Australia Tobacco Market Size and Share - Outlook Report, Forecast Trends and Growth Analysis (2025-2034)
Description
Australia Tobacco Market Trends
In 2023, low-priced cigarettes accounted for nearly 79% of the Australia tobacco market share, recording a y-o-y growth of 3 percentage points. The demand for high-price cigarettes also surged by 2 percentage points, while constituting a market share of 6%. This indicates a sustained demand for various tobacco offerings among different consumer segments.
As per a report of the Australian Packaging Covenant Organisation 2023, major tobacco companies such as Philipps Morris Australia have made significant progress on their journey towards ensuring sustainable packaging of tobacco products. This has led to a favourable impact on waste reduction and maximised the efficient usage of materials, which is one of the key Australia tobacco market trends.
As per the Australian Bureau of Statistics, in 2023, nearly 2.7 million outbound travellers returned to Australia, while carrying 3.4 tons of legal tobacco. This is expected to have sustained the consumption of legal tobacco in the country.
Australia Tobacco Market Growth
One significant factor contributing to the Australia tobacco market growth is the increasing demand for roll-your-own (RYO) tobacco. As the price of manufactured cigarettes rises due to high excise taxes, many smokers are opting for RYO tobacco as a more cost-effective alternative. This shift allows consumers to maintain their smoking habits while reducing expenses. Additionally, RYO tobacco offers more customisation in terms of quantity and blends, appealing to those seeking a personalised smoking experience.
Traditional marketing strategies that target smokers with attractive packaging materials and cost-effective rates have ceased to deliver results due to the increasing consumer awareness regarding the harmful effects of smoking, coupled with the government mandate of marketing products in plain white packaging. Thus, companies have switched to providing other types of tobacco products to consumers, which have a high degree of safety. Major market players are establishing multi-functional project teams in their organisations, including electronics, recycling, reverse logistics, and supply chain management, among others. This is driving the Australia tobacco market expansion.
Australia Tobacco Market Insights
Introduction of new market products
Companies like Philipps Moris are introducing new tobacco products without a heating element, which is favourably shaping the Australia tobacco market dynamics. This reduces the emission of harmful substances by up to 95%. The Australian Bureau of Statistics suggests that 1.9 million people were daily smokers in Australia in 2021. This can be attributed to the genetic predisposition of people towards smoking, apart from the need to curtail different mood disorders. As per the World Health Organisation, nearly 22.3% of the global population consumed tobacco in 2020. This suggests that cigarette consumption is expected to retain a large consumer base, even in high-income countries like Australia.
Repositioning tobacco products in the market
The indigenous tribes of Australia are expected to emerge as a major consumer base for tobacco companies, thereby driving the Australia tobacco market growth. The increasing government focus on preventing the risk of lung cancer and other health diseases among adolescents is expected to prompt tobacco companies to shift their focus away from younger consumers and towards older consumers, who prefer tobacco consumption for cultural reasons.
Opportunities in the Australia Tobacco Market
The increasing demand for alternative tobacco products, including Next-Generation Products (NGPs), is expected to fuel the Australia tobacco market growth, driven by the implementation of strict government regulations and the increasing consumer shift towards smokeless devices, Roll-Your-Own (RYO) tobacco. Increasing innovation in product development is prompting companies to launch low-risk tobacco products in the vaporised product segment, apart from smokeless tobacco products, which is driving the market growth. The rising consumer appeal for cultural products such as waterpipes and Kretek is expected to enhance tobacco consumption among consumers over the forecast period.
Companies that prioritise innovation are expected to benefit despite tighter regulatory norms for the tobacco industry in Australia. The market exhibits sustained demand for nicotine pouches, herbal blends, and heated tobacco products, which are provided by international players.
Australia Market Restraints
The Australia tobacco market growth faces significant challenges from the rising consumption of illicit tobacco products by consumers due to their high degree of cost-effectiveness and accessibility. In 2023, illicit tobacco intake accounted for a share of 28.6% of the overall consumption. This was a year-on-year growth of 5.7 percentage points, reaching 2.8 million kilograms while also exceeding the pre-pandemic levels. Unbranded tobacco constituted a share of nearly 58.3% of the total consumption of illicit tobacco in Australia. This can be attributed to increasing consumer awareness and appeal for its tobacco blends. Though these indicate significant problems for market players, increasing government intervention to minimise consumption by strengthening import-export regulations is expected to drive the market expansion over the forecast period.
