Smoking tobacco – fine cut tobacco – has a much larger consumer base than cigars or cigarillos in Indonesia. Fine cut tobacco has traditionally been popular in rural areas and villages, where tobacco and cigarette papers are commonly offered alongside food and drink at meetings, family gatherings and other social events.
While cigarettes saw a decline in retail volume sales during 2020, retail volume sales of cigars continued to rise – albeit at a slightly more modest rate than earlier in the review period – while those of cigarillos posted a modest decline. Demand for cigars and particularly cigarillos is very low in Indonesia compared with cigarettes, and many smokers of cigars are loyal consumers who continue to purchase these products even in tough economic times.
Surging demand for fine cut tobacco was particularly beneficial to Indonesian Tobacco Tbk PT during 2020. It dominates retail volume sales of these products with such brands as Kuda Terbang, Pohon Sagu and Manna.
Retail volume sales of fine cut tobacco will continue to exhibit double-digit rates of annual growth for most of the forecast period. Continued increases in the level of excise duty levied on cigarettes will be the key driver of this, as this will encourage local consumers – particularly those on lower incomes – to switch to fine cut tobacco.
There will also be strong growth in demand for retail volume sales of cigars during the forecast period, albeit from a fairly low base. With restrictions on public gatherings likely to ease as the threat posed by the pandemic begins to fade, events and seminars will be held to promote the awareness of both local and imported cigars.
With a wide product portfolio in cigars, cigarillos and smoking tobacco, Taru Martani PT is planning to further widen its distribution network in Indonesia, with e-commerce set to play an important role in this. It is also developing its presence on social media, such as Instagram, where it frequently holds live events in an effort to attract the attention of consumers.
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This report originates from Passport, our Cigars, Cigarillos and Smoking Tobacco research and analysis database.
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