Cigar Market

Market Overview

The global cigar market size was valued at USD 41,570.60 million in 2021. It is projected to reach USD 114,355.50 million by 2030, growing at a CAGR of 11.90% during the forecast period (2022-2030).

 Tobacco leaves that have been dried and matured are rolled into a cigar and intended for smoking. There are numerous shapes and sizes of cigars created. Since the 20th century, practically all cigars have been constructed with three parts: the filler, the leaf that binds the filler together (the binder leaf), and the wrapper leaf, which is frequently the best leaf utilized. Due to its high level of product innovation, price sensitivity compared to cigarettes, product premiumization, and solid distribution system, the cigar market has shown consistent growth and is predicted to grow during the forecast period. The desire among young customers is fueled by the addition of diverse flavors, such as wine, tea, chocolate, and vanilla, to cover up the bitter taste of tobacco.

Market Dynamics

Global Cigar Market Drivers

Intense Penetration of Organized Retail Network

A better shopping experience is produced by consumers being able to research different products, compare prices, and evaluate quality, thanks to the development of organized retail. For advertising, vendors use both conventional and social media platforms. In addition, businesses develop advertising campaigns and trade exhibitions to market their cigar brands and goods, interacting with their target market through various social media channels. Furthermore, several studies revealed that the proliferation of tobacco-related goods stores in industrialized nations like the United States, Germany, and the United Kingdom is fueling the demand for cigars and cigarillos.

Most cigarette vendors are implementing online retail tactics to lower expenses and boost their margins, which is anticipated to be advantageous for the market throughout the projection year. As a result, many retail establishments are expanding their product lines to include a variety of conventional and premium cigars and cigarillos, accelerating the product's adoption and fueling a healthy market expansion. Companies that make cigars and other tobacco goods have strategically benefited from this rapidly expanding marketing.

Global Cigar Market Restraint

Stringent Government Regulations and Health Factors

Government initiatives and legislation to reduce tobacco use have increased globally, hampering the cigar market's development over the forecast period. In addition, the government has outlawed smoking in many nations in public areas, places of employment, government buildings, schools, and healthcare facilities, as well as on public transportation. Additionally, cigars are not a secure substitute for cigarettes, and the toxicity of cigar smoke is at least equal to that of cigarette smoke. Large cigars have the potential to deliver cigarettes with filters up to 10 times the nicotine, twice the tar, and more than five times the carbon monoxide. As a result, this aspect is also limiting the market under investigation.

The Family Smoking Prevention & Tobacco Control Act (Tobacco Control Act), which grants the FDA authority to regulate the manufacture, distribution, and marketing of tobacco products, seeks to reduce the consumption of tobacco products in the United States in order to safeguard the public and foster a healthier future. These regulations prohibit the sale of tobacco products to minors, the sale of packages containing fewer than 20 cigarettes, vending machine sales, sponsorships of sporting or entertainment events or other social or cultural gatherings by tobacco companies, and the free distribution of sample cigarettes.

Global Cigar Business Opportunities

Premiumisation and Product Differentiation

The smoothness/harshness balance, nicotine impact, mouth feel, and draw resistance variations have been employed to satisfy the tastes of different subgroups of smokers, such as women and younger consumers, to maximize product appeal for cigar and cigarillos makers. In addition to marketing, changes in product design and flavorings that affect sensory perceptions were also responsible for the rapid uptake of cigars among young people in 2018. According to the US Department of Health & Human Services, of middle and high school students who had smoked a cigar in the previous 30 days, 43.6% had done so while using a flavor-flavored cigar. As a result, this element encourages producers to introduce flavored cigars in the market under investigation.

For instance, Scandinavian Tobacco Group UK introduced the Signature Dual Filter Cigarillos in February 2020 as a new addition to its Signature cigar line. The new cigars come in packs of 10 and have a suggested retail price (rrp) of GBP 4.95. They have an acetate filter with a peppermint capsule hidden underneath a laser marker to provide a smooth smoking experience. It has a natural leaf wrapper and is manufactured using Virginia leaf tobacco in addition to the capsule.

Regional Analysis

The global cigar market segmentation is based on four regions: North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant shareholder in the global cigar market and is anticipated to grow at a CAGR of 16.90% over the projection period. Compared to premium cigars, regular cigars are more frequently consumed in India due to the exceptionally high tax rates on premium cigars. The distinction between premium cigars, which are more of a luxury item, and other tobacco products, like cigarettes and loose tobacco, which are highly addictive and hazardous, is not made by the government. Due to societal factors and the nation's e-cigarette prohibition, tobacco sales volume continued to increase in 2019. In 2019, cigarettes were taxed on a per-kilogram basis 55 times more than other tobacco products, which put manufacturers under pressure.

North America is anticipated to grow at a CAGR of 6.00%, generating USD 21,380.69 million during the forecast period. In the United States, cigars come in three main varieties: big cigars, cigarillos, and small cigars. Youth use of cigars has increased as some businesses flavor their brands and sell them as single sticks. In the past, older males preferred to smoke cigars in the United States, but due to increased marketing and advertising of these goods by the cigar business, adolescent consumption has surged. Rising smoking rates have driven the Canadian cigar market among the populace, a changing society, a greater level of living, and the growing appeal of flavored cigars among young and older women. Canada's federal government has established stringent regulations regarding cigars and small packaging and size.