“Australia Tobacco Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:
Market Breakup by Type
By Type Analysis
Virginia tobacco is expected to constitute a major portion of the Australia tobacco market share due to its increasing application in cigarette production. It is highly favoured by international tobacco companies for its high sugar content and mild flavour. Its popularity can also be attributed to the increasing domestic demand for low-nicotine cigarettes since it is extensively used in milder blends. Other tobacco varieties such as Oriental and Burley also enjoy a significant market presence, but the increasing consumer preference for Virginia makes it the leading choice of the international tobacco industry.
By Product Analysis
Based on product, the Australia tobacco market is divided into kretek, smokeless tobacco, cigarette, NGPs, cigar and cigarillos, roll your own, smokeless device, waterpipes, and snuff, among others. Over the forecast period of 2024-2032, NGPs (next-generation tobacco products) are expected to grow at a CAGR of 3.7% since they present a safer alternative to conventional cigarettes, which emit large quantities of harmful smoke. This is expected to reduce the incidence of harm caused by smoke inhalation. These products are expected to be closely followed by cigars and cigarillos, which are projected to grow at a CAGR of 3.5% during 2024-2032, due to the anticipated increase in tobacco consumption among adults.
Rapid technological advancements and the increasing consumer preference for clean smoking devices have led to the increasing appeal for products like waterpipes, snuff, and smokeless tobacco. Other types of cigarettes like Kretek and Roll-Your-Own tobacco are also gaining significant traction in the market, thereby driving market growth.
By Distribution Channel Analysis
The introduction of new grocery retailing platforms can create new market opportunities for major companies in the Australia tobacco market. Presently, online channels account for a very small portion of overall tobacco sales, which can be attributed to the lower prevalence of quick commerce services companies.
In 2019, the National Drug Strategy Household Survey suggested that current smokers purchase their tobacco products mostly from supermarkets (43%) or a tobacconist (23.5%). This can be attributed to the high prevalence of smoking among low-income households. As per the Australia tobacco market analysis, medium-income households generally rely on convenience stores for purchasing tobacco products, which drives point-of-sale conversions for tobacco companies.
Australia Tobacco Market Regional Insights
Due to the increasing threat posed by the consumption of illicit tobacco products on human health, major state governments in Australia have sought to repeal their regulatory frameworks governing tobacco consumption, which is expected to drive the Australia tobacco market expansion.
In June 2023, the government of Queensland made the possession and retail supply of illicit tobacco products a criminal offence and imposed heavy penalties on its suppliers. It is now expected to mandate the possession of an approved license for wholesalers and retailers of smoking products, similar to the government of Victoria.
In October 2023, the government of New South Wales implanted the Health Legislation Amendment (Miscellaneous) Act 2023 to enable inspectors and health officers to search any premises and seize and dispose of illegal tobacco products.
A similar market trend is visible across other regions of Australia, such as Victoria, Western Australia, and the Australian Capital Territory which is expected to enhance the market revenue over the forecast period.
Australia Tobacco Market Regional Analysis
The Australian tobacco market exhibits distinct regional variations in consumer preferences. In urban areas, there is a growing demand for alternative products such as e-cigarettes, smokeless devices, and Roll-Your-Own (RYO) tobacco, driven by health-conscious consumers and stricter smoking regulations. These regions are also experiencing a surge in the adoption of Next-Generation Products (NGPs) like heated tobacco.
In contrast, rural and regional areas continue to show a preference for traditional cigarettes, though smokeless tobacco and waterpipes are slowly gaining popularity. The market’s regulatory landscape is consistent across regions, but urban areas are more responsive to newer, reduced-risk products.
Competitive Landscape
Major tobacco manufacturing companies are focusing on establishing partnerships with tobacco retailers to ensure that their products secure a prominent place of display at their shops and boost business conversion rates through point-of-sale marketing. This is essential since customers presume high brand visibility means high popularity.
