In line with heightened health concerns in the wake of Coronavirus (COVID-19), retail volume sales of cigars, cigarillos and smoking tobacco continued to decline in 2020. While cigars, cigarillos and pipe tobacco saw faster decreases, compared with 2019, fine cut tobacco, as a more economical alternative to cigarettes, witnessed a slower decline.
Scandinavian Tobacco Group Canada continued to dominate retail volume sales of cigars and cigarillos in 2020, while Rothmans Benson & Hedges led pipe tobacco and dominated fine cut tobacco. There was some upward movement in retail volume shares in cigars, not least by Scandinavian Tobacco Group Canada (Old Port, Colts) and Casa Cubana (Prime Time), and Rothmans Benson & Hedges in smoking tobacco.
Unlike liquor and cannabis-based sellers, smoke shops, cigar clubs/houses and tobacco product manufacturers and distributors were considered non-essential in provinces like Ontario. As in cigarettes, convenience stores and forecourt retailers derived some benefit as they remained open and appealed to convenience and one-stop shoppers.
Heightened awareness of health and wellness due to the pandemic, particularly around respiratory illnesses and disease, is predicted to lead to further declines in retail volume sales across cigars, cigarillos and smoking tobacco in the forecast period. This performance is underpinned by the anticipated declines in smoking prevalence and opportunities for smoking, especially once the vaccination programme is complete and the threat of the pandemic fades, and people return to their pre-COVID-19 lifestyles.
The pandemic did not delay the implementation of the plain packaging regulation in Canada. A number of premium cigar players, such as the owners of major Cuban cigar brands, decided not to make Canada-specific packaging for the domestic market, partly due to the relatively small market size, alongside elevated regulatory pressure.
As in cigarettes, the major brand owners are expected to diversify their portfolios by moving into new categories, such as “reduced-risk” products, nicotine pouches, heated tobacco and/or cannabis products. For example, major tobacco players like British American Tobacco are seeking to protect and improve profit margins and offer products that help to change consumer preferences as sales of cigars, cigarillos and smoking tobacco continue to decline.
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