Flavour Capsule Cigarette Market – Key Research Findings
Adoption of new technologies is the key factor in the flavour capsule cigarette market. The flavour capsule cigarette itself is an advanced technology which has been applied to a normal cigarette. But there are many other technological advancements that are being used such as hybrid capsules and double capsules that is helping the flavour capsule cigarette market to grow.
The flavour capsule cigarette market set to grow 2.3x during the period of 2019-2027 in terms of value. Also, the cigarette market is on a decline in terms of volume but the demand for the flavour capsule cigarette has been on the rise.
One of the recent developments in the flavour capsule cigarette market is the hybrid capsules that contain two capsules in a single cigarette with either the same flavours or two different flavours. The consumer could control the burst of flavours, which could provide either combined flavour, single flavour or no flavour as per the choice of the consumer. Also, a new technology has been launched, a water capsule filter, which is known to modify the taste of the cigarette and also cooling the cigarette smoke.
Among the flavour capsule cigarette, double capsule cigarette has a smaller market share as compared to the single capsule cigarette. However, the demand of the double capsule cigarette is higher as it is expected to grow by more than 13% in the forecast years 2019-2027. This is due to product being new into the market and the consumers are very intrigued by innovative products.
The flavour options that the manufacturers are offering in the flavour capsule cigarette are rising and more and more options are available nowadays. This is with respect to the consumer demands that is driving the flavour capsule cigarette market. The demand for new products in the market has led to many new flavours being launched in the market.
Owing to this demand from the consumers, the flavours such as bubble gum, green tea, chocolate, rum, etc. is expected to grow at a very high rate with a CAGR of more than 18% in the forecast years.
The flavour capsule cigarette offerings of the multinational companies have applied almost all the recent technological advancement. These companies also have a wide range of flavour capsule cigarette with various flavour offerings to cater to a larger consumer base. Also, these manufacturers are continuously evolving their existing product line to be in line with the other company offerings and the consumer needs.
Distribution channel of the flavour cigarette manufacturers has been strong along with their marketing strategies which is mainly responsible for the company’s to increase their sales. The multinational companies give free samples to younger population at certain locations such as cigarette shops, bars, restaurants, etc. to make them try the products and to review these products.
These manufacturers also promote their brands by offering the flavour capsule cigarette at economic prices. Direct sales has the largest share in the distribution of the flavour capsule cigarette with a share of more than 35% but this distribution channel is expected to have a lower growth rate as compared to the others such as modern trade, specialty stores and online retailing.
Trends in Flavour Capsule Cigarette Market
Consumer tastes is shaping the cigarette market. The cigarette manufacturers are paying special attention to the consumer demands and this has resulted in the cigarette industry being shaped according to the consumer demands.
For example, the capsule cigarette is in response to a certain population disliking the taste of the cigarette resulting in the launch of flavour capsule cigarette in the market. Also, the advanced filter that the manufacturers had launched previously was due to consumer demand for a better filter in the cigarettes that they smoked.
The availability of alternatives to cigarettes is pushing the manufacturers to launch new products such as flavour capsule cigarette market. There are various other alternatives for nicotine delivery other than cigarettes. But, the cigarette has dominated this segment as the most used delivery system. But due to advances in the other segments such as e-cigarette and vapour systems, the manufacturers are trying their best to remain in the competition.
This has resulted in the cigarette manufacturers innovating products such as flavour capsule cigarette and introducing exciting flavours for these flavour capsule cigarette. Also, the manufacturers have introduced the concept of capsule in economically priced flavour capsule cigarette as well to give tough competition to the available alternatives.
Flavour Capsule Cigarette Is More Popular Amongst Youngsters and Women
The manufacturers have strategized their way of marketing by making the flavour capsule cigarette popular among youngsters and women ho mostly do not like the taste of cigarettes. Also, the flavour capsule cigarette has become a trend among young consumers, especially in North America. This targeted marketing has also gained a lot of criticism for the flavour capsule cigarette.
