The nicotine market: massive financialization serving an industrial oligopoly

A recent analysis conducted by the firm Profundo for the Counter-Fire organization[1] This study highlights the economic dynamics of the nicotine market in Europe, characterized by a high concentration of financing around major multinational tobacco companies and significant support from international financial markets. Despite an apparent diversification of products, particularly with the rise of vaping, heated tobacco, and nicotine pouches, the sector remains largely dominated by a few established players whose financial power relies heavily on revenues from combustible tobacco. This structure raises major issues in terms of public health, regulation, and economic influence.

The study is based on an analysis of ten companies active in the European nicotine market, including both multinational tobacco companies and players specializing in new products. Financial flows were identified from public data and then adjusted to isolate the portion specifically attributable to nicotine-related activities, thus providing a better understanding of the investment dynamics specific to this sector.

A market in transformation financed by profits from combustible tobacco

The European nicotine market is undergoing rapid transformation, driven by the development of so-called "smoke-free" products. This evolution is taking place against a backdrop of a gradual decline in smoking in several European countries, prompting manufacturers to reposition their offerings towards new segments presented as innovative or lower-risk.

However, this diversification does not challenge the core business model of major tobacco companies. Combustible tobacco products continue to generate the bulk of revenue and, above all, profits, constituting the primary source of financing for investments in new products. Thus, non-cigarette nicotine products represent approximately 14% of British American Tobacco's revenue, nearly 9% for Philip Morris International (excluding heated tobacco), and approximately 1% for Imperial Brands and Japan Tobacco International.

This imbalance reflects a logic of cross-financing, in which revenues from cigarettes and other traditional tobacco products directly fuel the development of new ranges, allowing manufacturers to reposition themselves without challenging their structural dependence on the most harmful products.

Massive financial flows indicative of strong market integration

Between 2018 and 2025, nearly €18.7 billion in financing in the form of loans and issuance services has been identified as being linked to nicotine activities in Europe. This financing is primarily based on subscription operations, which represent approximately 64% of the total amount, compared to 36% for bank loans.

In addition to these flows, there are approximately €27.9 billion in investments in shares and bonds, illustrating the high level of integration of the nicotine industry into traditional financial markets.

These funds are highly concentrated: British American Tobacco and Philip Morris International alone capture the vast majority of nicotine-related financial flows, with approximately €8.4 billion and €7.9 billion in identified financing, respectively. These two companies alone account for nearly 90% of the sector's credit and investment in Europe.

This financial concentration directly reinforces industrial concentration: by mobilizing resources on a large scale, large multinationals are able to invest massively, acquire competitors and consolidate their dominant position in emerging segments.

International investors at the heart of sector financing

The analysis highlights the structuring role of North American financial markets in financing the nicotine industry. As of October 2025, financial institutions located in North America held nearly 83% of identified equity and bond investments, totaling approximately €23 billion, compared to nearly €3 billion for Europe, of which less than €1 billion was held by European Union entities alone. These investments are primarily driven by large international asset managers, including Capital Group, Vanguard, BlackRock, and State Street, which are among the major shareholders of multinational tobacco companies. No European Union entity appears among the top twenty identified investors, illustrating the dominance of North American financial markets in the sector's capital structure.

Bank financing confirms this trend. Between January 2018 and October 2025, loans and issuance services attributable to nicotine reached €18.7 billion, including €64 billion in issuance services and €36 billion in loans. North American banks play a central role, with €5.9 billion, representing nearly a third of the identified financing.

In this context, the participation of European players, and French players in particular, appears more limited in volume, but nonetheless significant. The report identifies Société Générale as the main French bank involved, with €367 million in financing (loans and issuance services) attributable to nicotine over the period studied. Crédit Agricole is also mentioned, although at a considerably lower level, with €10 million.

Regarding capital investments, the French presence is also documented. Among European Union investors, Crédit Agricole holds approximately 92 million euros of assets related to the sector, followed by Groupe BPCE (60 million euros), BNP Paribas (39 million euros) and Société Générale (37 million euros).

The report highlights that France, along with Germany, is among the leading investors in the European Union's nicotine industry. While smaller than that of North American players, this involvement remains significant: by combining equity investments and bank financing, French financial institutions directly contribute to supporting a sector whose health and environmental impacts are well-documented. In a context of stated ESG commitments, this exposure calls into question the pronouncements of certain banks and their actual practices, and underscores the role of financial actors in the sustainability of this market.

An expansion strategy based on investment and acquisitions

The massive financial support enjoyed by the nicotine industry allows major tobacco companies to deploy particularly aggressive expansion strategies. Philip Morris International, for example, has invested over $16 billion since 2008 in the development of its so-called "smoke-free" products, including IQOS and ZYN nicotine pouches.

