During 2019, consumers in India gradually increased their consumption of cigars and cigarillos due to rising disposable income and the emergence of cigar clubs and lounges. In addition, more retail stores solely focused on selling these products.
In terms of distribution channels, duty free stores and partnerships with 5-star hotels and lounges remained the most important channels for foreign players in cigars and cigarillos. The import duty on cigars, which is 120%, continued to pose a significant challenge to foreign manufacturers to expand their products in India.
In 2019, Godfrey Phillips India led the category. The company is engaged in the import and distribution of cigars in India and distributes products from Habanos, Altadis, Davidoff, Scandinavian Tobacco Group, and Villiger.
In 2020, sales of cigars, cigarillos and smoking tobacco are now expected to grow by 9% in constant 2019 value terms in light of the impact of COVID-19. This compares to a 6% rise in sales forecast in our 2019 edition of tobacco.
Consumer accessibility to both cigars and cigarillos was severely impacted during lockdown. Restrictions around socialising meant cigar club enthusiasts were only able to meet virtually and not in person, while the closure of hotels/restaurants/bars and tobacco specialists brought trade in these products to a halt.
The increase in taxation which coincided with the onset of the pandemic in the country will mean that growth in value sales at constant 2019 prices is set to remain higher over the remainder of the forecast period than it was over the review period. As lockdown restrictions and disruption to the supply chain ease, these products will become more accessible again, especially once hotels/restaurants/bars and tobacco specialists open.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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