Cigars, Cigarillos and Smoking Tobacco in Croatia

2021 DEVELOPMENTS

Fine cut tobacco performs well in 2021 thanks to price sensitive consumers

In 2021, excise tax on fine cut tobacco and pipe tobacco increased again from HRK800 to HRK860, resulting in a further increase in unit prices. Despite the excise tax increasing, fine cut tobacco continued to perform well due to a rise in the prices of cigarettes, as consumers shifted from cigarettes to fine cut tobacco.

Illicit trade continues to pose a major threat to retail sales of smoking tobacco in 2021

Illicit trade continues to pose major threat to retail sales of smoking tobacco and all other types of tobacco in Croatia. At present, illicit smoking tobacco constitutes approximately more than half of smoking tobacco sales in the country.

Saturation in cigars and growing array of alternatives to smoking tobacco limit innovation and new product development

Arnold André Cigars GmbH & Co KG was the leading player in cigarillos in 2021, 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.

PROSPECTS AND OPPORTUNITIES

Slower category sales expected during the forecast period but will benefit from lower unit price increases than that of cigarettes

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. The likelihood of another excise tax on cigarettes is high and this is expected to continue to boost demand for fine cut tobacco, while some consumers might switch to heated tobacco products.

Price increases set to boost illicit trade during the forecast period

The challenge for fine cut tobacco and tobacco products in general, is that demand for these products are dependent on the economic situation as many Croatians are price sensitive. Consequently, as consumers’ price sensitivity increases, illicit cross border trade intensifies.

Manufacturers launch tobacco products that are additive free

Towards the end of the review period, JT International Zagreb doo launched Camel Essential that is additive free, in a bid to reduce the perceived harm from the tobacco product. The company might be the first player to implement this approach in manufacturing and branding but the competition will likely follow, especially with the looming threat from heated tobacco products.