Economics of Alcohol and Tobacco - World Tobacco Markets

The U.S. Department of Agriculture estimated the world production of tobacco in 2003 at 6.57 million metric tons (a metric ton equals one thousand kilograms or 2,204.62 pounds), down from 6.98 million in 2002 but up from 6.45 million in 2001. China produced nearly 40% (about 2.62 million metric tons). Other leading tobacco producers included India (660,000 metric tons), Brazil (636,700 metric tons), the United States (403,518 metric tons), Turkey (171,314 metric tons), and Indonesia (158,900 metric tons). (See Table 7.8.)

The Tobacco Atlas, published by the World Health Organization (WHO) in 2002, notes that each year more than five trillion cigarettes are manufactured. China is the largest manufacturer, followed by the United States. Nearly two million people are employed in the industry worldwide. Philip Morris is the largest transnational tobacco firm, with $47.1 billion in sales and more than 16% of the global tobacco market in 1999. Marlboro is the most popular cigarette brand, selling 350 billion units in 1999, according to the WHO.

In August 2003 Reuters news service reported that 80% of smokers live in the developing world. Indeed, Vincent Coppola cited a statistic from a 2001 WHO report that in a survey of sixty-eight countries, up to one-quarter of children ages eleven to fifteen had been handed free cigarettes by marketers (Vincent Coppola. "Smoked Out," Adweek, May 6, 2002). Figures from the Campaign for Tobacco-Free Kids show how lucrative overseas markets can be for cigarette makers. In 1998 Philip Morris made a profit of $5 billion selling cigarettes overseas. In the United States its profits totaled $1.5 billion.

On February 27, 2005, the world's first tobacco control treaty, the World Health Organization Framework Convention on Tobacco Control (WHO FCTC), became binding international law with ratification by fifty-seven

TABLE 7.7
Cigarette exports to leading destinations, 1999-2004
SOURCE: Thomas C. Capehart, "Table 6. U.S. Cigarette Exports to Leading Destinations, 1999-2004," in Tobacco Situation and Outlook Yearbook, U.S. Department of Agriculture, Economic Research Service, December 2004, http://www.ers.usda.gov/publications/so/view.asp?f=specialty/tbs-bb/ (accessed March 7, 2005)

						January–September
Country	1999	2000	2001	2002	2003	2003	2004b
				Billion pieces
Japan	72.5	77.1	75.4	77.9	79.3	62.7	54.9
Iran	a	a	a	1.5	3.0	2.1	13.4
Saudi Arabia	10.2	10.6	11.3	11.7	11.6	8.4	8.3
Israel	4.4	4.4	4.6	4.6	4.9	3.6	3.9
Lebanon	5.7	4.2	5.7	3.9	3.7	2.6	3.0
Kuwait	1.9	1.8	2.0	1.8	2.1	1.6	1.5
Hong Kong	3.2	3.2	2.8	2.8	2.3	1.6	1.4
United Arab Emirates	1.6	1.6	2.3	3.0	1.6	1.2	1.4
Taiwan	1.9	2.0	2.1	1.9	2.1	1.6	1.2
Singapore	3.3	3.4	2.5	2.5	1.6	1.1	0.8
European Union	20.3	12.1	4.8	3.6	2.3	1.9	0.6
Morocco	1.4	0.2	a	a	0.3	0.1	0.6
Netherlands	0.2	0.2	1.9	0.9	0.4	0.8	0.4
Qatar	0.2	0.2	0.3	0.3	0.4	0.3	0.3
Cyprus	6.0	7.1	4.5	0.6	0.5	0.3	0.3
South Korea	2.8	4.7	6.2	3.6	0.6	0.6	0.3
Russia	0.8	2.2	2.3	1.3	a	a	0.1
Panama	0.5	0.3	0.6	0.2	0.2	0.2	0.1
Mexico	0.3	0.3	0.3	0.2	0.1	0.1	0.1
Netherlands Antilles	0.2	a	0.1	0.1	0.1	0.1	0.1
Other countries	14.0	12.7	4.2	5.0	4.4	2.9	1.5
Total	151.4	148.3	133.9	127.4	121.5	93.8	94.2
aLess than 50 million.
bSubject to revision.

countries, including Canada. The United States had signed the measure but had not ratified it (become bound by it) as of mid-2005. The goal of the WHO FCTC is to improve global health by reducing tobacco consumption by setting international standards on tobacco price and tax increases, tobacco advertising and sponsorship, labeling, illicit trade, and secondhand smoke.