Price fighter cigarillos continued to record dynamic growth in 2020, with these products attracting price-conscious consumers switching from cigarettes. New products were launched by major players in quick succession during 2019 and 2020, which also helped to encourage cigarette smokers to make the switch.
In contrast to dramatic surge in demand for cigarillos, cigars recorded a sharp decline in 2020, largely due to the reduced imports from Dominican Republic, where production was interrupted by the spread of COVID-19. Because of lockdown measures, cigar factories were closed in Dominican Republic; as a result, the resumption of exports from Dominican Republic to Japan did not recover during 2020.
Fine cut tobacco continued to benefit from smokers migrating from cigarettes in 2020 due to the significant increase in the price of cigarettes. Since consumers can adjust the amount of tobacco leaf that they put in fine cut tobacco, fine cut tobacco usually becomes cheaper, per stick, compared to cigarettes.
Fast growth of cigarillos is expected to end in 2022. In December 2019, the government decided to increase the tax on cigarillos to bring it in line with the tax on cigarettes, with changes scheduled for October 2020 and October 2021.
Fine cut tobacco is expected to continue positive growth in the forecast period, as an alternative to the high cost of cigarettes. The tax increase for cigarillos scheduled in October 2021 will encourage consumers to look for another alternative, which will pose another positive impact on fine cut tobacco.
Pipe tobacco is set to see a volume gain in the forecast period, due to the popularity of water pipe tobacco, or shisha. Shisha bars and cafes are currently found mainly in urban areas such as Tokyo, Osaka and Nagoya, but the spread to mid-sized cities is set to continue.
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Understand the latest market trends and future growth opportunities for the Cigars, Cigarillos and Smoking Tobacco industry in Japan 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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