Smoking tobacco continued to attract cigarette smokers in 2020 who were searching for cheaper and allegedly less harmful products, in that some consumers deem smoking tobacco to be more natural and less processed compared to manufactured cigarettes, with fewer additives. The larger volume category of fine cut tobacco continued to marginally outperform pipe tobacco, with the latter dominating in value share terms.
The niche of cigars and cigarillos, which had been experiencing increasing demand towards the end of the review period, experienced double-digit retail volume declines in 2020. However, rising price-sensitivity was less of a factor for this category, particularly for cigars, as the latter tends to be purchased by consumers with high purchasing power; the degree of knowledge regarding tobacco products among frequent consumers is significantly higher than the average tobacco consumer (especially cigarettes).
Smoking tobacco is dominated by imported brands including Red Field, Madison and Flandria, placing leadership in the hands of major local distributors such as Andes Tabacos Ltda which strengthened its convincing leadership of the category due to its presence in the increasingly popular fine cut tobacco. Pipe tobacco on the other hand, remained a more consolidated competitive landscape, with Russo e Hijas Ltda retaining its leadership where it locally represents globally-renowned brands such as Captain Black (for Scandinavian Tobacco Group A/S) and Ark Royal (for Cía Industrial de Tabacos Monte Paz SA).
Ongoing stress and anxiety relating to the pandemic is likely to see some migration towards home consumption of cigars and cigarillos in the short to medium term, given further restrictions heading into the forecast period, and major social occasions still being lost for an important part of 2021. Therefore, demand for cigars and cigarillos is expected to improve from 2021 onwards as consumers look to relax with an indulgent product.
With consumers increasingly health-aware in the COVID-19 world, there is set to be increased interest in products perceived as less potentially harmful in the tobacco environment. This is likely to benefit smoking tobacco, which is seen as a more natural alternative, particularly as organic variants have continued to penetrate the market, while different flavours have also attracted consumers looking for a different experience.
While cigar consumption is predicted to quickly recover to, and surpass, pre-pandemic levels over the forecast period, it will remain an expensive niche overall within tobacco due to its limited target audience of affluent consumers. However, while the social and status aspects of cigar smoking will also return once restrictions are finally relaxed, depending on the threat level of the virus, more intense public settings such as bars, restaurants and events will return only slowly at the tail end of a series of measures to ease lockdown restrictions.
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Understand the latest market trends and future growth opportunities for the Cigars, Cigarillos and Smoking Tobacco industry in Chile with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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