billion in the U.S. alone over the next five years, and that money is directly impacting the money made by the tobacco industry. As more people choose vaping over smoking, it’s affecting the tobacco industry’s bottom line.
This is happening in places other than the U.S., too. Japan actually has the largest “heated tobacco” market in the entire world and uses most of the “heated tobacco” products that are out there. Germany is second right now with Switzerland and Portugal coming in third and fourth. But the U.S. is expected to climb to No. 2, provided the FDA doesn’t wreak havoc on the industry. That will no doubt hurt tobacco sales for the tobacco industry even more.
Is This Good News for the Vaping Industry?
Before you get too happy about the downfall of the tobacco industry, you should know that this might not be the best news in the world for the vaping industry. We’ve debated in the past whether the tobacco industry is for or against the vaping industry, and while common sense might tell you that it’s against it, the tobacco industry is going to do whatever it takes to make money, even if that includes creating vaping products of their own.
You have probably already noticed that many tobacco companies are creating vaping products these days. They are even asking the FDA to relax some of its regulations—the same regulations that they openly called for several years ago—so that they can get more involved in the vaping industry. And you are probably going to see this continue in the coming years.
That isn’t necessarily good. But at the same time, we do have to admit that it feels good to see the vaping industry making such a dent in the tobacco industry. The vaping industry was almost non-existent a decade ago, and yet, here it is competing with Big Tobacco. It’s pretty crazy that it’s happening.
Why You Should Keep an Eye on This Trend
The vaping industry has grown a lot in recent years, but it’s going to need to catch some breaks if it wants to continue to grow. The FDA regulations pose a serious threat to the entire industry, and in order for many vape companies to stay in business, the regulations are going to have to be either reduced significantly or eliminated altogether.
The vaping industry is also going to need to continue to conduct extensive research on its products to make sure they are safe and healthy for people to use. If the industry is able to do that, it would give it a huge boost and change the game immediately.
You should stay informed about the battle between the tobacco and vaping industries, and look out for more information on it over the next five years. It’s going to be interesting to see how everything shakes out over time.