Running red hot – the global shisha tobacco market

While the global tobacco industry is facing the combined challenges of stricter regulations, new entrants from technologies such as vaping, and rapidly changing consumer behaviour, there is one market segment that is experiencing significant growth: shisha. Also known as hookah, argila and narghile, waterpipe smoking is a market expected to be worth over US$25bn by 2028, and is mostly prevalent across the Middle East & Africa, which accounts for almost 85% of the total market.

With its attractively decorated pipes and wide range of flavours, shisha use is increasingly popular; the industry has attracted international investment and has become a phenomenon marketed globally by social media influencers and celebrities. Traditional images of older uncles playing backgammon and smoking shisha in courtyards have been replaced by young millennials in trendy cafes smoking a variety of flavours from brands such as Al Fakher, Nakhla, Al Waha, Romman and Al Mazaya. Unlike smoking conventional cigarettes shisha has become a socially acceptable habit, particularly among women as it is (mistakenly) perceived to be safer than smoking cigarettes and is quickly becoming less of a cultural taboo.

Meanwhile manufacturers are focused on growing the market, partly by updating their product ranges with more exciting flavours, from Red Bull flavour to peanut butter jelly. Sales figures from Dubai Duty Free suggest they are onto something; since 2018 its shisha section has increased sales by 120% and their bestselling brands are Al Fakher and Nakhla.

Research suggests that the top three markets for shisha are as follows:

  • Jordan – according to Assabeel newspaper, Jordanians are the most prolific smokers in the Arab region and the third overall in the world. Also home to some of the largest manufacturers, companies include Nidal Murad & Partners ‘Al Waha’, Al Zawrae Tobacco Trading ‘Mazaya’ and Ramez Mazawi & Partners ‘Romman’. All export internationally, including to the UK and USA.
  • Egypt – the key operating company in the country is Eastern Company SAE, a subsidiary of Chemical Industries Holding SAE; it exports 60% of its product to the UAE, KSA, Jordan, Kuwait, Sudan and Libya. Nakhla Fumes ‘Nakhla’, acquired by Japan Tobacco International (JTI), is one of the biggest manufacturers in Egypt. Recently, Eastern Company closed a deal with the Dubai-based Al Wahdania General Trading Company LLC to distribute 200 tons of molasses to the GCC.
  • UAE – the largest market share in the country belongs to Al Fakher Tobacco Trading LLC, one of the top brands in the shisha tobacco industry with factories in the UAE, Egypt and Turkey. Kingsway Capital, founded by Manuel Stolz, a British-German investment banker, has recently invested.

By tapping into a regional niche, investing in product innovation and exploiting changing attitudes towards conventional smoking, the shisha industry looks set to profit.