Key Industry Players
BAT Australia Ltd. is a wholly-owned subsidiary of British American Tobacco Group, which is headquartered in Woolloomooloo and has around 400 employees, with nearly 1,300 employees working across South Asia.
ICT Group Pty Ltd. is a partner of the BBM Group which has been manufacturing tobacco products for the last 8 decades. Its product range includes 1.84 mm King size cigarettes, 2. 84 mm nanotek super slim cigarettes, and 3.100 mm super slim cigarettes.
Philip Morris Australia was founded in 1954 and is headquartered in Melbourne, Victoria. It is engaged in manufacturing smoke-free alternatives for consumers and prides itself on being PMI’s first international affiliate to manufacture products overseas.
There are many other key players in the Australia tobacco market report.
In 2023, low-priced cigarettes accounted for nearly 79% of the Australia tobacco market share, recording a y-o-y growth of 3 percentage points. The demand for high-price cigarettes also surged by 2 percentage points, while constituting a market share of 6%. This indicates a sustained demand for various tobacco offerings among different consumer segments.
As per a report of the Australian Packaging Covenant Organisation 2023, major tobacco companies such as Philipps Morris Australia have made significant progress on their journey towards ensuring sustainable packaging of tobacco products. This has led to a favourable impact on waste reduction and maximised the efficient usage of materials, which is one of the key Australia tobacco market trends.
As per the Australian Bureau of Statistics, in 2023, nearly 2.7 million outbound travellers returned to Australia, while carrying 3.4 tons of legal tobacco. This is expected to have sustained the consumption of legal tobacco in the country.
Australia Tobacco Market Growth
One significant factor contributing to the Australia tobacco market growth is the increasing demand for roll-your-own (RYO) tobacco. As the price of manufactured cigarettes rises due to high excise taxes, many smokers are opting for RYO tobacco as a more cost-effective alternative. This shift allows consumers to maintain their smoking habits while reducing expenses. Additionally, RYO tobacco offers more customisation in terms of quantity and blends, appealing to those seeking a personalised smoking experience.
Traditional marketing strategies that target smokers with attractive packaging materials and cost-effective rates have ceased to deliver results due to the increasing consumer awareness regarding the harmful effects of smoking, coupled with the government mandate of marketing products in plain white packaging. Thus, companies have switched to providing other types of tobacco products to consumers, which have a high degree of safety. Major market players are establishing multi-functional project teams in their organisations, including electronics, recycling, reverse logistics, and supply chain management, among others. This is driving the Australia tobacco market expansion.
Australia Tobacco Market Insights
- In 2023, Australia consumed nearly 6.9 million kgs of legal tobacco.
- In 2023, the consumption of legal non-domestic tobacco surged y-o-y by 67%.
- In 2023, 5.4 kilograms of domestic cigarettes were consumed by Australians.
Introduction of new market products
Companies like Philipps Moris are introducing new tobacco products without a heating element, which is favourably shaping the Australia tobacco market dynamics. This reduces the emission of harmful substances by up to 95%. The Australian Bureau of Statistics suggests that 1.9 million people were daily smokers in Australia in 2021. This can be attributed to the genetic predisposition of people towards smoking, apart from the need to curtail different mood disorders. As per the World Health Organisation, nearly 22.3% of the global population consumed tobacco in 2020. This suggests that cigarette consumption is expected to retain a large consumer base, even in high-income countries like Australia.
Repositioning tobacco products in the market
The indigenous tribes of Australia are expected to emerge as a major consumer base for tobacco companies, thereby driving the Australia tobacco market growth. The increasing government focus on preventing the risk of lung cancer and other health diseases among adolescents is expected to prompt tobacco companies to shift their focus away from younger consumers and towards older consumers, who prefer tobacco consumption for cultural reasons.
