Cigars were negatively impacted by COVID-19 and continued their downward trend, as consumers shunned cigars for the most part, due to their high retail price. In addition, as cigars are imported, they were even more expensive in 2020, due to further devaluation of the Algerian dinar.
The average unit price of cigars continued to increase, with growth being driven by local currency devaluation, combined with rising tobacco taxes, which have made cigars less affordable. As a result, there was no migration away from cigarettes towards cigars in Algeria during the review period and the product area continued to see declining volume sales.
Smoking tobacco is set to continue growing in popularity thanks to the increasing consumer base for pipe tobacco and shisha water pipes, with new flavours helping to attract consumers. However, it is not predicted that water pipe tobacco will be able to attract high numbers of Algerian smokers away from cigarettes.
Smoking of cigars is not popular even among upper-income urban smokers, with cigar smoking clubs not existing in Algeria. In addition, weak distribution also constrains sales as cigars are not easily found in newsagents, tobacconists or kiosks, except in particularly affluent areas or high-class hotels.
Over the forecast period, the government will likely use tobacco taxation increases to help pay for its response to COVID-19. This will result in price rises and may lead to some consumers quitting smoking completely.
Pipe tobacco also relies on imports, as there is almost no domestic production. However, pipe tobacco is also plagued by relatively high levels of illicit trade in water pipe tobacco, especially in the eastern regions of Algeria, where Tunisian smoking tobacco brands are often sold through illicit distribution channels.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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