Cigars and Cigarillos in Latvia

TRENDS

In cigars, there was a notable shift towards higher quality cigars in 2015. There were also increasing numbers of smokers who were starting to smoke cigars on a regular basis. This benefits the mid-price band as such smokers also look for good quality and price ratio. Such a development contributed to the shift from famous Cuban brands to products of other regions. Meanwhile, the review period was more dominated by occasional smokers, who were looking for world famous Cuban names. On the other hand, cheap cigars did not gain high levels of attention and remained weak, with a number of fragmented brands. As a result, cigars grew by 2% in volume and 8% in current value terms. In cigarillos, on the other hand, the strong growth of economy price fighter cigarillos could be observed. This was a consequence of another tax increase for cigarettes and decreasing availability of illicit products, which made new offerings in cigars and cigarillos viable and attractive again. The significance of price fighter cigarillos resulted in 6% volume and 10% current value growth level in 2015.

COMPETITIVE LANDSCAPE

Philip Morris Latvia SIA maintained its leadership of cigars and cigarillos with a 66% volume share in 2015. The company is represented by Partner and the recently launched Philip Morris brand. Both products are available in price fighter cigarillos and secure the company’s strong sales. Orlik Tobacco Co A/S ranked second with a 20% volume share in 2015. The company is represented by the relatively new, but quickly growing Break brand, which is the only significant alternative to Philip Morris Latvia’s brands. In cigars, leadership was maintained by Corporación Habanos SA, which accounted for a 64% volume share. The company has prestigious and globally renowned brands, which comply well with the dominance of occasional smokers over the everyday cigar smokers in Latvia. Nevertheless, the share of others grew, as the number of more experienced smokers increased and they were looking for new products to diversify their experience. With the exception of brands owned by Philip Morris International Inc and its official distributor Philip Morris Latvia SIA, there is rather a low level of exclusive distribution rights for cigars and cigarillos in Latvia.

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