Despite the excise tax increasing in 2020, fine cut tobacco continued to perform well due to a rise in prices of cigarettes, as consumers shifted from cigarettes to fine cut tobacco. Cigars and cigarillos have a different target audience to smoking tobacco in Croatia.
The excise tax on cigarillos and smoking tobacco, including fine cut tobacco, increased from HRK600 to HRK800 in 2020. Consequently, in a year where the pandemic stifled economic growth, retail value and volume sales growth for these categories were much slower than previous years despite consumers switching from cigarettes.
Arnold André Cigars GmbH & Co KG was the leading player in cigarillos in 2020, followed by Corporación Habanos SA, with their positions reversed in cigars. Meanwhile, BAT Hrvatska doo led smoking tobacco, followed by JT International Zagreb doo and Duhanka Zagreb doo.
Over the forecast period, the constant forecast retail value and volume CAGR is expected to be much lower for all categories of cigars, cigarillos and smoking tobacco apart from pipe tobacco which will have a negative constant forecast retail value and volume CAGR, but the category will see a deceleration in the downward trend. In 2021 excise tax on fine cut tobacco and pipe tobacco will increase again from HRK800 to HRK860, resulting in a further increase in unit prices.
The challenge for fine cut tobacco and tobacco products in general, is that demand for these products are dependent on an economic recovery as many Croatians are price sensitive. Consequently, as consumers’ price sensitivity increases illicit cross border trade intensifies.
From 2021, the volume of cigars, cigarillos and smoking tobacco that will be allowed to be imported into Croatia without being taxed will decrease substantially. This is expected to affect sales of these products, particularly in cities and villages bordering neighbouring countries.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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