Restraining Factors that will Impact the Flavour Capsule Cigarette Market
There are various factors that is affecting the flavour capsule cigarette market such as regulations, certain measures to stop smoking and the various alternatives that are available in the market. Out of these, the alternatives that are available in the market which are being promoted as safer than cigarettes is restraining the growth of the flavour capsule cigarette market.
The alternatives such as the e-cigarettes that does not contain tobacco and is being promoted as safer than the cigarettes. There are also availability of cigarettes that do not contain tobacco but look and burn like cigarettes. This has resulted in the market of the cigarettes being affected.
But the manufacturers have come up with innovative options such as perforated filtered cigarettes even in the flavour capsule cigarette ranges which assure of the tobacco affecting the consumer less than the conventional cigarettes. Also, the double capsule cigarettes is drawing more consumers to try the cigarette especially the younger population. This is leading to the demand of the flavour capsule cigarette market to grow in the forecast years.
Flavour Capsule Cigarette Market has Very High Penetration in the South Asia
The market share of the flavour capsule cigarette is more in the European countries due to the large number of the smokers that are present in this region and the consumers are willing to try new products and shift from the conventional ones.
But, the flavour capsule cigarette market is expected to grow at a very high rate in the forecast years leading to the South Asia having the largest market share by 2029. This is due to various factors such as rising population in this region, increasing disposable income among the consumers, rising middle class population, a higher youth population and adoption of western culture.
The market of the flavour capsule cigarette is growing at a high rate in the Middle East and Africa as well. This is owing to the rising penetration in these. Also, the rising demand of the flavour capsule cigarette in this region has led to the manufacturers increasing their presence in this region.
Flavour Capsule Cigarette Market is a Consolidated Market With a Few Leading Players Controlling the Overall Market
The flavour capsule cigarette market is mainly consolidated by 6 major companies that control a large market share. The consolidation of the industry has put large scale industries which control supply for a large part of the economy in an advantageous position.
The global flavour capsule cigarette market is classified into three tiers, where tier-1 companies hold a prominent market share and have a strong presence across the globe. Leading brands operating in the global flavour capsule cigarette market include Marlboro, ITC Ltd., Kent, L&M, Pall Mall, Lucky Strike Company, Benson & Hedge, Camel Double, Chesterfield Henrico, Bohem Café, Dunhill. Most of the key players in the global flavour capsule cigarette market are multinational players that are investing highly in the research of flavour capsule cigarette.
The Analyst’s Viewpoint
A comprehensive view of the flavour capsule cigarette market has led our analysts to conclude that, the market is growing at an impressive rate, with Asia and Middle East and Africa holding a large market share in this market. In North America and Europe, the demand of the flavour capsule cigarette has been high but the ban on menthol and various rules and regulations that are being enacted; the market for flavour capsule cigarette is expected to decline at a very high rate.
Menthol has had the highest share in the flavour capsule cigarette market. However, the other flavours such as clove, fruit, honey and others and will gain traction in these regions due to the ban on menthol.
In addition, the technological innovations and the continuously evolving products has led to the consumers being interested in the flavour capsule cigarette, which is the main aim of the flavour cigarette manufacturers. The hybrid cigarettes and the water filer cigarettes are rising the demand of the flavour capsule cigarette. Also, inserting capsules along with a tube segment is the upcoming trend that the manufacturers are certain will increase the demand of the flavour capsule cigarette market.
Leveraging ‘HTP’ Technology for Reduced Toxicity
Smokers, and vapers are representing a shift of approach towards flavour capsule cigarettes integrated with HTP (Heated Tobacco Product) technology, for their reduced toxicity as compared to traditional counterparts.
HTPs heat tobacco at 250-350 degrees Celsius, lower than that of conventional cigarettes - 600 degrees Celsius, with the help of battery-driven heating systems to produce nicotine-infused vapor. The flavour capsule cigarettes deliver the nicotine-infused vapor to consumers by heating the tobacco sticks, eliminating the need of combusting the tobacco.
The heating system enclosed in flavour capsule cigarette is either an outward heat source to aerosolize nicotine from proprietary cigarettes or a heated sealed chamber to aerosolize nicotine directly from tobacco leaf. The HTPs or heat-sticks consist of a small case containing flavouring agents or flavoured capsules, allowing smokers to crush the capsule while smoking to flavour the aerosol as per their convenience.