Opportunities in the Australia Tobacco Market
The increasing demand for alternative tobacco products, including Next-Generation Products (NGPs), is expected to fuel the Australia tobacco market growth, driven by the implementation of strict government regulations and the increasing consumer shift towards smokeless devices, Roll-Your-Own (RYO) tobacco. Increasing innovation in product development is prompting companies to launch low-risk tobacco products in the vaporised product segment, apart from smokeless tobacco products, which is driving the market growth. The rising consumer appeal for cultural products such as waterpipes and Kretek is expected to enhance tobacco consumption among consumers over the forecast period.
Companies that prioritise innovation are expected to benefit despite tighter regulatory norms for the tobacco industry in Australia. The market exhibits sustained demand for nicotine pouches, herbal blends, and heated tobacco products, which are provided by international players.
Australia Market Restraints
The Australia tobacco market growth faces significant challenges from the rising consumption of illicit tobacco products by consumers due to their high degree of cost-effectiveness and accessibility. In 2023, illicit tobacco intake accounted for a share of 28.6% of the overall consumption. This was a year-on-year growth of 5.7 percentage points, reaching 2.8 million kilograms while also exceeding the pre-pandemic levels. Unbranded tobacco constituted a share of nearly 58.3% of the total consumption of illicit tobacco in Australia. This can be attributed to increasing consumer awareness and appeal for its tobacco blends. Though these indicate significant problems for market players, increasing government intervention to minimise consumption by strengthening import-export regulations is expected to drive the market expansion over the forecast period.
“Australia Tobacco Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:
Market Breakup by Type
- Nicotiana Rustica
- Virginia
- Burley
- Oriental
- Others
- Kretek
- Smokeless Tobacco
- Cigarette
- NGPs
- Cigar and Cigarillos
- Roll Your Own
- Smokeless Device
- Waterpipes
- Snuff
- Others
- Hypermarkets and Supermarkets
- Convenience Stores
- Tobacco Shops
- Others
- New South Wales
- Victoria
- Queensland
- Australian Capital Territory
- Western Australia
- Others
By Type Analysis
Virginia tobacco is expected to constitute a major portion of the Australia tobacco market share due to its increasing application in cigarette production. It is highly favoured by international tobacco companies for its high sugar content and mild flavour. Its popularity can also be attributed to the increasing domestic demand for low-nicotine cigarettes since it is extensively used in milder blends. Other tobacco varieties such as Oriental and Burley also enjoy a significant market presence, but the increasing consumer preference for Virginia makes it the leading choice of the international tobacco industry.
By Product Analysis
Based on product, the Australia tobacco market is divided into kretek, smokeless tobacco, cigarette, NGPs, cigar and cigarillos, roll your own, smokeless device, waterpipes, and snuff, among others. Over the forecast period of 2024-2032, NGPs (next-generation tobacco products) are expected to grow at a CAGR of 3.7% since they present a safer alternative to conventional cigarettes, which emit large quantities of harmful smoke. This is expected to reduce the incidence of harm caused by smoke inhalation. These products are expected to be closely followed by cigars and cigarillos, which are projected to grow at a CAGR of 3.5% during 2024-2032, due to the anticipated increase in tobacco consumption among adults.
Rapid technological advancements and the increasing consumer preference for clean smoking devices have led to the increasing appeal for products like waterpipes, snuff, and smokeless tobacco. Other types of cigarettes like Kretek and Roll-Your-Own tobacco are also gaining significant traction in the market, thereby driving market growth.
By Distribution Channel Analysis
The introduction of new grocery retailing platforms can create new market opportunities for major companies in the Australia tobacco market. Presently, online channels account for a very small portion of overall tobacco sales, which can be attributed to the lower prevalence of quick commerce services companies.
In 2019, the National Drug Strategy Household Survey suggested that current smokers purchase their tobacco products mostly from supermarkets (43%) or a tobacconist (23.5%). This can be attributed to the high prevalence of smoking among low-income households. As per the Australia tobacco market analysis, medium-income households generally rely on convenience stores for purchasing tobacco products, which drives point-of-sale conversions for tobacco companies.
Australia Tobacco Market Regional Insights
Due to the increasing threat posed by the consumption of illicit tobacco products on human health, major state governments in Australia have sought to repeal their regulatory frameworks governing tobacco consumption, which is expected to drive the Australia tobacco market expansion.
