Cigars and cigarillos consumption showed a slight decrease in volume terms in 2021, as imported offerings were harmed by a further weakening of the local currency against the US dollar. However, domestic cigars, which have a small consumer base, returned to growth as COVID-19 lockdowns were lifted in the middle of 2021.
The habit of smoking fine cut tobacco persisted in 2021, having initially been driven by the lack of cigarettes in the previous year, which generated new consumers. Fine cut tobacco with a niche profile showed moderate growth in 2021, supported by the entry of cigarette smokers who were looking for alternatives that were cheaper and seen as less harmful.
While cigars declined in volume terms in 2021, local companies were able to increase their overall market share. Cigars produced in Argentina were able to increase their volume share against imported cigars for a second year in 2021, since the weakening of the peso against the US dollar significantly increased the retail sales price of imported options, putting them beyond the spending power of middle- and low-income social groups.
From 2022 onwards, cigars and cigarillos is expected to see continued year-on-year growth in the forecast period, though it is not expected to return to pre-pandemic levels in either volume or constant value terms by 2026. As long as the current economic instability endures in the mid-term, cigarillos will benefit from its competitive price positioning compared to Cuban and Dominican cigars, which retail at premium and super premium prices.
Cigars companies enhanced their distribution structure through e-commerce platforms in 2021, with the blossoming of sales driven by tobacco specialist stores, which added to their online marketing and promotional activity with new e-commerce platforms, as well as a proliferation of tutorials informing cigar smokers on how to smoke cigars in their homes. Casa del Habano, a specialist tobacco store that sells only Cuban cigars, alongside other tobacco offerings, saw its online sales boom in 2021.
Smoking tobacco is set to sustain positive but gradually slowing volume growth throughout the entire forecast period. Fine cut tobacco, which is responsible for a significant majority of smoking tobacco, is forecast to keep gaining ground against cigarettes, driven by the entry of cigarette smokers who are looking for products that they see as less harmful than cigarettes, such as organic offerings.
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Cigars, Cigarillos and Smoking Tobacco
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