The price of each 10g cigar is increased by GBP 2.59 in the UK due to tobacco duty, a significant element impeding the cigar market. However, the value-for-money frenzy sweeping the tobacco industry in the UK has less influence on cigar sales since they still have a connection to celebrations. Cigar consumption is rising, which is a sign of cigars' rising popularity in the nation. In the fiscal year 2019–20, almost 325 thousand kilos of cigars were issued for consumption in the United Kingdom, up from just 269 thousand kilograms in the previous year, according to HM Revenue & Customs (a non-ministerial department of the UK Government).

Since the last few decades, the use of tobacco products, including cigars, has roughly decreased, primarily as a result of the economic crisis in the LAMEA region. In Argentina, consumers' purchasing power has significantly decreased in recent years, particularly for low- and middle-income groups. The use of e-cigarettes has also been discouraged by the National Clinical Practice Guideline for Tobacco Cessation due to a lack of sufficient evidence. In Argentina, the local manufacturing of reduced-risk product categories, including e-cigarettes, has a regulatory authority's ban on the sale, importation, and positive impact on the market for tobacco products, including cigars. Smokes and cigarillos benefit from a wide range of alternatives, a solid distribution network, and a relatively low price.

Segmental Analysis

The global cigar industry is segmented by product type and distribution channel.

Based on product type, the global market is bifurcated into conventional and premium cigars.

The conventional cigar segment is the highest contributor to the market and is expected to grow at a CAGR of 11.95% during the forecast period. The public is smoking more frequently due to perceived stress, peer pressure, lifestyle choices, and exposure to secondhand smoke, which is driving up market demand for cigars. Government restrictions on tobacco use and tobacco products continue to be a significant force behind the growth of the cigar industry. By publishing an Advanced Notice of the Proposed Rulemaking (ANPRM) for premium cigars in March 2018, the FDA began gathering feedback and opinions on its plans to regulate cigars in the United States. This is expected to impact the consumption of conventional cigars because they will be more accessible and approachable, leading to an increase in demand for conventional cigars in the United States and North America.

Since premium cigars are more of a lifestyle statement than anything else, demand for them is rising quickly. In addition to developed nations like the United States, France, and Germany, there is a growing market for premium cigars in emerging nations like China and India. China is one of the leading markets for premium Cuban cigars, so the industry is concentrating on expanding its market share through strategic alliances. For instance, in order to enhance the import of premium cigars, Habanos S.A. negotiated a contract with the China National Tobacco Corporation in 2017. The organization is putting a lot of effort into training its sales personnel and increasing spending to expand its distribution networks.

Based on distribution channels, the global market is bifurcated into offline and online retail stores.

The offline segment owns the highest market share and is anticipated to grow at a CAGR of 11.95% during the forecast period. Retail establishments, including hypermarkets and supermarkets, convenience stores, and specialty shops, are included in this section. Manufacturers have been using this opportunity to promote their products by offering multipack discounts (such as buy two, get one free or buy two for one) and wholesale price discounts to drive sales through this channel because these outlets are in densely populated areas and have a more significant customer group. Additionally, point-of-sale advertising is used to increase impulse purchases of tobacco products since these establishments offer greater visibility and because most of the cigar market forbids the promotion of cigars and other tobacco products.

Strong organized retail penetration would make it possible for consumers to research different products, compare quality and costs, and make smarter purchasing decisions. Specialist stores also provide clients with various high-end and more specialized goods, boosting product sales through this channel. However, these stores are not allowed in several establishments, like schools and hospitals.

A significant advantage for this channel over others has been created by increasing internet usage, mobile users, and e-commerce platforms. In addition, compared to traditional channels, products are often offered at competitive prices. Along with cost reduction and margin expansion, variables including expanded product variety, shopping convenience, consumer choice in the delivery date, and good discounts all played a big role in changing consumer purchasing patterns and the shift to online shopping. Start-ups have been attempting to exploit this channel, which combines informational and instructive material with sales-oriented marketing and effective online payment systems because online retail is readily available over the other.

Fewer rules govern the sale of cigars and other tobacco goods over the internet, even though online orders and transactions are subject to purchasing precautions. The requirement to supply an identification number that matches the credit card information used for payment is the only way to ensure that the customer is at least 18 years old. The COVID pandemic has curtailed travel alternatives, which has boosted tobacco product sales through this channel because internet retailers provide door-to-door delivery options.

Recent Developments

• September 2021- The Villiger Group and Joya De Nicaragua formed a joint venture to build a new, cutting-edge factory and enhance hand-rolled cigar output. The business declared that by constructing a new plant, it would be able to solidify and grow its market share in the US market for high-end hand-rolled cigars.
• October 2022- The General Cigar Co. will release CAO Vision 2022 in November. CAO Vision debuted in 2007, then disappeared from the cigar market for 13 years before returning in 2020. The cigars were best known for their white, futuristic humidor, which lit up much like a laptop computer.