In June 2023, the government of Queensland made the possession and retail supply of illicit tobacco products a criminal offence and imposed heavy penalties on its suppliers. It is now expected to mandate the possession of an approved license for wholesalers and retailers of smoking products, similar to the government of Victoria.
In October 2023, the government of New South Wales implanted the Health Legislation Amendment (Miscellaneous) Act 2023 to enable inspectors and health officers to search any premises and seize and dispose of illegal tobacco products.
A similar market trend is visible across other regions of Australia, such as Victoria, Western Australia, and the Australian Capital Territory which is expected to enhance the market revenue over the forecast period.
Australia Tobacco Market Regional Analysis
The Australian tobacco market exhibits distinct regional variations in consumer preferences. In urban areas, there is a growing demand for alternative products such as e-cigarettes, smokeless devices, and Roll-Your-Own (RYO) tobacco, driven by health-conscious consumers and stricter smoking regulations. These regions are also experiencing a surge in the adoption of Next-Generation Products (NGPs) like heated tobacco.
In contrast, rural and regional areas continue to show a preference for traditional cigarettes, though smokeless tobacco and waterpipes are slowly gaining popularity. The market’s regulatory landscape is consistent across regions, but urban areas are more responsive to newer, reduced-risk products.
Competitive Landscape
Major tobacco manufacturing companies are focusing on establishing partnerships with tobacco retailers to ensure that their products secure a prominent place of display at their shops and boost business conversion rates through point-of-sale marketing. This is essential since customers presume high brand visibility means high popularity.
Key Industry Players
BAT Australia Ltd. is a wholly-owned subsidiary of British American Tobacco Group, which is headquartered in Woolloomooloo and has around 400 employees, with nearly 1,300 employees working across South Asia.
ICT Group Pty Ltd. is a partner of the BBM Group which has been manufacturing tobacco products for the last 8 decades. Its product range includes 1.84 mm King size cigarettes, 2. 84 mm nanotek super slim cigarettes, and 3.100 mm super slim cigarettes.
Philip Morris Australia was founded in 1954 and is headquartered in Melbourne, Victoria. It is engaged in manufacturing smoke-free alternatives for consumers and prides itself on being PMI’s first international affiliate to manufacture products overseas.
There are many other key players in the Australia tobacco market report.
Table of Contents
100 Pages
- 1 Preface
- 2 Report Coverage – Key Segmentation and Scope
- 3 Report Description
- 3.1 Market Definition and Outlook
- 3.2 Properties and Applications
- 3.3 Market Analysis
- 3.4 Key Players
- 4 Key Assumptions
- 5 Executive Summary
- 5.1 Overview
- 5.2 Key Drivers
- 5.3 Key Developments
- 5.4 Competitive Structure
- 5.5 Key Industrial Trends
- 6 Market Snapshot
- 7 Opportunities and Challenges in the Market
- 8 Asia Pacific Tobacco Market Overview
- 8.1 Key Industry Highlights
- 8.2 Asia Pacific Tobacco Historical Market (2018-2024)
- 8.3 Asia Pacific Tobacco Market Forecast (2025-2034)
- 9 Australia Tobacco Market Overview
- 9.1 Key Industry Highlights
