The Zhitong Finance App learned that GF Securities released a research report saying that global demand for cigarettes has been shrinking for a long time, and smoke-free products have become the second growth curve for multinational tobacco companies. Global HNB sales volume is about 204.1 billion units in 2025, and the compound growth rate from 2020 to 2025 is about 16.9%. The legal affiliation of domestic HNB according to cigarette management has been clarified, and the policy has entered the mandatory national standard and industrialization system construction stage; tobacco consumables and system technology are a more sustainable and barrier-free value link in the HNB industry chain.
The main views of GF Securities are as follows:
Global demand for cigarettes has been shrinking for a long time, and smoke-free products have become the second growth curve for multinational tobacco companies
According to WHO data, the number of global tobacco users fell from about 1.38 billion in 2000 to about 1.2 billion in 2024; in 2025, global HNB sales volume was about 204.1 billion, and the compound growth rate from 2020 to 2025 was about 16.9%. PMI's smoke-free business revenue has reached 41.5% of total revenue, and BAT has risen to 18.2%. Industry competition is shifting from a single cigarette brand to product platforms, regulatory certification, heating technology, tobacco materials, and user ecology. Markets such as Japan, Europe, and the US have formed regulatory frameworks combining tobacco management, market review, and differentiated tax systems.
The legal ownership of domestic HNB according to cigarette management has been clarified, and the policy has entered the mandatory national standard and industrialization system construction stage
The 2026 “Heated Cigarettes” draft for comments also covers cigarettes, smoking utensils and aerosols, and incorporates heating element surface temperature, lip contact temperature, nicotine release, battery and startup protection into the bottom line of detectable safety; standard compatible centers, peripherals, and induction heating routes clarify the range of tobacco substrates, and reserve space for product differentiation for taste, fragrance, and usage experience. The licensing, trading, traceability and protection mechanisms for minors formed by vaping smoke can be further extended to HNB supervision.
The growth rate of cigarettes is slowing, tax benefits are stable, the return of smuggling, the progress of tobacco control and industry going overseas are jointly driving HNB from policy reserves to product and supply chain preparations
In 2025, the growth rate of the country's cigarette production slowed to 0.2%, and China Tobacco's exports of HNB consumables fell by about 51% year on year; at the same time, China's smoking rate declined more slowly than in many developed countries, and compliant supply had the policy value of meeting stock demand, stabilizing the tax base, and improving competitiveness in overseas markets. Industrialization will advance along the “release of national standards - product review - production plan - channel tax price - order fulfillment”. China Tobacco industry companies such as Jiangsu have locked in the supply chain in advance through procurement of smoking utensils, flavors, sealing adhesives, and processing technology. Winning bids, orders, and revenue confirmation form the core indicators for judging the progress of the industry.
Tobacco consumables and system technology are a more sustainable and barrier value link in the HNB industry chain
HNB's unit usage of recycled tobacco leaves and essences is significantly higher than traditional cigarettes, and the material side continues to repurchase along with cigarette sales; cigarette revenue reflects more independent choices for initial purchase, replacement, and tobacco use. Huabao International has a base of flavors, thick slurry flakes and overseas customers. The HNB increase is determined by China Tobacco's supply qualifications, project share, and capacity utilization rate; SMOORE has formed the capacity for tobacco substrates, infrared central heating, smoking equipment and system solutions, and has formed the basis for Glo Hilo's overseas distribution and domestic smoking equipment winning candidates.
Risk Alerts
The pace of policies and pilots falls short of expectations, product strength and consumer acceptance are insufficient, the degree of participation of external enterprises falls short of expectations, and the risk of overseas regulation and customer concentration.