This strategy also relies on external growth operations. Philip Morris International's acquisition of Swedish Match for approximately $16 billion illustrates this logic of vertical integration aimed at strengthening its presence in high-growth segments, particularly the nicotine sachets segment.

These dynamics reflect a transformation of the sector that relies less on independent innovation than on the ability of large companies to absorb or control new entrants, thus consolidating an already highly structured oligopoly.

An apparent diversification, but persistent financial barriers

While the nicotine market is characterized by the emergence of new players, particularly in Asia, this diversification remains heavily constrained by unequal access to financing. Companies like Smoore International and Shenzhen iMiracle have contributed to the rapid growth of vaping in Europe, notably through attractive and widely distributed products.

However, these players have limited access to institutional financial markets. Their development relies primarily on private capital, internal financing, or commercial strategies, which restricts their ability to invest on a large scale or to compete sustainably with multinational tobacco companies.

In this context, large companies benefit from a decisive structural advantage, enabling them not only to dominate historical segments, but also to establish themselves in emerging markets thanks to their investment capacity, distribution networks and globalized marketing strategies.

A financialization that weakens public health policies

Beyond economic dynamics, the analysis highlights an increasing financialization of the nicotine market, which contributes to strengthening the renewal and even the expansion of the tobacco industry on an international scale.

This deep integration into financial markets poses major regulatory challenges. It gives tobacco companies considerable resources to influence markets, invest in new products and adapt to regulatory changes, while maintaining their dependence on combustible products.

It also raises questions about the indirect influence of financial actors on public policies, particularly in a context where international commitments, notably under Article 5.3 of the WHO Framework Convention on Tobacco Control, call for the protection of public health policies against the interests of the tobacco industry.

Thus, behind an apparent transformation of the market, the analysis highlights the persistence of a highly concentrated economic model supported by massive financial flows, which contributes to perpetuating the influence of the tobacco industry in an environment marked by increasing objectives of smoking reduction.

Removing tobacco from the financial sector: a key lever for denormalization

In light of these factors, the analysis by the consulting firm Profundo highlights the extent to which the tobacco and nicotine industry is fully integrated into international financial systems; it benefits from massive support from investors, banks, and market participants. It confirms that the fight against smoking cannot be limited to health or regulatory measures alone, but must also be part of an economic and financial transformation strategy aimed at permanently removing the tobacco sector from financing channels.

In this context, the French situation warrants particular attention. As the report shows, French financial institutions—banks and investors—participate, on their own scale, in financing the nicotine industry, whether through equity investments or through credit and financial services activities. This involvement, while less visible than that of North American players, nevertheless contributes to the economic stability of a sector whose health and environmental impacts are widely documented. These practices contradict the very declarations made by some of these players regarding responsible finance and excluding tobacco from their operations.

The question of the French framework for sustainable finance thus appears central. The "Socially Responsible Investment" (SRI) label, a public mechanism created in 2016 to direct savings towards activities compatible with ESG criteria, has long allowed the indirect inclusion of tobacco-related companies in labeled portfolios. This situation has highlighted a major contradiction between the stated objectives of responsibility and the reality of the financial flows supporting the tobacco industry. The explicit exclusion of tobacco from the SRI label in 2023[2] This constitutes an important step forward in this regard, by recognizing the incompatibility of this sector with the principles of sustainable finance. However, this measure remains partial and cannot, on its own, address the challenges raised by the financialization of the sector.

Continuing its work, the National Committee Against Smoking (CNCT) is calling for an extension of tobacco exclusion policies to all financial products, beyond the sole framework of the SRI label. It also appears necessary to more strictly control the practices of financial institutions to ensure consistency between their ESG commitments and their actual activities. Finally, the extent of this financialization of tobacco within the economy necessitates comprehensive information for all public bodies, as well as recognized public-interest organizations, so that they immediately exclude any investment likely to finance the tobacco sector.

Thus, beyond existing mechanisms, such a development requires fully integrating the issue of tobacco financing into public health policies and financial regulation. It constitutes a key lever for accelerating the denormalization of tobacco and limiting the expansion capacity of an industry that continues to adapt and transform itself, particularly through new nicotine products, as the CNCT points out.

©Generation Without Tobacco

AE

[1] Press release, Electronic cigarettes: the industry's new cash cow, Counter-fire, published on April 14, 2026, accessed the same day

[2] Press release, The CNCT welcomes the exclusion of tobacco from the Socially Responsible Investment (SRI) Label, CNCT, published on April 18, 2023, accessed on April 14, 2026