Cigar and cigarillos were heavily affected by Russia's economic downturn and a weakened rouble in 2015, in addition to tax increases towards the end of the review period. Russian cigar and cigarillo enthusiasts tend to show strong loyalty to these products and are unlikely to switch to other tobacco products. However, a sharp decline in purchasing power impacted many of these consumers' ability to afford cigars and cigarillos, while economic uncertainty also encouraged many to cut back on non-essential purchases and seek to save. Many are thus cutting back on their consumption of cigars and cigarillos, which saw a sharp 8% retail volume decline in 2014 and a further 13% drop in 2015 over the previous year.
Overall cigars and cigarillos is dominated by Lane Ltd, which accounted for close to 81% retail volume share in 2015 and gained a percentage point in share over the previous year. This company represents Scandinavian Tobacco Group in Russia and owes its strength to the Captain Black brand, the dominant brand in cigarillos and also one of the most affordable. The company benefited from restructuring its distribution system in the first half of 2015, with its distribution partner beginning to handle the company's entire local portfolio of pipe tobacco and cigars and cigarillos. This enabled a stronger and more efficient distribution presence and enabled the company to bolster its sales. The company however continued to see retail volume sales decline in the year, being impacted by a sharp overall drop in demand for cigarillos.
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