Flavour capsule cigarettes utilizing HTPs release relatively reduced levels of carbon monoxide, tar, and carcinogenic substances, which exist in the air momentarily. However, non-smokers are in the vicinity of getting addicted to flavour capsule cigarettes due to the presence of nicotine.
‘Dual’ Flavours for Personalized Experience
Occasional and regular smokers are turning to dual capsule flavour cigarettes in a bid to enjoy bespoke experience. The dual capsules can be embedded in dual-segment carbon filters, or in filters that contain a tube segment. Filters with two capsules offer additional flavour to the consumers, allowing them to burst once for either of the flavours, or twice for a combination of both the flavours.
However, dual flavour capsule cigarettes containing clove flavour, and others, are reported to produce greater amount of nicotine, carbon monoxide, and tar as compared to traditional cigarettes. Further, the double capsule flavour cigarettes relatively last longer, increasing the risk of acute lung infections by about 20 times.
Amidst North America’s Hegemony, South Asia and East Asia Offer Lucrative Opportunities
Although North America is set to dominate the global flavour capsule cigarette market over the forecast period, South Asia and East Asia are progressing tremendously. The growth is attributed to prominence of consistent smokers, and increasing rate of first-smokers. The fact that about 18% of the US adults are chain-smokers, while above 2000 youth and young adults are on the verge of becoming regular smokers is motivating cigarette manufacturers to center their focus on developed countries.
An incessant rise in the number of smokers, particularly above 300 million people consuming about 2.3 trillion cigarettes annually in China, and lax tobacco control policies in Indonesia have grabbed the attention of the market players.
Diverse Flavours and Proprietary Technology - Key Factors to Define Stakeholders’ Tactics
The global flavour capsule cigarette market observes fair consolidation, with prominent players, including Marlboro, Kent, and L&M, collectively accounting for a third of the total market revenue. Organized players are launching super slim flavour capsule cigarette - a proprietary technology - that features a flavour capsule embedded in the cigarette’s filter.
The cigarette adds a burst of apple mint flavour upon crushing, efficiently offering smokers a two-flavour option. Cigarette makers are setting their sights on developing smoke-free products for elderly derived from nicotine sans the toxic smoke. Flavour capsule cigarette manufacturers are focusing on including niche flavours, including apple, spearmint, and grape, among others.
Manufacturers are coming up with flavour capsule cigarettes that allow consumers to alter the strength of the cigarette by twisting a moveable filter. In addition, cigarette makers are introducing tobacco vapor product that utilizes an indirect low-temperature tobacco-heating technology, and granulated tobacco capsule for vapor formation.
Market players are shutting down the factories of legacy cigarettes to produce heated tobacco units under the name - I Quit Ordinary Smoking (IQOS). Furthermore, the prominence of menthol among the millennial is influencing established and emerging participants to ramp up the production of menthol-flavoured capsule cigarettes.
How Growth Will Unfold
Upsurge in the rate of demographic cohort indulged in smoking and vaping is set to direct the global flavour capsule cigarette market to a robust growth trail amid stringent anti-tobacco regulations. Double capsule flavour cigarettes is becoming commonplace among consumers on account of multiple flavour, and bespoke smoking experience. In addition, cigarette makers are developing triple-segment flavour capsule cigarettes to enhance the smoking session of the consumers.
On the flip side, advanced economies, including the US, are spectating significant decline in cigarette consumption on grounds of rising health awareness among the population, yet the FDA permits the inclusion of cigarettes containing sweet and fruity flavours.
Key Segment
By Flavour
- Menthol Flavored
- Clove Flavored
- Fruit Flavored
- Other Flavors
By Product Type
- Single Capsule
- Double Capsule
By Price Range
- Economy
- Premium
By Sales Channel
- Direct Sales
- Modern Trade
- Specialty Stores
- Convenience Stores
- Online Retailing
By Region
- North America
- Latin America
- Europe
- South Asia
- East Asia
- Middle East and Africa
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by - Sudip Saha, Managing Director and Co-Founder of Future Market Insights
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