Cigars and cigarillos struggled to adapt to the new climate brought by COVID-19 in 2020. Indeed, cigars and cigarillos saw among the highest volume declines in 2020 as they were harmed by a further weakening of the local currency against the US dollar.
Interestingly, smoking tobacco showed an upbeat performance in 2020, sustaining a positive growth trajectory in both retail volume and current value terms. The strong performance of smoking tobacco was supported by the entry of new cigarette smokers that were looking for cheaper and less harmful alternatives.
While cigars declined in volume terms in 2020, local companies were able to increase their overall market share. Cigars produced in Argentina were able to increase their volume and overall mix share against imported cigars in 2020 since imported cigars suffered with supply issues due to COVID-19 restrictions in the second quarter of 2020.
In the forecast period, smoking tobacco will drive the recovery of cigars, cigarillos and smoking tobacco. Indeed, smoking tobacco is set to sustain positive but gradually slowing volume growth throughout the entire forecast period.
In comparison to smoking tobacco, cigars and cigarillos are set to post much more mild growth according to the forecasted current value CAGR. Cigars and cigarillos will continue to be harmed by economic instability and local currency devaluation against the US dollar in the forecast period.
While the premium price positioning of cigars will continue representing a barrier to the entry of new consumers, more affluent consumers are expected to maintain their consumption and even look into more premium offerings. For example, Habanos is a premium cigar brand from Cuba that has a super-premium positioning in Argentina, but due to its high price it only represents a minority of cigar consumption in Argentina.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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