Cigars, Cigarillos and Smoking Tobacco in Austria

2021 DEVELOPMENTS

Cigar and cigarillo sales mainly driven by consumers seeking smoking indulgence and luxury

After a peak the year before, retail volume sales in cigars and cigarillos remained at a high level and significantly superior to pre-pandemic levels in the second year of the pandemic in 2021, because of limited opportunities for legal and illegal cross-border sales due to temporarily closed borders and travel restrictions. The strong decline in cross-border traffic and home seclusion during the COVID-19 pandemic had a strong positive impact on cigarette sales in 2020, as many cigarette smokers could only purchase cigarettes locally, however this was only a minor driver in sales of cigars and cigarillos.

Price-sensitive consumers switch from conventional cigarettes to roll-your-own, with cannabis also helping to support sales of fine cut tobacco

After a peak the year before, retail volume sales in fine cut tobacco remained on a high level and significantly superior to pre-pandemic levels in the second year of the pandemic in 2021.

Ongoing trend for shishas supports pipe tobacco, as many bars ignore the restrictions and consumers also take up shisha smoking at home

After a peak the year before, retail volume sales in pipe tobacco remained on a high level and significantly superior to pre-pandemic levels in the second year of the pandemic in 2021. The reason for this was the high popularity of shishas, which have seen a great increase in interest over the past ten years, driven by the expansion of specialised shisha bars.

PROSPECTS AND OPPORTUNITIES

Cigars will continue to see popularity as an occasional indulgence, whilst demand for cigarillos will fall once again

It is yet uncertain as to what extent additional interest in cigars and cigarillos, as seen during the time of the pandemic, will prevail over the forecast period. Cigars has a good chance to benefit from a lasting impact, as retail volume sales are likely to see a slight downward trend but are expected to remain superior to 2019 pre-pandemic levels throughout most of the forecast period.

Fine cut tobacco set to face competition from cheaper foreign cigarettes once again, and even cannabis smokers are seeking healthier fillings for their joints

Fine cut tobacco is likely to see a clear downward trend over the forecast period and fall back below 2019 pre-pandemic levels more quickly. Furthermore, with the reopening of borders and the higher availability levels of cheaper cross-border cigarettes again, this will pose a challenge to fine cut tobacco sales which were inspired by price-sensitive consumers seeking to economise.

Shisha smoking at home will help support sales of pipe tobacco, while the authorities may come down more heavily on shisha bars

Given the strong performance of shisha tobacco, even in the face of closures/bans in foodservice establishments, the forecast on pipe tobacco remains very optimistic. A notable number of consumers purchased shishas for their homes during the pandemic, as a way to make home seclusion more enjoyable.