Review of the Status of the Tobacco Industry in Iran and Recommendations for Improving the Condition of the National Tobacco Industry
The tobacco industry in Iran, with a market consisting of approximately 20 million consumers and an estimated consumption rate of 25% for various tobacco products (cigarettes and hookah), has a value exceeding 70 trillion tomans. This industry operates in a quasi-monopolistic manner, with more than 70% of it controlled by two domestic manufacturers licensed by international companies.
From a broader perspective, the tobacco industry is classified as harmful to public health, water-intensive in its cultivation methods, and foreign currency-consuming in terms of its trade balance. Furthermore, over the past two decades, domestic production capacity has steadily declined, currently amounting to only about 10%.
Status of the Tobacco Industry in Iran
About 25% of Iranians use tobacco, with a market worth over 70 trillion tomans. Two major companies control 70% of sales. Smuggling has sharply declined, while domestic tobacco farming has dropped to 4,831 hectares and 10,000 tons in 2021.
Tobacco Industry Policy in Recent Decades
Iran’s tobacco industry has evolved through three main periods: a state monopoly, a phase of foreign investment to improve quality and reduce smuggling, and privatization to address inefficiencies. While monopoly allowed government control, it led to technological stagnation and declining market share. Regulatory functions have gradually shifted to the Ministry of Industry, Mine, and Trade, but the industry still faces significant challenges.
Challenges and Issues in the Tobacco Industry
Iran’s tobacco industry faces three main challenges: regulating production and processing in its quasi-monopolistic structure, controlling consumption of harmful products while aligning policies, and inefficiencies from the privatization of the Iranian Tobacco Company. These issues have left the industry uncompetitive internationally and producing lower-quality products.
Proposed Strategy to Improve Iran’s Tobacco Industry
Define clear policy goals, implement regulatory and operational reforms, and empower the Tobacco Industry Headquarters to manage and oversee the sector effectively.
This study was conducted at Islamic Parliament Research Center Of The Islamic Republic Of IRAN by Hossein rajabpour, Sadegh Rahiminejad and Ali Azhdari in 2025.
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