- 9.2 Australia Tobacco Historical Market (2018-2024)
- 9.3 Australia Tobacco Market Forecast (2025-2034)
- 10 Australia Tobacco Market by Type
- 10.1 Nicotiana Rustica
- 10.1.1 Historical Trend (2018-2024)
- 10.1.2 Forecast Trend (2025-2034)
- 10.2 Virginia
- 10.2.1 Historical Trend (2018-2024)
- 10.2.2 Forecast Trend (2025-2034)
- 10.3 Burley
- 10.3.1 Historical Trend (2018-2024)
- 10.3.2 Forecast Trend (2025-2034)
- 10.4 Oriental
- 10.4.1 Historical Trend (2018-2024)
- 10.4.2 Forecast Trend (2025-2034)
- 10.5 Others
- 11 Australia Tobacco Market by Product
- 11.1 Kretek
- 11.1.1 Historical Trend (2018-2024)
- 11.1.2 Forecast Trend (2025-2034)
- 11.2 Smokeless Tobacco
- 11.2.1 Historical Trend (2018-2024)
- 11.2.2 Forecast Trend (2025-2034)
- 11.3 Cigarette
- 11.3.1 Historical Trend (2018-2024)
- 11.3.2 Forecast Trend (2025-2034)
- 11.4 NGPs
- 11.4.1 Historical Trend (2018-2024)
- 11.4.2 Forecast Trend (2025-2034)
- 11.5 Cigar and Cigarillos
- 11.5.1 Historical Trend (2018-2024)
- 11.5.2 Forecast Trend (2025-2034)
- 11.6 Roll Your Own
- 11.6.1 Historical Trend (2018-2024)
- 11.6.2 Forecast Trend (2025-2034)
- 11.7 Smokeless Device
- 11.7.1 Historical Trend (2018-2024)
- 11.7.2 Forecast Trend (2025-2034)
- 11.8 Waterpipes
- 11.8.1 Historical Trend (2018-2024)
- 11.8.2 Forecast Trend (2025-2034)
- 11.9 Snuff
- 11.9.1 Historical Trend (2018-2024)
- 11.9.2 Forecast Trend (2025-2034)
- 11.10 Others
- 12 Australia Tobacco Market by Distribution Channel
- 12.1 Hypermarkets and Supermarkets
- 12.1.1 Historical Trend (2018-2024)
- 12.1.2 Forecast Trend (2025-2034)
- 12.2 Convenience Stores
- 12.2.1 Historical Trend (2018-2024)
- 12.2.2 Forecast Trend (2025-2034)
- 12.3 Tobacco Shops
- 12.3.1 Historical Trend (2018-2024)
- 12.3.2 Forecast Trend (2025-2034)
- 12.4 Others
- 13 Australia Tobacco Market by Region
- 13.1 New South Wales
- 13.1.1 Historical Trend (2018-2024)
- 13.1.2 Forecast Trend (2025-2034)
- 13.2 Victoria
- 13.2.1 Historical Trend (2018-2024)
- 13.2.2 Forecast Trend (2025-2034)
- 13.3 Queensland
- 13.3.1 Historical Trend (2018-2024)
- 13.3.2 Forecast Trend (2025-2034)
- 13.4 Australian Capital Territory
- 13.4.1 Historical Trend (2018-2024)
- 13.4.2 Forecast Trend (2025-2034)
- 13.5 Western Australia
- 13.5.1 Historical Trend (2018-2024)
- 13.5.2 Forecast Trend (2025-2034)
- 13.6 Others
- 14 Market Dynamics
- 14.1 SWOT Analysis
- 14.1.1 Strengths
- 14.1.2 Weaknesses
- 14.1.3 Opportunities
- 14.1.4 Threats
- 14.2 Porter’s Five Forces Analysis
- 14.2.1 Supplier’s Power
- 14.2.2 Buyer’s Power
- 14.2.3 Threat of New Entrants
- 14.2.4 Degree of Rivalry
- 14.2.5 Threat of Substitutes
- 14.3 Key Indicators of Demand
- 14.4 Key Indicators of Price
- 15 Value Chain Analysis
- 16 Price Analysis
- 17 Manufacturing Process
- 18 Competitive Landscape
- 18.1 Market Structure
- 18.2 Company Profile
- 18.2.1 BAT Australia Ltd.
- 18.2.1.1 Company Overview
- 18.2.1.2 Product Portfolio
- 18.2.1.3 Demographic Reach and Achievements
- 18.2.1.4 Certifications
- 18.2.2 ICT Group Pty Ltd.
- 18.2.2.1 Company Overview
- 18.2.2.2 Product Portfolio
- 18.2.2.3 Demographic Reach and Achievements
- 18.2.2.4 Certifications
- 18.2.3 Philip Morris Australia
- 18.2.3.1 Company Overview
- 18.2.3.2 Product Portfolio
- 18.2.3.3 Demographic Reach and Achievements
- 18.2.3.4 Certifications
- 18.2.4 Others
- 19 Key Trends and Developments in the Market
Pricing
Currency Rates
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