Global tobacco brand value drops as smokeless alternatives gain ground, Marlboro remains most valuable for 10th year

The total value of the world’s top 10 most valuable tobacco brands has decreased by 6 per cent, with eight out of ten brands experiencing a decline in brand value this year, according to the latest ranking by Brand Finance, the leading brand valuation consultancy.

The ranking has revealed a significant shift in the industry towards smokeless alternatives, driven by changing consumer preferences and increasing regulatory pressures. Despite these changes, traditional combustible tobacco brands remain the most valuable, supported by loyal customer bases and effective pricing strategies.

IQOS, brand value up 8 per cent to $3.5 billion (£2.62bn), is the fastest-growing tobacco brand, driven by rising revenue from smoke-free products. Philip Morris International reported smoke-free products reached nearly 40 per cent of total net revenues in the fourth quarter of 2023. This was driven by the continued growth of IQOS, which has now surpassed Marlboro in net revenues.

Despite a 6 per cent drop in brand value to $32.6bn, Marlboro retains its position as the world’s most valuable tobacco brand for the tenth consecutive year. It leads the sector by a significant margin, with a brand value more than five times that of L&M, which holds the second spot.

Altria, which owns Marlboro in the US, and Philip Morris International, which owns the brand elsewhere, have both faced declining revenue from combustible products. Altria has struggled with lower shipment volumes and increased promotional investments, including a recent 17-cent per pack price increase on Marlboro and other brands in the US. Similarly, Philip Morris has reported a drop in revenue from combustible tobacco. Nevertheless, Marlboro retains its top position due to its loyal customer base and strong promotional strategies.

L&M (brand value $6.2bn) has climbed to second in the ranking, despite recording a 2 per cent decline in brand value. It has overtaken Pall Mall, which now sits in third following a 9 per cent loss in brand value to $5.9bn. L&M’s brand value has taken a hit as shipment volumes have declined. L&M is the sector’s strongest brand with a Brand Strength Index score of 77 out of 100.

“While Marlboro continues to lead as the most valuable tobacco brand for the tenth consecutive year, the industry is undergoing significant transformation. The rise of smokeless alternatives like IQOS highlights shifting consumer preferences and changing market dynamics,” Richard Haigh, global managing director at Brand Finance, said.

“Earlier this year, BAT's announcement of a $31.5bnn impairment on the value of some of its US cigarette brands marked the first significant write-down in a major market. Acknowledging the reality that the market for traditional cigarettes is shrinking and taking action should be seen both as a bold and an important step in addressing an existential problem for the company. With 8 out of the top 10 brands experiencing declines in value, tobacco giants must be brave in admitting market shifts and strategically planning their next moves to sustain global dominance and relevance."

Chesterfield (brand value $3.1bn) has maintained its brand value year-on-year and advanced one position to seventh place. The brand has seen a rise in shipment volume, with an 8 per cent increase in Q4 2022 and a 14 per cent increase for the full year which has contributed to its stable brand value this year.

The latest rankings highlight the dominance of US tobacco brands, which make up a remarkable 92 per cent of the total brand value in the ranking, totalling $61bn. Only two brands in the ranking are from outside the US, the UK’s Rothmans (brand value down 8 per cent to $2.9bn) and Indonesia’s Sampoerna (brand value down 12 per cent to $2.7bn).